Ben Lancaster

TradeNeXus: An award-winning innovator focused on driving efficiencies within the post-trade FX workflow.

May 2023 in Supplements

TradeNeXus is a part of GlobalLink’s suite of market-leading e-trading platforms, technology, data and workflow solutions from State Street. TradeNeXus brings innovative solutions to its clients and provides straight-through processing, operational efficiencies and settlement risk reduction. TradeNeXus recently won the “Best FX Posttrade Provider” in the FX Markets Asia 2023 awards for the 3rd year in a row, and the platform was recognised as part of State Street’s TabbFORUM Nova 2023 award. We asked Ben Lancaster, Head of TradeNeXus Product, to outline some of the key features of the service it offers particularly for FX clearing.

Please tell us a little about the TradeNeXus ecosystem and how you have brought together a community of FX market participants to drive efficiencies within the post trade workflow.

The TradeNeXus ecosystem consists of a variety of market participants across the FX workflow, from execution to settlement. The service connects to over 400 asset managers, 50 banking groups, 800 custodians plus a broad range of order management systems, technology providers and market utilities such as CLS, LCH, and Capitolis. This community has been built to drive efficiencies and add value across clients’ workflows, by providing automation and straight through processing across the platform, as well as building innovative solutions to solve client and market issues.

At TradeNeXus, we recognise the importance of partnering with innovators in the post-trade space to help bring new tools to market, delivering more automated solutions for clients to create efficiencies. We strive to make our solutions seamless for clients to adopt, all of our add-on services; Clearing Connectivity, Trade Optimization and CLSTradeMonitor, can be utilized with minimal uplift for buy-side clients.

The complexities and nuances of the FX market has over time driven bespoke post-trade workflows and numerous manual processes. The TradeNeXus community helps clients manage with these complexities and to drive efficiencies in an ever changing landscape.

Under State Street’s GlobalLink umbrella, the TradeNeXus community also consists of market leading products such as FX Connect, BestX, Fund Connect, and Currenex to name a few. Global Link Digital has been launched to bring together post trade transparency next to execution venues, TCA and research analytics into a single user interface.

What are the core services that TradeNeXus offers?

TradeNeXus’ core functionality is trade matching, confirmation and settlement messaging for foreign exchange (FX and FXO) and money market transactions. The platform offers consolidated multi-counterparty view of post trade activities within a single dashboard, including exceptionbased confirmation management workflow.

TradeNeXus’ robust SWIFT messaging capabilities are at the core of this functionality. The platform automatically enriches custodial SWIFT messages with broker settlement instructions, whilst ensuring SSI accuracy through regular authentication of details through our broker published SSI database.

To provide clients with flexibility and customization, TradeNeXus is a rules based system which enables users to set-up tailored rules across the platform, such as on incoming trades, settlement determination and outgoing messages. The settlement workflow supports Gross, Net and CLS settlement, where corresponding SWIFT messages are automatically generated to custodians and agents. The asset manager focused netting functionality allows buy-side clients to create netting groups and agree the net figures with the sell-side.

How have you configured your Clearing Connectivity service so that it offers asset managers minimal disruption to existing trade operations and customised assistance with the adoption of FX clearing into their workflows?

TradeNeXus Clearing Connectivity is a workflow solution designed to help asset managers with the adoption of FX clearing. Asset managers are able to adopt our Clearing Connectivity service without the need for additional integration work, or changes to their incoming trade data. Multiple integrations have been enhanced to offer clients the ability to automatically route trades for Clearing, including our direct integrations with FX Connect and Charles River Development. At TradeNeXus, we try to maximise the client integrations that are in place and add more workflows that stem off those integrations, allowing our clients, where possible, to have one single integration.

Once the determination has been made to clear a trade, our integration with LCH will automatically send the trade for Clearing and provide clients with the clearing status in the TradeNeXus dashboard.

This STP workflow allows asset managers to seamlessly adopt clearing and incorporate it into their existing pre and post execution workflow. There are no changes required to execution blocks; which means that cleared and non-cleared allocations can be executed together in netting blocks.

What are some of the key features and functionality of the Clearing Connectivity service?

One of the key benefits of Clearing Connectivity is allowing users to adopt the service with no additional integration or uplift, meaning no change to clients’ core workflows.

Our Clearing rules engine allows clients to set-up tailored rules to determine whether a trade should settle bilaterally or cleared. The integration with LCH allows for realtime automated two-way connectivity with the CCP; to submit trades and display lifecycle status within the TradeNeXus dashboard, allowing users to monitor all bilateral and cleared trades in a single dashboard.

Once a trade is cleared, TradeNeXus will automatically send SWIFT messaging to clients’ custodians with enriched clearing data. Additionally, the Clearing queue includes a full audit history with all incoming and outgoing messages, and well as allowing users to take action within the queue to facilitate an exception based workflow.

You have been collaborating with other leading industry players in the FX clearing space including an integration with LCH. What advantages is that bringing to users of TradeNeXus?

TradeNeXus is the first asset-manager focussed post-trade provider to provide FX clearing workflows. This integration with LCH provides TradeNeXus clients with a front to back ecosystem for managing bilateral and cleared trades. The STP access to LCH’s Clearing Services, combined with LCH’s connectivity to a large pool of Clearing and Executing Brokers facilitates the buy-side adoption of FX Clearing, as clients look to utilise Clearing to manage counterparty risk and reduce initial margin requirements. The collaboration with LCH innovation ensures TradeNeXus continues to be at the center of the post-trade ecosystem, which continues to evolve as clients seek clearing and optimization workflow solutions, in light of UMR, SA-CCR and a greater focus on operational efficiencies.

What work are you doing to expand your portfolio of post trade FX services and solutions?

In addition to our Clearing Connectivity service, we’ve recently launched Trade Optimization in partnership with Capitolis and have worked with CLS to bring CLSTradeMonitor to TradeNeXus users. Our partnership with Capitolis provides clients with access to Capitolis’ automated Trade Novation and Trade compression workflows. Combined with Clearing, our optimization offering enables clients to effectively manage the impact of both Uncleared Margin Rules, and SA-CCR. As asset managers are starting to see the impact of both regulations, we are seeing a need for clients to evaluate their post-trade workflow and an increasing focus on portfolio optimization.

CLSTradeMonitor provides clients with a consolidated view of the status of all trade instructions submitted to CLSSettlement across multiple custodians, in a single dashboard. This increases transparency for clients into CLSSettlement, allowing clients to monitor where there could be potential issues with and to better manage their settlement risk. It also removes the operational overhead of obtaining different reports across custodians, creating efficiencies in the post trade workflow for our clients.

These new services involve creating a consolidated view by bringing monitoring side by side with client’s matching, messaging, and settlements processes, and allows clients to incorporate revolutionary new tools into their current into their new tools into their existing workflows.