NSCC Seeks SEC Approval for Limits Alert System
The National Securities Clearing Corp. is seeking the SEC’s approval for a key component of a monitoring system that will alert firms to trading activity that hits or exceeds trading limits.A subsidiary of the DTCC, the NSCC wants to provide its members with a new tool — the DTCC Limit Monitoring function — designed to serve as an early warning system to alert firms that their trading is nearing defined trading limits, say DTCC officials. The NSCC, which provides clearing, settlement, risk management and central counterparty services, needs a rule change by the SEC for this to happen.
The NSCC’s action follows the efforts of a working committee created last year to focus on improving market stability, officials say. The committee consists of representatives from exchanges, self-regulatory organizations, broker-dealers, buy-side firms and clearing organizations. The committee’s discussions led to the introduction of the DTCC Limit Monitoring capability for broker-to-broker trading that generates a warning or breach message when trading activity exceeds the pre-set early warning levels or established trading limits.
If approved, the DTCC Limit Monitoring system would allow firms to manage the potential risk exposure for their own accounts and their clients’ accounts for equities, corporate and municipal bonds, and unit investment trust instruments.
As proposed, the NSCC’s Universal Trade Capture platform would feed U.S. equity trade data to the DTCC Limit Monitoring software, covering broker-to-broker trading cleared via exchanges, electronic trading systems, dark pools and other liquidity destinations in the U.S., officials say. The proposed alert system would also support the Real-Time Trade Matching service of the Fixed Income Clearing Corp., another subsidiary of the DTCC.
In addition, under the proposal, NSCC members that are required to use the service according to NSCC’s rules and those that elect to use the service will have to input trading alert criteria, officials say. They will have to identify trading limits based on the net-notional value for the trading activity of their clients and for their own trading desks. While NSCC members will be responsible for their trading limits, the NSCC may review those limits and discuss concerns with its members if the limits are not aligned with recent trading activity.
The DTCC Limit Monitoring service is slated to produce message outputs for NSCC members that have registered for the service by mid-January 2014, officials add.
The proposed timeline for the rollout to NSCC members is as follows:
- November 2013: The tool is open to NSCC members for creating risk entities and associated limits;
- December 2013: NSCC will provide its members with end-of-day reports to assist in verifying that associated, pre-set limits are aligned with current trading activity;
- And January 2014: Operations will be functional, including email notification for breaches of pre-set limits.
G2 FinTech Adds Dividend Analysis Functions
Tax analysis and compliance software vendor G2 FinTech has added dividend analysis functions to the tax analysis TaxGopher software, officials say. The software, which targets cost basis adjustments, will consider mitigated risk of loss in treating qualified dividends and dividend received deductions, officials say.
To determine if a dividend qualifies for lower tax rates, a taxpayer must not only verify that the dividend-producing equity was held for the required length of time, but must also check to see if the risk of loss incurred by the equity position was mitigated during the eligibility period, say G2 FinTech officials.
If the taxpayer considers only the holding period and fails to consider mitigated risk of loss, they could incorrectly claim a dividend as qualified, when it actually should be taxed at ordinary dividend rates, officials say. The TaxGopher software is intended to help clients avoids these mistakes and non-compliance with the Internal Revenue Code (IRC).
Fiserv Ports TradeFlow to Red Hat Linux
Financial technology solutions provider Fiserv is making its post-trade processing solution TradeFlow available for the open source Linux operating system, officials say. TradeFlow for Red Hat Enterprise Linux has been designed to meet the demand from wealth managers for solutions that exploit open source technology such as Linux.
TradeFlow for Linux is intended to reduce trading risks, operating costs and improve the efficiency of post-trade activities, including trade capture, data enrichment and management, confirmation, affirmation, settlement and clearing, officials say.
The solution will also integrate support for central counterparty clearing of over-the-counter derivatives through MarkitServ, and facilitates the automated import of Standing Settlement Instructions from Omgeo Alert.
Wolters Kluwer Acquires rFrame Suite
Wolters Kluwer Financial Services, a provider of regulatory compliance and financial transaction solutions, has acquired the rFrame regulatory reporting product suite from CGI, an IT and business process services company.
The rFrame will be “an excellent fit” with Wolters Kluwer’s Summix regulatory reporting solutions, says Stephen Heron, sales director, UK and Ireland for the vendor. The combination will target firms operating in the UK that need to meet specific regulatory requirements, including Corep, Finrep, liquidity and credit reporting, and the new specifications of the Bank of England.
Volante Launches Swift Funds Message Migration
Data integration vendor Volante Technologies has launched a migration tool, dubbed the Swift Funds Migration Accelerator, that targets firms moving from ISO 150022-based SWIFT funds messages to ISO 20022-based offerings, officials say.
The adoption of ISO 20022 messages by the funds industry is intended to standardize the funds processing cycle for multiple fund instruments, says Fiona Hamilton, vice president, EMEA, for Volante in a statement. Swift will remove the ISO 15022 funds message templates from SwiftNet.
The new accelerator contains a set of pre-defined Swift MT and MX (ISO 20022) message types that have embedded network validation and bi-directional transformation rules, say Volante officials.
The embedded rules implement the SWIFT User Handbook for mapping specifications. The rules can be applied to existing workflows and includes generic adaptors such as XML, CSV and Fixed-Width for proprietary mapping.
NorthPoint Releases EPM 2.0
NorthPoint Financial has released NorthPoint EPM 2.0 — the Enhanced Portfolio Management System — with an upgraded Price Master, more hedging and netting functions for consolidated positions, and upgraded reporting including secure mobile reporting, officials say. NorthPoint also offers more integration with industry standard service providers.
The Price Master integrates with market data providers Bloomberg, Interactive Data, Markit and Thomson Reuters to support portfolio and position values. The upgraded software offers the ability to create an automated, rules-based waterfall for pricing securities that help operations staffs “quickly and accurately mark their portfolios,” officials say.
The updated NorthPoint EPM offers price modification and hypothetical modeling to support portfolio managers with feedback on the P&L and exposures, officials say.
Broadridge and TwoFour Target Treasury Ops
Broadridge Financial Solutions and TwoFour Systems will provide a front- to back-office treasury solution that will help firms consolidate their post-trade operations across assets, officials say.
Broadridge will be joining a multi-asset post-trade platform to TwoFour’s cross-product solution for orders, trading, front-office position keeping and treasury risk assessment, officials say.
The combination of offerings is in response to the regulatory mandates for FX and money markets that govern clearing, reporting and operational controls.
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