Rising South American Trade Volume Creates Need for Post-Trade Automation, Says Omgeo Exec

While South America has generally had some economic stability issues, the overall growth in the region has caused trade volumes to rise to the point where participants need to move from a manual to an automated post-trade solution, says Sheldon Warrick, executive director of global relationship management at Omgeo.

Omgeo’s entrance into Brazil began as foreign asset managers wanted to invest in the local market using a local broker, but in order to minimize post-trade risk, these managers wanted to have an automated solution in place. As the Brazilian market has grown—trade volume topped a 10% yearly increase in 2012 on the nation’s exchange—asset managers within the country have looked for global market diversification, says Warrick.

“We’re starting to see a lot more asset managers starting to invest more overseas and saying, ‘We can’t use the same bespoke, manual processes that we have for processing these trades globally.’ So you find asset managers now saying, ‘If I’m going to take risk out of the business, I need to be able to have a real-time post-trade system’ that allows them to invest globally,” says Warrick.

Omgeo recently won a client in Brazil, Itaú, who adopted Omgeo solutions to automate post-trade processes and central matching capabilities. Omgeo is also currently working with another undisclosed client in Brazil on implementing these services.

In addition to Brazil, Omgeo has also gone live in Chile, where it has partnered with the nation’s CSD, Depósito Central de Valores (DCV), to provide a post-trade solution for the buy and sell side. Similar to the context of how Omgeo entered the market in Brazil, says Warrick, foreign asset mangers who are now investing in Chile are using Omgeo’s Central Trade Matching (CTM) tool to communicate with local brokers who are also using CTM.

“This is the start of it,” says Warrick. “We expect over time that that will grow to also include local market traffic, i.e. a local asset manager with a local broker.”

Omgeo is also working with the DCV on a broker-to-broker communication solution, which the company expects to go live before the end of June this year.

“The trend is increased volume, increased global diversification in terms of investment partners, and as a result of that, people are looking to adopt best-of-breed solutions,” says Warrick. “So whether it’s on the OMS side or the management system side or the post-trade side of things, we see that this is a trend in the marketplace.”