Omgeo is linking Omgeo Connect , – its connectivity tool for fund managers, their outsourcing service providers and other third-party post-trade vendors- to the Deriv/SERV platform operated by one of its parents, the Depository Trust and Clearing Corporation (DTCC). The connection between the two services is expected to go live this quarter.
The aim, says Omgeo, is to make it easier for multi-asset class fund managers to integrate the processing of OTC derivatives contracts alongside the fixed income, equity and other securities Omgeo already handles. It marks a further step in the Omgeo strategy of diversifying into new and alternative asset classes. “Users will benefit from streamlined trade and settlement management of multiple asset classes via an ASP environment, eliminating the need to maintain multiple systems and services,” says Omgeo in a statement.
DTCC Deriv/SERV provides automatic matching and confirmation of a range of OTC derivatives products, including single-reference entity credit default swaps (CDS), CDS indices, interest rate swaps, swaptions, variance swaps, equity swaps, equity index options and equity share options.
DEriv/SERV also automates payment matching and bilateral netting of credit default swaps. It is currently used by over 400 derivatives dealers and buy-side firms around the world. DTCC claims Deriv/SERV processes two thirds of all trades in the $17.3 trillion credit default swaps market.
Omgeo adds that Omgeo Connect will extend its XML message specification to capture the data relevant to OTC derivatives, transform this data into industry standard FpML messages, and then route these messages to DTCC Deriv/SERV via an MQ interface. Post matching, Omgeo Connect will receive status messages from DTCC Deriv/SERV, transform these messages, and pass them back to the investment manager via their Omgeo Connect interface.
By linking to Deriv/SERV, Omgeo enables Omgeo Connect users to access Omgeo Central Trade Manager (Omgeo CTM, the successor to the old Thomson OASYS Global central trade matching engine), Omgeo OASYS-TradeMatch (the combination of the legacy DTCC TradeMatch and the Thomson OASYS Global trade matching engines) and DTCC Deriv/SERV via a single platform.
“This collaboration with DTCC Deriv/SERV is the first of many planned for Omgeo Connect and is a significant step forward in Omgeo’s strategy to quickly bring to market streamlined solutions that address the challenges of processing trades across multiple asset classes,” says Steve Matthews, managing director, product and business development at Omgeo. “We are pleased to be able to build on our relationship with DTCC, our parent company, and we will continue to explore ways to extend our efforts to bring efficiencies to all sections of the investment manager and investment manager outsourcer communities.”
Omgeo is also working with DTCC to create what it calls “a lightweight, file-based, automated solution” to hook fund managers up to Deriv/SERV without costing too much. Omgeo expects the cheap and cheerful version to be available in 2006.
“Omgeo Connect’s link with DTCC Deriv/SERV is another example of how we are working to bring to a wider universe of market participants better access to the benefits of automated processing for OTC derivatives trades,” says Peter Axilrod, managing director, business development, DTCC Deriv/SERV. “We are pleased to work with Omgeo and other complementary service providers to develop solutions that will better manage risk and bring greater efficiency to this rapidly growing and dynamic market.”