In other FinTech briefs, Morningstar debuts a risk model for equities and SWIFT and Dow Jones tie negative news to KYC data.
EBS Clients Get STP via TRTN
Foreign exchange (FX) trading platform EBS is now part of a post-trade network offering, the Thomson Reuters Trade Notification (TRTN), in an effort to offer EBS clients straight through processing (STP) support, officials say.
EBS is joining more than 2,500 other publishers on TRTN, which Thomson Reuters officials say is increasing its network connections and volumes. TRTN has “seen an increase in message volume of 80 percent in 2016,” according to the market data and news giant.
Designed for global FX market participants, “TRTN provides a single point for liquidity providers to connect with counterparties around the world in a venue-agnostic manner,” according to Thomson Reuters. “Broker networks, bank platforms, ECNs and FX venues globally can automatically publish on the network.” Their clients can receive post-trade messages through one, real-time channel, and via multiple industry-standard message formats.
The inclusion adds to existing EBS post-trade capabilities, and adds a “global distribution footprint” for clients to integrate EBS Direct for STP, said Seamus O’Sullivan, global head of FX forwards — EBS Direct, in a prepared statement.
EBS BrokerTec is a division of the ICAP Group
Morningstar Offers Global Risk Model for Investors
Investment research giant Morningstar has just released its first Global Risk Model for investors that takes into consideration 36 factors “across style, sector, region, and currency characteristics” of stocks and equity portfolios, officials say.
The risk model is intended to help investors understand an investment’s factor exposures and to forecast the future return distribution of individual stocks and equity portfolios, Morningstar officials say. The company plans to eventually expand the risk model to additional asset classes.
Six of the 36 factors are based on Morningstar’s proprietary ratings:
- Quantitative Fair Value Estimate;
- Morningstar Quantitative Economic Moat Rating;
- Quantitative Uncertainty Rating;
- Quantitative Financial Health;
- Ownership Risk;
- And Ownership Popularity.
“Our model uses unique factors such as sustainable competitive advantage and ownership data to provide a powerful lens with which to understand the risk of a stock or portfolio. In addition, our risk model methodology incorporates ‘fat tails,’ or extreme events, among investment returns when forecasting the distribution of future returns, instead of relying on a normal distribution,” says Warren Miller, head of asset management software for Morningstar, in a statement.
Miller adds that investors can use the risk model to “research securities and construct portfolios to make more informed investment decisions about risk and suitability, at a more granular level.”
The model evaluates more than 40,000 stocks and 10,000 equity fund portfolios in Morningstar’s database and then builds a comprehensive forecast of future returns for various time horizons based on all 36 factor exposures, officials say. In addition, the Global Risk Model can assess an equity portion of a client’s multi-asset portfolio.
The Global Risk Model and related data points are initially available in Morningstar Direct, a web-based global investment analysis platform for institutional investors, officials say. The company plans to add the risk model and related factors to its data feeds later this year.
SWIFT and Dow Jones Link KYC Data to ‘Negative’ News
Financial messaging and systems cooperative SWIFT is launching KYC Adverse Media, a “negative” news service integrated into its KYC Registry, a centralized repository that maintains a standardized set of information about financial institutions required for know your customer (KYC) compliance.
The partnership with Dow Jones will make Dow Jones Risk and Compliance data available to more than 2,500 correspondent banks and funds players that are already using SWIFT’s KYC Registry for customer compliance programs, officials add.
“Financial institutions are increasingly being expected by regulators to use ‘negative news’ coverage as part of a risk-based approach to customer due diligence for financial crime compliance,” according to SWIFT. “The KYC Adverse Media service provides Registry users with access to this type of curated content from more than 32,000 news publications worldwide, as well as regulatory notifications.”
The new service “complements banks’ self-reported, SWIFT-verified KYC data and documents with high-quality news content dating back to 2012. Articles are linked directly to the relevant legal entities in the KYC Registry, enabling users to view at a glance what news coverage, if any, is available for each Registry member,” officials say.
The Dow Jones Adverse Media data covers companies from every country in the world that “have received negative news coverage for regulatory, competitive, financial, production, environmental, and social or labor related issues,” officials say.
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