Misys Launches Exotic FX Options Matching For Buy Side

Misys plc, the application software and services company, has extended its Confirmation Matching Service (CMS) to include MT306 messages for matching Exotic FX Options. This extended capability within Misys' market leading matching engine enables the buy side counterparties to benefit

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Misys plc, the application software and services company, has extended its Confirmation Matching Service (CMS) to include MT306 messages for matching Exotic FX Options. This extended capability within Misys’ market-leading matching engine enables the buy-side counterparties to benefit from increased automation and improved risk management, whilst also reducing manual processes executed by banks.

The US Federal Reserve and the Bank of England have been increasingly vocal in their recommendations that banks improve automation and reduce manual processes in order to reduce risk associated with errors. In response, Misys joined the Exotic FX Options Group that was set up by the banks to address automation of MT306 messages for confirming and matching Exotic FX Options and has been an active participant in the group, leading to today’s announcement.

MT306 messages through SWIFT enable banks to exchange Exotic FX Options between each other in a simple automated manner. However, many of these are also traded with fund managers and other buy-side organisations that are not on the SWIFT network. As such, traditional post-trade confirmation via fax or over the phone was still necessary for organisations trading outside of the banking network. With Misys adding the MT306 to its Confirmation Matching Service, its non-bank customers will now also be able to enjoy automated post trade confirmation and matching of Exotic FX Options.

“It’s good news for the industry that Misys is opening up MT306 and confirmation of exotic trades to non-banks,” says Patrick Fisher, JP Morgan Chase, Head of the Post Trade Automation Industry Working Group. “Every opportunity for the industry to mitigate risk and streamline processes through automation should be explored and exploited. We intend to further expand the range of currency products that we can automate in 2010, and will continue to work with Misys to ensure their continued involvement with this key initiative. “

Manual processes are in popular decline, in part to improve operational efficiency, but in particular in response to regulatory demands to reduce risk. Misys worked closely with the banks to develop the highly complex addition of Exotic FX Options and Derivatives quickly. It is the first solution to make post-trade confirmation possible between banks and non-banks resulting in increased efficiencies, reduced operational risk and an easier way for banks and non-banks to work together.

“This step is the latest in a long line of market-led enhancements by Misys that respond to the changing industry dynamics and the regulatory framework in which it operates,” says Gil Bray, Solutions Director, Misys Confirmation Matching Service. “We have more than 950 customers who all put their trust in our service for confirmation, netting and settlement needs around the world. Ultimately, this will make their businesses more efficient with faster processing and settlement times and fewer errors, leading to an increase in margins. At the same time they will ensure they are attractive partners for the banks by simplifying the confirmation of complex trades that were otherwise manually completed.”

The latest release from Misys builds on its strategy of working closely with banks on the latest industry developments and rapidly providing a solution, however complex. In the last year Misys has also launched the MT600 series messages to include base metals along with precious metals, as well as the ability to send or receive an MT305 message for an NDO (Non-Deliverable Options). The result is that customers are confident that Misys will help them to remain competitive and compliant, whilst significantly reducing operational risk associated with manual processing.