SWIFT has launched its central matching service for confirmation messages to central clearing counterparties (CCP). Accord for Securities, which matches both treasury and equity confirmations, has established direct links to EuroCCP, SIX x-clear and LCH.Clearnet.
According to Frank Versmessen, head of post-trade services at SWIFT, the motive for the link came from the existing users of SWIFT Accord. They wanted to benefit from clearing, novation to reduce counterparty risk, and netting to reduce settlement volumes, he says.
With the new service, broker dealers will have ability to specify which CCP they want to clear their matched trades.
SWIFT has agreed to work with several prime and executing brokers including BofA Merrill Lynch, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, and UBS to work in developing the service as well as testing or piloting the new link. Testing with the CCPs is expected to start in Q1 2011 with a pilot program for the brokers planned for Q2 2011.
Accord for Securities, launched in 2009, can be used for automated trade-date matching between prime and executing brokers for hedge fund trades, and for matching between executing brokers for over-the-counter securities trades.
Currently, OTC trades are matched on the SWIFT platform, leading to bilateral settlement. Regulators across the globe have been pushing for more OTC derivatives to be cleared through CCPs.