Industry endorses central matching model as global drive towards shorter settlement cycles gains momentum
Omgeo, the global standard for post-trade efficiency, today announced a 25% increase in the number of investment managers and broker/dealers using Omgeo Central Trade ManagerSM (Omgeo CTM) since the beginning of 2012. Omgeo CTM is the strategic platform for the central matching of cross-border and non-U.S. domestic equity, fixed income, contract for difference and exchange traded derivative (ETD) transactions.
Omgeo CTM now has over 1,175 clients worldwide. This growth includes the addition of 229 investment managers and broker/dealers globally to Omgeo’s thriving community of over 6,500 clients, which now spans 52 countries. The growth in Omgeo CTM clients has been particularly strong in Asia, including China and India. In the last year, there has been a 67% increase in Omgeo CTM clients in Asia to more than 200 fund managers and brokers.
The demand for Omgeo CTM is being driven, in large part, by the shortening of settlement cycles to T+2, which is mandated in Europe’s forthcoming Central Securities Depository Regulation1. In the US, a recent study by the Boston Consulting Group2 shows that the majority of participants (68%) are in favor of a shorter settlement cycle. A prerequisite for achieving shortened settlement cycles is the requirement for trades to be verified on the day they are executed, also known as same-day affirmation (SDA). This is most effectively achieved with central matching. SDA rates on Omgeo CTM average 93%, versus locally matched trades with same-day affirmation rates ranging from just 36% in the US domestic market to up to 72% for cross-border and non-US domestic transactions.
The increase in the adoption of central matching can also be attributed to the ongoing development of the service — including the addition of new ETD capabilities, as well as the migration of broker/dealer clients from Omgeo’s legacy local matching solution, Omgeo OASYS GlobalSM, to Omgeo CTM.
To date, almost 400 brokers have already migrated to Omgeo CTM across all markets and interfaces, representing 60% of the total OASYS Global acronyms (1000+).
In addition, users of Omgeo CTM are also able to take advantage of automatic settlement and account instruction (SSI) enrichment via Omgeo ALERTSM, the industry’s largest and most compliant web-based global database for the maintenance and communication of SSIs worldwide. Today, ALERT holds over five million settlement instructions on nearly 500,000 accounts.
Tim Keady, managing director of sales and solutions delivery at Omgeo, said: “The increasingly rapid adoption of Omgeo CTM is testament to the industry’s belief that central matching is the most effective way of achieving best practice in trade confirmation, while ensuring shorter settlement cycles can be achieved.”
“As we move closer to the implementation of the T+2 settlement cycle in Europe, we anticipate there will be even greater adoption of central matching.”
1Proposal for a Regulation of the European Parliament and of the Council on improving securities settlement in the European Union and on central securities depositories (CSDs), March 2012
2 Boston Consulting Group, Cost Benefit Analysis of Shortening the Settlement Cycle, October 2012