FTF News also reports upon Cathay Capital and Bpifrance’s majority stake in NeoXam, CQG links to a new Chinese exchange, and the SGX’s interest in the Cobalt network.
First Part of the Launch Slated for Q3 2019
Post-trade infrastructure systems provider the DTCC has released a timetable for the first phase of settlement optimization, which intends to remove “an entire market day of settlement exposure without eliminating a calendar day from the standard trade settlement process,” DTCC officials say.
The initial piece is slated to launch in the third quarter of 2019 and is intended to improve overnight processing to help financial services firms cut costs and risks. Taking their cues from the Settlement Optimization Working Group, DTCC officials are implementing a phased approach, starting with “Night Cycle Re-engineering.”
“By focusing initially on re-engineering the night cycle, a processing batch occurring in the overnight hours, DTCC seeks to significantly increase settlement rates going into the next morning,” officials say. “Today’s more sequential algorithm results in a night cycle settlement rate of about 45 percent for all transactions during that period. However, DTCC estimates it can increase that same settlement rate to as high as 90% as a result of the re-engineering,” officials say.
The increase in settlement in the night cycle is a prerequisite for the working group to explore the implementation of Settlement Optimization Phase 2, DTCC officials add.
“Night Cycle Reengineering will create and lead to a number of industry benefits including improved processing efficiency, reduced operational risk and improved intraday settlement finality,” says Murray Pozmanter, DTCC managing director and head of clearing agency services, in a prepared statement. “With this plan, we are beginning to bring our vision for the evolution of the U.S. equities market structure to life,” he says.
DTCC officials say the new approach “introduces an advanced settlement processing algorithm capable of evaluating each member’s transaction obligations, available positions, transaction priority instructions and risk management controls while identifying the transaction processing order that maximizes the number of transactions settled.”
The Settlement Optimization Working Group, formed in September 2017, has about 50 members “including major service providers,” officials say.
The members provided “important feedback on the re-engineering proposal including the proposed timeline and key processing times,” officials say. “The launch of Night Cycle Re-engineering is subject to regulatory approval, as are the additional phases that will be addressed over time.”
Cathay Capital and Bpifrance to Acquire NeoXam Majority Stake
Cathay Capital and Bpifrance report that they have signed an agreement to acquire a majority stake in Paris, France-based NeoXam, a financial software company, from BlackFin Capital Partners.
Going forward, NeoXam’s management intends to develop its presence in key markets, particularly the Asia-Pacific region and the U.S., according to a statement by the partners.
“Our global business will undoubtedly benefit from the Cathay Capital network, particularly in China and North America, to continue to deliver world-leading financial solutions to our customers,” Serge Delpla, NeoXam founder and CEO, says in the statement.
NeoXam notes that it processes more than $15 trillion worth of assets per day and serves over 10,000 users.
CQG Connects to Dalian Commodity Exchange
Trading tools provider CQG, Inc. reports that it is connected to the Dalian Commodity Exchange to offer global clients access to iron ore futures.
The move marks the second Chinese market available on CQG. In mid-March, CQG announced that the Shanghai International Energy Exchange (INE), a unit of the Shanghai Futures Exchange that launched March 26, would be the first Chinese market available on CQG. The launch of that marketplace represented the first time retail foreign investors could participate in a Chinese commodities market, CQG says.
According to DCE, China is the largest iron ore import country in the world. The China Securities Regulatory Commission announced on April 13 its approval of the opening of the iron ore futures contract to overseas traders.
SGX Invests in Cobalt FX Post-Trade Network
Cobalt, a foreign exchange (FX) post-trade processing network based on blockchain technology, reports that it has secured a strategic investment from the Singapore Exchange (SGX).
SGX’s investment will “support the continued expansion of Cobalt’s footprint into the FX space,” Cobalt says in a statement.
Cobalt characterizes its solution as a “highly optimised technology alongside an in-house immutability service based on distributed ledger technology … to deliver a shared back and middle office infrastructure that is scalable, secure and fast.”
Cobalt officials also explain that its “shared view of trade data … frees up back and middle office resources from multiple layers of reconciliation; creating a ‘golden’ portfolio of FX transactions from which to provide multiple services.”