The Depository Trust & Clearing Corporation (DTCC), the premier post-trade market infrastructure for the global financial services industry, today announced that DTCC Exception Manager, its platform to publish, manage and communicate trade exceptions, will now offer an optional Central Securities Depositories Regulation (CSDR) service to assist clients by calculating predicted fail penalties, prioritizing exceptions by size of predicted penalty and generating claim emails. Additionally, there will be a new linkage between Exception Manager and Central Trade Manager (CTM), DTCC’s service to centrally match cross-border and domestic transactions, providing clients with direct access to golden source trade information that only DTCC is able to provide.
“We look forward to launching the new Exception Manager capabilities,” said Matthew Stauffer, Managing Director, Head of Institutional Trade Processing at DTCC. “Access to accurate, authoritative trade data and the ability to quickly capture, prioritize and resolve exceptions is critical to preventing trade fails that could lead to penalties under the forthcoming CSDR’s Settlement Discipline Regime (SDR). The new features will have a tremendously positive impact on our clients’ ability to effectively address exceptions, resulting in greater risk mitigation and cost reduction for the industry.”
Exception Manager CSDR Service
The CSDR Settlement Discipline Regime (SDR), which is expected to take effect in February 2022, introduces new measures to mitigate settlement delays, supports no-touch processing and requires firms to maintain high settlement rates. For eligible trades that do fail, the SDR is anticipated to impose daily penalties or charges.
With its new CSDR service, Exception Manager will flag transactions that are in scope for CSDR, providing users with the ability to easily identify priority work before Settlement Date to manage activity and prevent a fail from occurring. The module will include:
- Predicted Penalty Calculation: Upon receipt of the exception record, a predicted penalty will be calculated for CSDR-eligible transactions, providing increased risk indication and allowing users to prioritize settlement exceptions by the size of predicted penalty and expedite work with their counterparties to resolve.
- Exception Prioritization: Customizable priority weighting logic automatically assigns a weighting to transactions to more effectively manage workflows and risk.
- Claim Email Creation: User can select an exception record(s) and automatically generate an email to initiate the claim process with their counterparty.
“The SDR will impact all firms that trade in securities that ultimately settle at an EU-domiciled central securities depository (CSD),” said Matt Johnson, DTCC Director, ITP Digital Strategy and Platform Management & Industry Relations. “With less than four months before the SDR is anticipated to go live, now is the time for firms to make preparations. Buyside firms that leverage Exception Manager’s new capabilities could see a significant reduction in trade fails, helping them avoid associated penalties imposed by the SDR.”
CTM Data Linkage
Today, the Exception Manager platform consolidates information on settlement status and settlement exceptions from multiple data providers including Custodians, Prime Brokers, Broker Dealers and DTC.
DTCC’s Exception Manager, will now link an exception record to the corresponding match agreed trade record in CTM. The data linkage provides a reference to all details of the trade associated with an exception, including financial details as well as the enriched standing settlement instructions (SSIs). This provides clients full visibility into the trade, supporting root cause analysis to address trade exceptions in a timely manner.
DTCC Institutional Trade Processing (ITP) delivers an integrated platform to facilitate the no-touch processing of institutional trades in the post-trade lifecycle. DTCC is the only provider positioned to provide this capability, seamlessly connecting its global community of over 6,000 clients to an open and integrated ecosystem that services trade enrichment, central matching, settlement management and data analytics.
