This Week: FIX; DLT report; reporting fines; derivatives tech; startups and more

FIX upgrades post-trade settlement communications with new message types

FIX Trading Community (FIX), an industry standards body, has launched four additional message types as its member prepare for T+1 settlement coming into effect in May 2024 in the US. The messages aim to accelerate post-trade operations and standardize settlement status communications in securities transactions.

The change to T+1 in the US has put the spotlight on efficiency in post-trade settlements as regulators look to close the gap between when a trade is made and when it settles. With the new message types, FIX aims to improve operational efficiency, reduce risk, and support industry initiatives to reach accelerated settlement.

Laurence Jones, Americas regional director for FIX, tells WatersTechnology there was “a push from our members to roll this out.” The new messages help track the status of a security’s settlement, a process that “today, [is often] done manually—and a lot of it can be done quite slowly.”

Although other messaging protocols exist—such as CSV, XML, or Swift—Jones says members were keen for FIX to expand so they could rely on one messaging standard throughout the trade. “They wanted FIX to expand and develop these new message types because they want to maintain consistency throughout the life of the trade by using the same language and the same message format protocol,” he says.

FIX emerged during the move towards electronic equities trading in the late 1990s. As a result, “a lot of FIX messages are related to order management execution—that’s the bread and butter of FIX,” Jones says. But he notes that there is still a “huge amount of workflow around post-trade within FIX as well.”

This is becoming more important with T+1 settlement. FIX, which is made up of industry working groups, has tasked its global post-trade working group with T+1. Jones, who chaired that group for five-and-a-half years, notes that T+1 is not just a question in the US, but is scheduled in Mexico, the UK, and Europe. “It’s coming globally … and the end goal will likely be T+0.”

The four new messages work in tandem to support settlement status communication. The first message works as a request for information; the next message is a “request ack”, or an acknowledgement that the request message has been received. Then a report message is sent, and—similar to the initial request—a report acknowledgement message is fed back.

Euroclear, DTCC and Clearstream call for industry collaboration in digital assets

DTCC, Clearstream, and Euroclear, called for increased collaboration in a paper released on September 18, on the industry’s digital asset evolution. The companies say fragmented standards, varying regulatory treatment, limited integrations with payment rails, and siloed liquidity are impeding the digitalization of global financial markets.

The paper suggests that industry-wide transformation will slow unless scale and interoperability are addressed. The paper highlighted isolated pools of liquidity on proprietary distributed ledger technologies, citing that in 2023, 74% of DLT projects involved less than 6 participants.

SEC charges DWS $25 Million in ESG mix-up

The Securities and Exchange Commission (SEC) charged investment adviser DWS Investment Management Americas (DWS), a Deutsche Bank subsidiary, for its failure to develop a mutual fund anti-money laundering (AML) program, and for misstatements surrounding its environmental, social, and governance (ESG) investment initiatives. DWS has agreed to pay $25 million in penalties.

The SEC’s order found that DWS failed its advised mutual funds on developing and implementing an adequate AML program to comply with the Bank Secrecy Act and relevant Financial Crimes Enforcement Network regulations.

The SEC’s order also found that DWS provided materially misleading statements about its methods for using ESG factors in research and investment recommendations for ESG products, including some actively managed mutual funds and separately managed accounts.

LEIs integrated into beneficial ownership datasets

The Global Legal Entity Identifier Foundation (Gleif) and Open Ownership have partnered to incorporate legal entity identifiers (LEIs) into datasets produced in accordance with the beneficial ownership data standard. By making ownership data more accessible, the partnership aims to promote transparency in corporate ownership and efficiency in global payments.

The partnership will allow identification of corporate owners and controllers by mapping onto datasets such as sanctions, watch and politically-exposed-persons lists.

Open Ownership’s database will be mapped onto international datasets using the LEI, as well as Open Corporate IDs and national business identifiers already programmed into the database.

Isda, S&P Global and Linklaters partner on derivatives contract tech

The International Swaps and Derivatives Foundation (Isda), S&P Global Market Intelligence and Linklater’s CreateIQ, a contract lifecycle management platform, have launched an integration between Isda Create and S&P Global’s counterparty manager service. The integration targets client onboarding and contract lifecycle management, and allows users to negotiate derivatives contracts on one platform.

The launch comes on the tail of a trial phase that allowed select banks and asset managers to test using the Isda Create via counterparty manager to make changes to Isda documentation. Isda Create is a module of CreateIQ. The integration covers all the CreateIQ platform’s modules, including other capital markets contracts.

DigitalAPICraft listed on Google Cloud marketplace

DigitalAPICraft announced its partnership with Google and the appointment of its CTO, HSBC exec Marco Tedone. DigitalAPICraft’s one API product suite is a white-label API marketplace which allows firms to publish, consume, collaborate, govern and monetize internal and external APIs for developers, product owners, and third-party partners and developers.

DigitalAPICraft has partnered with Google Cloud as an ISV (independent software vendor) partner. The DigitalAPICraft white-label enterprise API marketplace is now available on Google Cloud marketplace.

Mobile apps, websites and applications deployed on cloud services use APIs as connection points between platforms and ecosystems. API marketplaces allow developers and organizations to simplify the process of designing and developing new applications and managing existing ones.

BNY Mellon selects Eurex Clearing for first centrally cleared repo trades in Europe

Eurex announced that BNY Mellon has elected to centrally clear repo transactions with Eurex. Eurex is the first clearing house in Europe to centrally clear repo transactions with BNY Mellon. The first transactions have been executed. About 160 counterparties are currently registered with Eurex’s repo markets. Eurex allows market participants to raise or place cash against about 13,000 domestic and international securities.

Goldman fined $6 Million by SEC for providing deficient blue sheet data

Goldman Sachs & Co will pay a $6 million penalty to the Securities and Exchange Commission (SEC) for failing to provide complete and accurate securities trading information, or blue sheet data, to the SEC over a period of about 10 years.

The order finds that Goldman submitted over 22,000 deficient blue sheets containing missing or inaccurate trade data for at least 163 million transactions owing to 43 different types of errors, over this period. The order also finds that Goldman lacked processes to verify the accuracy of its electronic blue sheet submissions, though did attempt to improve its reporting systems and self-reported 29 of the 43 types of errors found by the SEC.

The Financial Industry Regulatory Authority (Finra) has reached a separate settlement with Goldman for related issues.

The DTCC announces updates to tech offerings ahead of T+1

The DTCC, announced that 350 investment managers are using their CTM’s automated trade affirmation feature to speed up post-trade operations and have launched a T+1 scorecard for CTM clients.

CTM is a part of DTCC’s trade processing service. CTM’s match to instruct workflow requires subscriptions to CTM, TradeSuite ID, and SSI enrichment via ALERT. It works by automatically triggering trade affirmation and delivery of instructions for DTC-eligible securities to the Depository Trust Company (DTC) when a trade match occurs.

DTCC plans to expand its trade archival service in early 2024 for firms to meet their registered investment adviser (RIA) as outlined in the SEC’s adopted amendments to Rule 204-2.

ICE and DeltaTerra partner on climate risk analytics

Intercontinental Exchange (ICE) has partnered with DeltaTerra Capital, an investment research and consulting firm specializing in institutional climate risk analysis, on climate-adjusted credit risk analytics for residential and commercial mortgage-backed securities.

The offering integrates ICE’s physical climate risk data with DeltaTerra’s climate analytics, financial risk models, and market data to give risk impact estimates for mortgage-backed securities. The solution translates climate risk estimates into financial risk assessments, including asset price depreciation risk and default risk for mortgage-backed securities.

ICE’s physical risk climate data maps geospatial climate, economic, and demographic data to US locations, mortgage-backed security (MBS) pools, and relevant fixed income securities. The DeltaTerra Klima tools provide metrics for climate-exposed capital markets, such as residential and commercial MBSs, and credit risk transfer securities.

Genesis Global makes primary market solution available

Genesis Global, a low-code application development platform vendor, has made their primary bond issuance solution broadly available. The solution aggregates deal data from multiple sources to give asset managers a real-time view of the market in one workspace that aims to facilitate decision making between portfolio managers, credit analysts and traders.

The offering was originally built for a global asset manager with about $500 billion in assets under management. It aggregates, normalizes, and scrubs data from deal sources and uses AI to process unstructured data from chat and email. The solution connects to order management systems to request and receive allocations. Chat functionality is available with Symphony or Microsoft Teams.

Gensis is strategically backed by Bank of America, BNY Mellon, and Citi.

Exeqution Analytics launches trading analytics service

Exeqution Analytics, a trading analytics company, launched this month with solutions for buy- and sell-side firms. Exeqution integrates its proprietary framework with client data to build analytics, visualizations, and reports for traders, quants, IT and the C-suite professionals to understand how a trade is performing, currently and historically.

The Exeqution’s framework integrates with existing tick capture systems and technology stacks. It deploys analytics and visualizations across Windows, Mac, and Linux using kdb+/q, C/C++, Python, R, Java and Javascript and integrates with execution and market data feeds. The vendor has offices in Sydney and Hong Kong and currently serves a sovereign wealth fund and a Hong Kong trading bank.

BIS, COP28, and Bank of United Arab Emirates call for TechSprint applicants

BIS, COP28 and Central Bank of United Arab Emirates have launched TechSprint to spur development in technological solutions for sustainable finance.

The groups have called for applications from developers and are seeking technology solutions addressing data verification gaps in sustainable finance. They are focusing on AI solutions for sustainable finance reporting, verification and disclosure; blockchain solutions for auditing and increasing transparency, traceability, and accountability; and internet-of-things and sensor tech solutions to assess impact, risk, and for compliance.

The call for proposals closes October 6, 2023.