Frances Maguire
Frances Maguire

OTC FX Clearing - spawning a new wave of technology innovation

The introduction of centralised clearing for OTC instruments is heralding a major re-engineering of technology. Trading infrastructures are being re-designed to support it and banks are investing in new systems to facilitate improved front to back-office transaction processing and risk management. Systems upgrades are also being undertaken to handle the new margining requirements and collateral management, Frances Maguire explores how all this activity is creating a demand for a new generation of trading and risk management systems, based upon innovative and highly scalable technology architectures, as clearing providers start thinking about how to differentiate their clearing offerings.

First Published: e-Forex Magazine 46 / FOCUS / January, 2012

Jim Dennelly, senior vice president, Sierra, SunGard’s capital markets business, says that clearing activities are going to become much more important than in the past and the company has been gearing up for the extra connectivity that will be needed, as well as the exception management that will be involved to process transactions and associated activity. “The workflow for clearing is not going to be trivial,” he comments.  Even before the regulations are fully finalised, Dennelly believes it is already clear that operational efficiency in the lifecycle of an FX trade needs to improve, and more reporting requirements will mean FX transaction data will have to be centralised and transparent. Managing risk Dennelly believes that the main focus will be on managing the risk of processing all the associated cleared trades. He says: “This involves working with the clearing agency, accepting vast amounts of data, and communicating back and forth. One of the biggest driving forces...continued

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