Our FinTech update covers: Cloud9 & IPC, FINRA & TRACE, RJO’s risk platform and Genesis & Northern Trust.
Firms Want Regulators to Focus on Clearinghouses
ABN AMRO Clearing, Barclays, Deutsche Bank, Commonwealth Bank of Australia, Franklin Templeton, Guardian Life, Ivy Investments, Nordea, TIAA and UBS recently endorsed and are signatories to a joint buy- and sell-side white paper that calls on regulators to take steps to make clearinghouses safer.
The position paper in question, “A Path Forward for CCP Resilience, Recovery and Resolution,” was actually published late last year with the backing of Allianz, BlackRock, Citigroup, Goldman Sachs, JPMorgan Chase & Co., Societe Generale, State Street, T. Rowe Price, and Vanguard.
“Since the financial crisis, clearinghouses have been increasingly relied upon to protect market participants from counterparty losses when faced with major market shocks,” according to a joint statement from the backers of the position paper. “The recommendations, which represent the institutional views of signatory firms, intend to better align incentives between clearinghouses and market participants, and ensure that clearing member and end-user liabilities are manageable.”
The growing support for more regulatory attention is a sign of the “the depth of convictions” about this issue, according to the paper’s supporters.
“The recommendations help to align the incentives of clients, clearing members and CCPs and to strengthen financial markets stability,” says Gert Ellerkmann, global risk governance and strategy specialist at ABN AMRO Clearing Bank, in a prepared statement.
“Central clearing has made the derivatives market more stable, but it has also increased dependence on central clearing counterparties and created a concentration of risk. Taking additional steps to ensure that risk is well managed is beneficial to all parties and the market as a whole,” adds Atanas Goranov, derivatives risk officer at the Guardian Life Insurance Company of America, in a statement.
“We look forward to joining this important joint sell side and buy side initiative to improve CCP resilience, with the goal to enhance financial stability during times of market disruption,” says Andrew Whiteley, head of funds risk at Barclays, in a statement.
“The whitepaper lays out a comprehensive set of recommendations to better align incentives and strengthen the CCP framework so that the resiliency of this important market function can be further enhanced. … We look forward to the next phase of advocacy on this initiative,” says Jonathan Siegel, vice president and senior legal counsel at T. Rowe Price, in a statement.
The full report can be found here http://bit.ly/2QdC9Ou.
Cloud9 & IPC Launch Disaster Recovery as a Service
IPC Systems, Inc., a trading communications and networking solutions vendor, and Cloud9 Technologies, a cloud-based communications vendor, have launched a cloud-based turnkey solution for voice trading disaster recovery, dubbed Disaster Recovery as a Service (DRaaS), officials say.
The DRaaS offering is a software as a service (Saas) “that allows traders to have ubiquitous access to a custom-designed virtual trading desk from any global location during an emergency,” according to the vendors.
“Political unrest, natural disasters, pandemic threats and a litany of other unpredictable events frequently jeopardize the most critical operations of traders,” says Bob Santella, CEO of IPC, in a prepared statement.
DRaaS is based on IPC’s Connexus Cloud, a multi-cloud platform, a global ecosystem that interconnects more than 6,600 capital market participants across 750 cities in over 60 countries, and Cloud9’s C9 Trader voice communications and analytics platform, officials say
RJO Deploys Risk Platform from Eventus
Chicago-based R.J. O’Brien & Associates (RJO), which points out that it is the oldest and largest independent futures brokerage and clearing firm in the United States, will deploy Austin, Texas-based Eventus Systems, Inc.’s market surveillance and real-time risk monitoring software platform.
That Eventus platform is called Validus and it is scheduled to go live on April 1, 2020.
The Validus software platform “features hundreds of pre-built surveillance procedures that clients can tailor to their own standards and to regulatory requirements,” the firm says in a joint statement.
R.J. O’Brien & Associates was founded in 1914 and currently tallies “more than 80,000 institutional, commercial and individual clients,” per the firm.
The Eventus Systems Validus platform is available as a cloud-based or real-time enterprise on-premise solution, the company says, adding that its clients include “Tier 1 banks, brokerages and futures commission merchants (FCMs), proprietary trading firms, exchanges, corporates and buy-side firms.”
FINRA Posts New TRACE Treasury Data
FINRA, the Financial Industry Regulatory Authority, has begun posting weekly, aggregate data on the trading volume of Treasury securities reported to its TRACE trade reporting and compliance report.
The new Treasury report “provides trading volume in U.S. Treasury securities reported to TRACE for the prior week,” FINRA says
The report’s “information is aggregated by Treasury security subtype: bills, floating rate notes (FRN), nominal coupons, and Treasury inflation-protected securities (TIPS). The data are further grouped into two categories: alternative trading system/interdealer transactions, and dealer-to-customer transactions. For nominal coupons and TIPS, the report also shows remaining maturity and on-the-run/off-the run buckets.”
Genesis to Use Northern Trust’s ITS
Northern Trust reports the advent of a partnership with Genesis Investment Management to provide trading procedures and processes for Genesis’s global equity trading. The partnership began on March 2, 2020, according to the firms.
The head of trading at Genesis, Neil Dacey, will “take up a management role in Northern Trust’s trading team overseeing emerging markets execution,” according to a statement.
Genesis will be using Northern Trust’s ITS, or integrated trading solutions, for execution services, “to be rolled out in stages and benefit from the scale and efficiency offered by ITS,” the firms say.
Northern Trust Corporation was founded in Chicago in 1889, and currently tallies offices in 22 U.S. states and Washington, D.C., and across 22 locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of December 31, 2019, Northern Trust counted “assets under custody/administration of U.S. $12.1 trillion, and assets under management of US $1.2 trillion.”