CanDeal And CIBC Mellon Announce Linkup To Aid STP

CanDeal and CIBC Mellon said they have linked up their two systems in a development that will likely enhance straight through processing (STP) in Canada. DealXpress 2.0, CanDeal's proprietary STP system, now allows investment managers to electronically pass matched trade

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CanDeal and CIBC Mellon said they have linked up their two systems in a development that will likely enhance straight-through processing (STP) in Canada.

DealXpress 2.0, CanDeal’s proprietary STP system, now allows investment managers to electronically pass matched trade information, including allocations, to the custodian. This latest version enhances the system’s capabilities which include routing electronic trade details to a portfolio management, trade management or accounting system to the front, middle or back office of an investment dealer, the company said.

“From a custodian’s perspective, DealXpress is able to provide us with clean trade instructions in electronic format,” said Robert Shier, CIBC Mellon’s senior vice president and chief operations officer. “Trades that come to us through DealXpress shouldn’t require our intervention, and result in higher matching rates at the depository, which means we experience fewer trade exceptions.”

DealXpress 2.0 provides a seamless electronic communication flow from the point of execution of a fixed income trade between the dealer and IM to its respective trade settlement with the custodian. The ability to pass complete trade details electronically can result in fewer fails, lower processing costs and accelerate the trade settlement cycle process, thereby mitigating risks and reducing costs, the company said.

“This additional capability represents a new paradigm in terms of how trade information flows between parties during the settlement process,” said Jayson R. Horner, President and CEO of Inc. “Trades completed on DealXpress 2.0 can be automatically ‘enriched’ to comply with industry standards and transmitted in real-time to the custodian to complete settlement. This eliminates unnecessary errors and saves both the IM and the custodian time and money and will help the Canadian debt securities marketplace reach its STP goals.”

DealXpress 2.0 is the second in a series of planned, customized enhancements, the company said. It enables buy-side institutions and dealers to confirm, communicate and settle trades electronically in a straight-though processing environment. Electronic trade-processing innovations are considered essential for the Canadian securities industry to reach its goal of implementing STP by June 2005.

Moving to STP is recognized as a key strategic industry initiative that requires all market participants to alter their existing practices and to recognize new system solutions and technologies, said the companies. CanDeal and its partners are working to automate the current trading and settlement environment by streamlining processes and bringing interconnectivity to all parties involved in the trade, it said. Receiving an accurate and complete electronic trade record from DealXpress eliminates costly and time-consuming manual trade record tasks for the IM, the dealer counterparty and now the custodian. DealXpress is a significant and practical advancement that will help the Canadian debt industry achieve STP, according to the company.

In its recent paper about industry trade processing best practices, the Canadian Capital Markets Association (CCMA), the industry group promoting STP in Canada, stated that the ability to pass financial information electronically on a timely, accurate system-to-system basis, to all parties in a transaction chain, is considered a pre-requisite to shortening the settlement cycle to trade date plus one day (T+1). It is also considered key to both help position firms for future growth and to maintain the competitiveness of Canada’s capital markets.

“CanDeal is working closely with industry participants to create the technology and electronic information flow necessary to achieve STP in the fixed income market,” said Horner.