DTCC’s ALERT hits six million instructions while plans to disrupt with blockchain

The Depository Trust & Clearing Corporation (DTCC), a 40-year old post-trade market infrastructure for the global financial services industry, has announced that its product Omgeo ALERT has reached a milestone with over six million settlement instructions, up 16% since the end of 2014.

Omgeo ALERT is used by brokers/dealers, investment managers and custodians as an online global database for the maintenance and communication of account information and standing settlement instructions (SSIs). Financial institutions have been looking to automate their FX post-trade operations, particularly since 2010.

In fact, DTCC’s Omgeo ALERT saw FX/cash settlement instructions up by 21% since the end of 2014, holding over 906,000, with a compliance rating of 99%. And the firm expects to see the number of FX SSIs climbing as global custodians and prime brokers adopt the service. The company supports equity, fixed income, money market and derivatives on an exchange traded basis as well as over-the-counter.

According to the firm, the six million settlement instruction milestone positions Omgeo ALERT to continue delivering on its goal of creating a single global SSI utility (‘SSI Utility’). Paula Arthus, Managing Director and Head of Omgeo and Data Services at DTCC, said that “with the creation of the SSI Utility, market participants can consolidate SSI information across all counterparties, matching platforms and asset classes into one database, thereby reducing risks and costs.”

“There is a move towards industry utilization in the post-trade space: build once, deploy many through leveraging scale, and implementing standardization in processes. With efforts to move the U.S. to a T+2 settlement cycle underway and European regulators debating trade failure charges, the time for SSI automation is now” she added.

Since April 2015, global custodians and prime brokers became able to take on a more collaborative role in SSI maintenance. Brown Brothers Harriman and J.P. Morgan were the first going live on GC Direct. Now, ALERT will enable clients and vendors open access to SSI data on a real-time, per transaction basis, over a secure network through its open application programming interface (API).

Bill Meenaghan, Executive Director of DTCC’s Omgeo ALERT, said: “Over the course of 2016, Omgeo ALERT will aim to extend coverage of client SSIs in its database, moving towards the SSI Utility’s goal of 100% coverage, which will allow brokers to retire their internal SSI databases. As the year progresses, more SSIs will be managed by the global custodian instead of manually by the investment manager – further ensuring accurate SSIs in DTCC’s Omgeo ALERT. This move will help to address the issue of trade failures, 30% of which are caused by inaccurate settlement instructions.”

In late March, DTCC had announced a partnership with Straight Through Processing (STP) related software developer Digital Asset to create a distributed ledger technology that aims to improve post-trade processes with potential disruption of a market worth $2 trillion of repos per day.

In March 31, ESMA fined DTCC €64,000 over violations of EMIR rules across 2.6 billion reports in a 9-month period, for “negligently failing to put in place systems capable of providing regulators with direct and immediate access to derivatives trading data”, according to the regulator’s official statement, adding that it was the first time ESMA has taken enforcement action against a trade repository registered in the European Union (EU).