London & New York, July 28, 2005 â T-Zero, a platform dedicated to achieving operational efficiencies in the credit derivatives markets, is launched. T-Zero, which has been incubated by Creditex, Inc. and is being spun off into a separate, independent entity, will provide a cost-effective solution to post-trade processing issues in the rapidly growing credit derivatives industry. Creditex and T-Zero will be owned by a separate holding company.
T-Zeroâs mission is to address three of the central challenges in the processing of credit derivatives: 1) lack of robust standardized electronic messaging between market participants, 2) deficiency of system-to-system connectivity between counterparties, and 3) need for a standardized workflow.
T-Zero electronically captures and re-directs all trade details, assignments, allocations and other relevant trade details. This is a particularly critical for tri-party transactions like "assignments" or "novations" â transactions where trades are assigned by the buyside to the sellside -- and "give-ups" â transactions where a prime broker acts as an intermediary between a sellside and buyside institution.
In addition, the T-Zero platform will provide agnostic connectivity among market participants, vendor risk systems, fund administrators, prime brokerage systems, dealer risk systems and The Depository Trust Clearing Corporation (DTCC). The system will automatically allow counterparties to send affirmed trades to DTCC for same-day or "T+0" legal execution.
"Achieving greater automated operational efficiencies is critical to the continued development and maturity of the global credit derivatives market," said Sunil Hirani, CEO of the holding company that will own Creditex and T-Zero. "T-Zero is designed to dramatically accelerate the industryâs movement toward automation and will allow market participants to achieve trade-date messaging and connectivity at a fraction of the current time and cost."
"Periodically, an innovation occurs that will be a critical factor in the development of that market," said Simon Morris, head of European credit trading at Goldman Sachs. "T-Zero is one such innovation. It will provide much needed automation and operational control in a time when the rapid growth of the credit derivatives market is not just continuing, but accelerating. We are pleased to be involved with this important industry initiative."
Guy America, head of European credit trading at JP Morgan, noted, "The launch of T-Zero comes at an opportune time when dealers, hedge funds, regulators and other market participants are seeking technology solutions to address the delays in unsigned confirmations and assignments."
Robert McGrail, Executive Managing Director of DTCC, said, "We are pleased to be linking our service with T-Zero. DTCC is continually collaborating with complementary service providers such as T-Zero to connect their front-office capabilities to Deriv/SERVâs real-time automated confirmation process efficiently."
"T-Zero complements our technology strategy perfectly," says Hans Hufschmid, Chairman and CEO of GlobeOp Financial Services. "By providing T-Zero messaging and connectivity services to our hedge fund clients, there will be substantial benefits to credit derivatives trade processing."
The launch of T-Zero comes on the heels of industry and regulatory calls for improving transaction processing as the industry has grown exponentially over the past few years. The FSA, Bank of England, Federal Reserve and ISDA have recently identified operational risks of derivatives and have called for automated solutions to address the problems.
Initially, T-Zero will handle single-name CDS trades and credit index trades. Additional products and further connectivity will be introduced over the course of the next year.