Euroclear Bank and Xtrakter are launching immediately the means for mutual clients to automate transaction information flows from trade matching through to settlement. As a result, client trade data matched by Xtrakters trade matching system – TRAX – will be processed straight through for settlement at Euroclear Bank, thereby eliminating trade matching duplication and reducing post-trade costs and risks. The number of unsettled transactions should also decline as a result of straight-through processing (STP).
For those tranactions settling at Euroclear Bank, TRAX will match the relevant trade details on trade date and inform clients of their transactions matching status. This will give counterparties sufficient time to repair any matching instruction errors before the transaction is positioned for settlement at Euroclear Bank.
The joint service covers a range of OTC fixed-income transactions. It eliminates the need for clients to input the same trade information as many as three times: upon trade execution, counterparties submit the relevant trade information to TRAX to achieve binding confirmation; they input the data again for internal reconciliation purposes; and yet again in their settlement instructions to the central securities depository of their choice. The joint effort of Xtrakter and Euroclear Bank to create a seamless link from TRAX to Euroclear Bank is the first opportunity available for market participants to perform these functions in one easy step. The link is now operational and ready for user testing.
For many years now, we have listened to firms asking for real STP from trade matching through to settlement, says Kevin Milne, Chief Executive of Xtrakter. We are delivering. And, the savings can be substantial given that a settlement failure, due to a counterparty being unable to repair an unmatched trade before settlement, is costly for both counterparties. The TRAX link to Euroclear Bank can reduce these costs and risks considerably.
D.C.