Traiana has made changes to its Credit Risk Hub that will enable FX prime brokers (FXPBs) to define trade information in more detail in order to increase credit risk controls and reduce the risks of credit over-allocation. Traiana’s Credit Risk Hub comprises two services; Designation Notice Manager (DNM), which helps FXPBs establish, monitor, amend and […]
Traiana is now providing direct central clearing connectivity to the Hong Kong Exchanges and Clearing’s (HKEX) OTC Clearing Hong Kong (OTC Clear).Market participants can now access HKEX’s OTC Clear service to clear USD/CNH and USD/HKD FX forward and swaps, via Traiana’s Clearing Hub (CCP Connect), which provides affirmation, matching and trade processing.The OTC Clear deliverable FX service can be used to mitigate settlement risk that arises when payments and receipts of currencies occur at different intervals during a standard bilateral settlement process. The service can also be used to offset settlement exposure with its clearing house cross currency swaps service.
On a panel discussion entitled “The Twists and Turns of FXPB”, speakers at Profit & Loss Forex Network Chicago discussed the possibility for technology to radically re-shape the prime services ecosystem.
Technology’s impact on prime services was the jumping off point for the last panel at Profit & Loss Forex Network Chicago. Peter Plester, head of prime brokerage at Saxo Bank A/S highlighted the impact that technology had already in terms of risk management in this segment pointing out that the traditional plumbing for starting up a prime broker was to connect to NEX Traiana and the various ECNs and have STP for tickets, but that the central risk system internal to the PB was fairly manual.
James Chrystal has left Nex Traiana, the firm that he co-founded in 2000.
Although a spokesperson for Nex Group declined to comment on the news, Profit & Loss understands that Chrystal has left the firm, where he was most recently acting as head of exchange traded derivatives.
Prior to co-founding Traiana in 2000, Chrystal worked at the Chicago Board of Trade (CBOT), joining as a director in its financial markets group in 1987 before being named director for e-trading sales and distribution in 1999.
NEX Group has provided a trading update for investors, in which it has flagged increased spending at its Optimisation division under which umbrella the firm’s post-trade businesses operate, including TriOptima and Traiana.
The announcement, which is being read in some quarters as a profit warning, says Nex has chosen to increase its investment in the Optimisation business in the first six months to “ensure the business is best positioned to take advantage of the significant opportunities that it has identified”.
NEX Optimisation has enhanced its existing messaging services to help clients prepare for the introduction of MiFID II on 3 January 2018.
The firm says it has extended Traiana’s Harmony messaging network to enable participants to exchange additional information to assist with meeting a number of regulatory obligations under MiFID II.
This includes support for data elements associated with transparency, transaction reporting, venue execution, instrument and entity identifiers, timestamps, OTC post-trade indicators and unbundling of research as well as execution fees.
NEX (Nex) Optimisation has launched an automated credit rebalancing tool that specifically addresses limit over-allocation by prime brokers.
Rebalancer went live across five major ECNs on 2 July 2017, with further platforms going live throughout the year.
Designed in close partnership with Citi, Rebalancer is deigned to enable dynamic allocation of credit across client trading venues, allowing clients to move credit from one platform to another in real time.
Prime brokers currently allocate credit to multiple trading venues but do not have the ability to move it around if there is excess credit on one and a shortage on the other.
NEX Optimisation (Nex) has launched a fully automated settlement netting service to streamline the bilateral settlement netting process for market participants.
The service will automate settlement netting of over-the-counter FX trades and will expand to all asset classes in the future.
Settlement failure rates are estimated at approximately 3% for the $1.5 billion that is settled on a daily basis between clients and their dealers. The new service will eliminate the manual process of netting between clients and their dealers by applying an API to communicate with the systems and reconcile payments for clients, banks and custodians.
Speaking at the Profit & Loss Forex Network New York conference, panellists outlined how they think the application of fintech solutions will shape the FX industry going forward.
Nick Solinger, president of FIA Tech, broke down three specific areas where he sees the potential for distributed ledger technology (DLT), or peer-to-peer technologies, to have a major impact on the FX industry.
Firstly, he highlighted how these technologies could change payments systems.
“The current market structure has been the primary limitation in terms of who can provide credit to whom and trade with whom and access the market on the same basis as a large, highly regulated dealer. So there is a focus on improving the payment network, and that will have potential implications upstream in terms of who can trade with whom,” said Solinger.
As buy-side workflows are becoming complex, these firms are looking for ways to simplify how they view and manage them, claims Basu Choudhury, business intelligence, Nex Traiana.
He says that, whereas in the past buy side firms used to probably have only one prime broker (PB), today they might have four or five prime brokers, or even have bilateral relationships. Further, when they execute they might do so via an anonymous venues or they might trade against another buy side firm that is using a prime broker.
“So what we’re seeing and hearing is that they want a single panel where they can see their PB relationships and bilateral, and even clearing at some point within one dashboard, one platform, where they can manage the matching, [confirmations] and settlements,” he says.