Traiana Launches Clearing Solution for OTC Equity Trades

Post trade provider Traiana has gone live with its new automated central clearing system for over-the-counter (OTC) equity trades, gaining the backing of some of the world’s biggest equity broker dealers.

Traiana, which is owned by interdealer broker Icap, launched Harmony CCP Connect for Equities on Tuesday that will enable OTC equity trades to be matched and cleared through its automated system.

It is currently connected to three European clearing houses, which include LCH Clearnet, EuroCCP and SIX x-clear, and has been adopted by Credit Suisse, J.P. Morgan and Instinet.

According to the post-trade provider, the first trade was completed on Monday between two banks that were not disclosed.

The central clearing system comes weeks after European firms moved to the T+2 settlement cycle. To ensure smooth transition to the cycle, Traiana aims to reduce operating costs by automating the process of matching trades and linking broker dealers to the appropriate clearinghouse.

“With global markets targeting shorter settlement cycles, this initiative supports our clearing strategy, increases STP on non-exchange flows and reduces settlement cost,” says Lee Ellmore, global head of securities, FX & OTC strategic change, Credit Suisse.

Traiana estimates that participants could reduce settlement costs for OTC equity trades in the EMEA region by up to $30 million on an annual basis.

“Equities settlement is still costly and can be inefficient. Increasing efficiency in this process and enabling clearing will reduce risk and costs in the market,” adds Adam Toms, CEO, Instinet.

“Moving OTC equity trades to a centrally cleared model that also provides netting benefits, represents a fundamental improvement to the structure of equities markets,” says Roy Saadon, head of EMEA and co-founder of Traiana.