SWIFT has signed an agreement with MarkitSERV to route its users’ foreign exchange (FX) non-deliverable forward (NDF) transactions to the firm’s FX clearing gateway, which will direct the trades to multiple FX central clearing counterparties (CCPs).
The partnership creates a single point of access for SWIFT users, including corporates, to multiple FX CCPs. It should enhance ease-of-use, straight through processing (STP) efficiency and compliance with post-crash regulations. Other types of trades may be added in the future.
Under the terms of the agreement, NDF trade messages sent over SWIFT will be automatically routed onwards to the designated FX CCP for clearing. When parties elect to clear an FX trade, MarkitSERV will automatically receive transaction data from SWIFT, match the trade, send it to the clearing broker for acceptance, and then deliver accepted trades to the designated CCP. Once the trade is cleared, a notification will be sent from MarkitSERV to the originating party via the SWIFT network.
MarkitSERV’s FX clearing gateway provides a single point of access for executing brokers, clearing brokers, trading venues and buy-side firms to match, legally confirm and route OTC FX transactions to nominated CCPs. The service, which includes full support for client clearing and allocations, is already live with LCH.Clearnet and Singapore Exchange (SGX) and certified by CME. MarkitSERV has, to date, processed every NDF trade that has been cleared. It says it will continue to build connectivity to other CCPs worldwide as they begin to clear FX.
Commenting on the deal, Joe Halberstadt, head of FX and derivatives at SWIFT, said he was delighted to be collaborating with MarkitSERV to enhance functionality and provide additional value to SWIFT users. “Straight through processing of NDF messages from the SWIFT network, via the MarkitSERV FX clearing gateway, will eliminate a great deal of the time and effort that might otherwise be required by participants to build connections to CCPs and clearing brokers,” he explained.
According to Andres Choussy, global head of FX clearing at JP Morgan: "MarkitSERV’s continuing innovation in post-trade STP, and in particular its commitment to providing clients with an easy mechanism to access FX CCPs – current and emergent – will greatly facilitate the transition to meet new clearing obligations mandated by Dodd-Frank and associated regulations in Europe and Asia.”
For the co-head of FX at MarkitSERV, Keith Tippell, this single piece of connectivity will bring all SWIFT users into new FX clearing flows. “With all G14 banks now signed to MarkitSERV’s FX clearing solution and connectivity to CCPs in place, our focus now is to ensure that regional banks and the buy-side can benefit from access to the evolving FX clearing environment.”