SWIFT was chosen to provide this solution following a competitive selection process.
The six brokers working together to pilot the solution during Q4 2008 include: Citi, Credit Suisse, Goldman Sachs, Lehman Brothers and Merrill Lynch. SWIFT and the prime brokers are currently working together to encourage the wider community of brokers processing trades for hedge funds worldwide to take advantage of the new solution.
The solution is based on SWIFTâs established Accord central matching service and will use industry standard messaging.
Today, discrepancies between trade details submitted to prime brokers by hedge funds on one hand, and their executing brokers on the other, are a source of considerable operational risk. SWIFTâs solution will improve the timeliness of pre-settlement matching of hedge fund trades between prime and executing brokers. Any errors likely to cause settlement fails will be identified sooner, reducing both risk and the cost of the manual processing required to fix breaks.
The brokers have agreed to oversee and provide transparency to the market on the evolution of the solution. They also value the fact that the SWIFT solution will offer choice in the marketplace for matching solutions, and will encourage further adoption of industry standards.
Gottfried Leibbrandt, Head of Markets at SWIFT, says: âWe are delighted to have been chosen by this group of major prime brokers to provide a pre-settlement matching solution to the equity and fixed income markets, in addition to our existing FX matching capabilities.â