In other FinTech news, a Swedish Bank outsources the back office, Fidessa orbits Neptune and Watson Wheatley has a new client.
CFTC Finalizes Registration for GTX, Tera and FTSEF
The CFTC has given its stamp of approval to three swap execution facilities (SEFs): the GTX SEF (GTX) of Bedminster, N.J.; TeraExchange, (Tera) of Summit, N.J.; and FTSEF (FTSEF) of Great Neck, N.Y., bringing the number of fully CFTC-registered SEFs to 21.
The regulatory action finalizes approval as each SEF had previously operated under temporary registration status, CFTC officials say. The regulator has issued orders of registration for the three SEFs.
“Upon review of their applications, the CFTC determined that GTX, Tera, and FTSEF have separately demonstrated compliance with the Commodity Exchange Act (CEA) and the CFTC’s regulations applicable to SEFs,” according to CFTC officials. “The terms and conditions applicable to each order include, among others, that each entity shall comply with all provisions of the CEA and all requirements in the CFTC’s regulations, as may be amended or adopted from time to time, that are applicable to SEFs. Each entity shall also comply with all representations and submissions made by it in support of its application for registration as a SEF.”
The GTX SEF is a Delaware limited liability company and an indirect wholly-owned subsidiary of Gain Capital Holdings, Inc., a publicly-traded company, CFTC officials say. FTSEF is a New York limited liability company and a wholly-owned subsidiary of FlexTrade Systems Inc., a privately held New York corporation. Tera is a Delaware limited liability company and a wholly-owned subsidiary of Tera Group, Inc.
SEFs operate under the CFTC’s regulatory oversight for trading and processing swaps as authorized by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, according to the CFTC. SEFs were created to provide greater pre-trade and post-trade transparency.
Swedish Bank Outsources Securities Operations
A Swedish bank, Sparbanken Syd, has signed an outsourcing agreement with software and services vendor Tieto that covers IT systems, operations and back office services of the bank’s securities business, say bank and vendor officials
The five-year agreement will support “the entire process from order to settlement of securities, enabling Sparbanken Syd [based in Ystad, Sweden] to provide future-oriented funds and securities offerings while ensuring cost-efficient and secure operations to its customers,” officials add. “Tieto will take full responsibility for the systems, operations and administration of Sparbanken Syd’s securities management (software as a service) and the back office services (business process outsourcing).”
The bank is “very confident with the choice of Tieto, as they have a deep knowledge and long-term experience in IT securities business including back office services. With the new solutions we will be able to focus on our core business within the securities area,” says Hans Nelfelt, a vice president with Sparbanken Syd, in a statement.
Fidessa’s Buy-side OMS First to Orbit Neptune
The buy-side order management system (OMS) from Fidessa is the “first external OMS” to link to the Neptune open standards network utility for connectivity, data aggregation and workflow integration between bond market participants, report officials from Fidessa and Etrading Software.
Neptune is “a commoditized and open standard FIX network that allows banks and investors to exchange controlled and targeted real-time axe and inventory using a robust data governance model that minimizes unintended information leakage,” according to officials at Etrading, which helped launch Neptune. “By focusing on the creation of a technology utility to exchange this information directly between market participants, Neptune enables greater transparency of trading interests across the marketplace between buyers and sellers of bonds — usually banks and investors such as fund managers, pension funds and asset managers.”
The Neptune network facilitates connections between asset managers and the sell-side via “any combination of the Neptune GUI [graphic user interface], their own in-house developed OMS or an external OMS provider such as Fidessa,” officials add. “The flexibility of connectivity options means they will be receiving pre-trade indications from multiple banks in real time through a single connection that can be integrated into their own in-house workflows.”
Etrading Software and a group of more than 40 banks and asset managers created the Neptune platform in 2014. Neptune was formulated to distribute “high quality pre-trade data to assist the buy-side with liquidity and price discovery utilizing their existing workflows,” according to Etrading. The platform, which has the support of 17 dealers, handles more than $60 billion of gross notional and 12,000 line items that reference more than eight thousand ISIN’s [International Securities Identification Numbers] across IG/HY/EM [investment grade/high yield/emerging markets] and covered bonds and 20 CCY’s [currency bonds].
“Neptune is fast expanding from its initial focus of purely European IG/HY corporate bonds, to a portfolio which also reflects the global nature and reach of its user base,” officials add.
“With the markets undergoing fundamental change, initiatives like Neptune that help buy-sides discover liquidity and price information for fixed income instruments are a big step forward in enabling investment managers to access these markets,” says Paul Nokes, CEO, Fidessa Buy-side, in a prepared statement. “The industry still has a long way to go, though, and the next challenge to solve is a consolidated feed of the 90 or so fragmented pricing mechanisms that exist.”
“We are pleased to have our first external OMS connected to Neptune and we look forward to partnering with further providers in the coming weeks and months as we continue to expand access to the platform,” says Grant Wilson, partner, Etrading Software, in a statement. “Enhancing the flow of electronic pre-trade information has been a focus of market participants for many years.”
Watson Wheatley Lands Unnamed Alternative Asset Manager
Self-described specialists in securities reconciliation, Watson Wheatley Financial Systems (WWFS) reports that it has signed a new client that will not be identified beyond a description as “a London based $10bn alternative asset manager,” WWFS officials say.
This latest client will be using the vendor’s “unique Total Equity reconciliation as they are keen to tie out their margin balances with their prime brokers to the penny,” says Duncan Wheatley, WWFS Director, in a statement. “They now have complete control of their reconciliations and are able to solve the FIFO/book cost differences that occur in their high frequency trading environment.”
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