Our FinTech roundup also covers news about BNY Mellon Pershing’s new COO, a new ICE ETF Hub function, and SmartStream’s intraday stress-test system.
Firms Automate Margining Tasks
The DTCC’s Margin Transit Utility (MTU), an automated margin call service, now has the support of 50 financial services firms that are striving to automate manual systems amid volatile markets, officials say.
The MTU service includes connectivity from AcadiaSoft’s Margin Manager and DTCC’s Alert for standing settlement instructions (SSIs), links to custodians and tri-party providers, settlement confirmations, and standardized end-of-day reporting, officials say. The system also offers connectivity to complementary collateral offerings such as those of CloudMargin, the Colline web-based system from software provider Vermeg, and TriOptima’s triResolve Margin.
The new support for MTU represents “thousands of Credit Support Annexes (CSAs)” and “leading dealer and buy-side organizations” that are grappling with the deadlines of the uncleared margin rules (UMR) rules for over-the counter (OTC) derivatives, according to officials of the post-trade infrastructure provider.
The MTU system validates, settles, reports and monitors “matched collateral calls globally while connecting to and sharing information with multiple counterparties,” according to the DTCC.
“As the markets have experienced unprecedented increases in volatility and margin call demands, we’ve seen firsthand the benefits of MTU and a fully automated margin call process on our first, recently onboarded accounts,” says Krzysztof Wierzchowski, director of global trade services at Franklin Templeton, in a prepared statement. “The solution has not only enabled us to meet the challenges of today, reducing risk and increasing efficiency at a time of uncertainty, but also positions us well to meet the regulatory demands of tomorrow,” Wierzchowski says. Franklin Templeton was one of the first firms to join the MTU community, according to the DTCC.
For MTU user Morgan Stanley, the service helps the investment bank automate “key processes with our counterparties, says Rob Marro, executive director at the firm, in a prepared statement. “Through broader MTU participation, we expect this to be integral to our ability to improve efficiency and remove complexity in tying the margin call to the settlement process and speeding reconciliations,” Marro says.
BNY Mellon Pershing Taps Goldmans for New COO
Correspondent clearing firm BNY Mellon Pershing has named Emily Schlosser as its new chief operating officer (COO), a post she takes after serving as head of change for the global markets division of Goldman Sachs, officials say.
At Goldman Sachs, Schlosser “led the transformation of their institutional client experience as well as major initiatives to drive new revenue streams, build scale, and manage risk and regulatory obligations,” according to BNY Mellon. “As COO and member of Pershing’s executive committee, Schlosser will lead Pershing’s operational functions and also will be involved in setting Pershing’s strategic direction.”
Before her time at Goldman Sachs, Schlosser was COO of corporate services at E*Trade, “responsible for client service, participant engagement, technology, marketing, operations, risk, finance and human resources. Both firm revenue and assets under management grew under her direction,” according to BNY Pershing.
“I’m thrilled to transition to this next exciting phase of my career as chief operating officer of BNY Mellon’s Pershing,” Schlosser recently posted via her LinkedIn page. “As COO, I look forward to continuing to transform our industry and deliver exceptional client experiences.”
Pershing and its affiliates serve advisors, broker-dealers, family offices, hedge fund and ’40 Act fund managers, registered investment advisors and wealth managers, officials say.
ICE ETF Hub Readies Basket Negotiation Technology
The ICE ETF Hub is launching an automated function for exchange traded fund (ETF) primary market participants that allows them to assemble customized basket proposals, according to officials at the Intercontinental Exchange (ICE), the owner of the New York Stock Exchange (NYSE), an operator of other exchanges and clearinghouses, and a data and listings services vendor.
“The passage of the Securities and Exchange Commission’s Rule 6c-11 last September will now expand the use of custom baskets to all ETFs in-scope of the rule,” according to ICE. “The result of this change offers the potential for offering greater tax efficiency, better liquidity and tighter bid-ask spreads for investors.”
The new functions allow market participants to “screen, communicate and assemble custom baskets with issuers electronically, via Financial Information eXchange (or FIX)-enabled APIs [application programming interfaces] and ICE ETF Hub’s front-end user interfaces,” according to ICE.
The platform helps end-users “send approved baskets to authorized participants for order placement. This functionality is designed to help fixed income market participants transition away from the many manual, bespoke processes in use today, thereby increasing scale and reducing operational risk through standardization and automation,” ICE adds.
The ICE ETF Hub will be launching “a pilot program to allow market makers to experience the custom basket negotiation functionality in a live production environment. Several market makers, including Jane Street, Old Mission and CTC, among others, have already enrolled in the program. Additional firms are expected to participate in the pilot program in the coming months,” ICE officials add.
SmartStream Launches Intraday Liquidity Stress Testing
SmartStream Technologies has launched the Intraday Liquidity Stress Testing module an on-demand solution that is part of the Transaction Lifecycle Management (TLM) Cash and Liquidity Management suite of products, officials say.
“Carrying out a stress test and running it can take up to eight weeks,” according to SmartStream. The new module “allows banks to run this in minutes — which is essential for refining the scenario, making real-time decisions, reporting and risk analysis.”
The new module targets a bank’s need “to carry out stress testing to improve profitability and reduce operational effort to meet the regulatory requirements,” according to the vendor. “With these considerations in mind, SmartStream developed the new module to provide stress test results immediately. The product is available as standalone or via the cloud. The pandemic and the turbulent conditions have made this type of stress testing more essential and re-enforced the value of such a solution to banks.”
In addition, SmartStream worked with Baringa Partners, a management consultancy firm, to complete a report that highlights the fact that a if bank “could cut its liquidity buffer by $6 billion, it may save as much as $50 million per year,” according to the vendor.
“The current turmoil in the market has had a big impact on a bank’s liquidity — so the ability to model the potential impact of such occurrences is no longer simply a regulatory box-ticking exercise, but a matter of self-protection and even of survival for many financial institutions,” says Nadeem Shamim, head of cash and liquidity for SmartStream.