SWIFT, the financial messaging consortium, has launched an initiative linking its global central trade matching solution for equities and fixed income trades, Accord for Securities, to multiple central clearing counterparties (CCPs). EuroCCP, SIX x-clear and LCH.Clearnet are the first CCPs to sign up to the solution, which will enable a direct connection between SWIFT Accord and their clearing platforms. Additional CCPs are expected to join once the service is live.
The initiative brings a new dimension to the post-trade processing of equity and fixed income trades, with reductions in the cost of settlement, and access to the risk mitigation features of clearing platforms. Leveraging their existing Accord connection, a broker dealer now has the ability to specify which CCP they want to clear their matched trades. SWIFT will use its network to send a MT 518 trade confirmation message to communicate these details to the CCP. The CCP will accept or reject using the MT 509 trade status message, and Accord would send status updates to inform the brokers on the progress of their trades.
Marco Strimer, chief executive officer (CEO) of SIX x-clear, said: “This new service from SWIFT is a great move and will have a positive impact on the financial community. Offering market participants a choice of CCPs is an excellent decision by SWIFT and one that will ultimately reduce counterparty risk, open up new opportunities and reduce costs. We are very pleased to be a first mover of this new service and look forward to working closely with SWIFT.”
Concurrently, SWIFT has agreed to work with several prime and executing brokers including BofA Merrill Lynch, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, and UBS to work in developing the service, as well as testing or piloting the new link. Testing with the CCPs is expected to start in 1Q11 with a pilot programme for the brokers planned for 2Q11.
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