Post-Trade Market Infrastructure DTCC today announced that it is partnering with Cboe Clear Europe to deliver an improved post-trade workflow for over-the-counter (OTC) cash equity transactions to help increase settlement efficiency in the UK and US markets. Europe.
DTCC will work with Cboe Clear Europe to increase post-trade efficiency by providing clients with the benefits of an established risk management counterparty. The service will bring OTC cash equity trades into the cleared environment of Cboe Clear Europe, which can then be netted against exchange trades for settlement purposes, potentially delivering significant returns.
As part of this initiative, DTCC and Cboe Clear Europe will develop a proof of concept linking DTCC CTM’s three-party trade matching workflow with Cboe Clear Europe. This link will enable Prime Brokers to receive a gold copy of transaction details when a match is made between a Hedge Fund and the Executing Broker through DTCC’s CTM service. Once the Prime Broker enters this three-party match, the CTM automatically sends these matched trades to the central counterparty, providing netting and clearing benefits to mutual clients.
The new workflow will help reduce operational risk and settlement, as well as post-trade friction, as additional markets are reviewed and prepared for accelerated settlement.
“We are pleased to be working with Cboe Clear Europe on this important initiative to bring greater post-trade efficiency to the industry as global markets look to accelerate to a T+1 settlement cycle. Cboe Clear Europe’s extensive venue coverage combined with CTM’s large clientele will provide increased operational efficiency and clearing opportunities across all European trading venues,” said Val Wotton, CEO and General Manager, DTCC Institutional Trade Processing. “The DTCC remains committed to delivering greater post-trade automation to increase efficiency for global financial markets as they work to implement expedited settlement.”
“We are excited to be the first CCP to connect to DTCC’s three-party CTM matching workflow,” said Vikesh Patel, President, Cboe Clear Europe. “This joint solution enables us to deliver greater efficiency to our clients by helping to optimize their current post-trade workflows and operational processes as global financial markets strive to accelerate settlement cycles.”
The benefits of this initiative include reductions in post-trade processing time, risks associated with OTC transactions, and settlement costs between Executing Brokers and Prime Brokers. It is expected that the common solution will also help to facilitate the reduction of capital requirements in the transition from OTC to CCP settlement as well as to reduce trade failures and defaults.
CTM is DTCC’s Institutional Trade Processing (ITP) central matching service for cross-border and domestic trades across multiple asset classes, including OTC and cash equity trades.
Cboe Clear Europe is a pan-European CCP, the most connected CCP in Europe – offering clearing services across 46 trading venues. Cboe Clear Europe is authorized to clear equities, depositary receipts, ETFs and equity derivatives (index futures and options and equity options).
The first attempt in this initiative to link DTCC’s CTM with Cboe Clear Europe’s CCP, subject to the satisfactory completion of regulatory processes, is expected to go live in the second quarter of 2025.