OSTTRA at FIA EXPO 2023: Post-trade as an investment rather than a cost

Rick Steves

The interview with Robert Costick and Joakim Strömberg navigated through an array of pertinent topics, underlining OSTTRA’s significant strides in refining the post-trade workflow domain of exchange-traded derivatives (ETD).

FinanceFeeds Interviews - FIA EXPO 2023

The Futures & Options Expo (FIA Expo) 2023 in Chicago provided a conducive platform for insightful dialogues and exchanges among the financial industry stalwarts.

Among the myriad of discussions, a particular interview conducted by FinanceFeeds’ Editor-in-Chief, Nikolai Isayev, with OSTTRA product directors, Robert Costick and Joakim Strömberg, emerged as a notable highlight.

OSTTRA, a joint venture between S&P Global and CME Group, plays a pivotal role in supporting the global financial markets by connecting myriad counterparties on its multi-asset networks that underpin the post-trade lifecycle from trade capture to clearing and settlement.

OSTTRA offers a pragmatic approach to post-trade challenges

The interview commenced with a reflective glance at OSTTRA’s recent accolade, the ‘Post-Trade ETD Provider of the Year‘ at the FinanceFeeds Awards 2023. Expressing his gratitude, Costick remarked, “It’s great to be recognized.” He further elaborated on the journey that led them here, especially emphasizing the challenges faced during the COVID-19-induced market volatility in March 2020.

The dialogue then transitioned towards the technological advancements spearheaded by OSTTRA, particularly in enhancing order IDs on Trade Date and introducing significant T+ improvements.

When queried about the necessity of distributed ledger technology (DLT) for optimizing post-trade processes, Costick elucidated, “Without requiring a major overhaul of technologies in place today, our clients have systems and processes embedded and they don’t just go away.” He underscored the firm’s pragmatic approach to solving the challenges swiftly without waiting for the industry to adapt to DLT.

DMIST compliance to go nearly 100% STP

A year post the launch of Derivatives Market Institute for Standards (DMIST), the conversation delved into the implications of the Final Standard for Improving Timeliness of Trade Give-Ups and Allocations, and a paper on Average Pricing. Costick reflected on the collaborative spirit fostered through the DMIST initiative.

“This is very close to our heart […] The industry has long been very fragmented and has really needed a common data standard and a way of doing things. So, if we get this right, and we will, we should be able to realize the dream of nearly 100% STP”, he said, adding that DMIST compliance will soon be a badge of honor for firms. “Those that don’t adopt DMIST will risk being left behind and ultimately lose business.”

Addressing the systemic inefficiencies originating from Trade Date, Strömberg shed light on the cascading effects these issues have on T+ processing, particularly total equity reconciliation, margin and settlement. He emphasized, “It is very important to have a process that makes sure that you get the data right and keep the integrity of data from T+0 all the way to maturity.”

Post-trade as an investment rather than a cost

As the discussion neared its conclusion, the spotlight turned toward OSTTRA’s core message for the FIA Expo 2023 attendees. Strömberg articulated, “Post-trade processing should be seen as an investment rather than a cost.”

His forward-thinking perspective resonated as an insightful takeaway, underlining the potential of such an investment in driving operational excellence, reducing risks, and ultimately serving as a competitive advantage.

The insights shared by Costick and Strömberg not only enriched the narrative around post-trade processes but also underscored the promising trajectory the industry is on, as echoed through the collaborative spirit reverberating throughout FIA Expo 2023.

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