Sapient sets out new OTC derivatives standard
advisory, analytics and technology provider Sapient Global Markets has
developed a new standard for cleared OTC derivatives reporting for asset
managers, futures commission merchants and custodians.
Clearing Connectivity Standard (CCS) is a standardised connectivity format that
the buy-side can use to transmit information to custodians. Presently, margin
statements reporting trading and collateral activities for clearing swaps are
found in a number of different formats and the lack of formal standards can
cause undue operational burdens and increase risk.
interpreting and managing files sent in various formats is simplified by the
CCS, which will aid integration with data systems and automate reconciliation
to make clearing and communications more efficient. The CCS provides
standardised connectivity and reporting for central counterparty-eligible
interest rate and credit default swap products in the US through clearer
LCH.Clearnet’s SwapClear facility and the CME Group.
hopes the standardised connectivity format will be used by intermediaries, such
as US futures commission merchants, to transmit OTC clearing information to
custodians on behalf of their buy-side clients. The standard outlines all
message elements which should be universally present in margin statements.
standardised CCS format will help eliminate the need to spend time and money
interpreting and reconciling data from different formats, and drive further
automation of the clearing process through the re-allocation of capital into
other focus areas. The CCS could reduce the overall costs of clearing swaps for
asset managers, which may ultimately increase order demand.
designed the new standard together with a project group of participants
representing some 12 firms and hundreds of end-users on the buy-side.
buy-side community will benefit greatly from this initiative, and with Sapient
Global Markets at the heart of industry innovation, we recognise the CCS as
something that will help many participants for years to come,” said Jim Bennett,
vice president at Sapient Global Markets. “With a unique understanding of
specific needs of asset managers and futures commission merchants, reporting
and operational processes, Sapient Global Markets is uniquely qualified to
facilitate this effort.”
line with G-20 mandates, both Europe and the US have agreed a January 2013
deadline for introducing central clearing and reporting of OTC derivatives
trades in a bid to reduce systemic risk in the sector.