Omgeo is partnering with the Depsito Central de Valores, S.A. (DCV) of Chile to enable seamless connectivity between Omgeo Central Trade Manager (Omgeo CTM) and the Depsito Central de Valores, enabling brokers to access the central matching benefits of Omgeo CTM via their Depsito Central de Valores institutional delivery system, SADE.
Two Chilean brokers, CELFIN and LarrainVial, have agreed to adopt the service once it becomes available in later this year.
Currently, the majority of Chilean post-trade, presettlement processes for international transactions are not fully automated. Brokers rely on spreadsheets and faxes to communicate trade details and compare confirmation messages. The direct link to Omgeo CTM allows the Depsito Central de Valores broker participants to further automate the trade lifecycle and introduce greater levels of straight-through processing, thereby lowering operational risk and costs.
A recent Omgeo discussion paper detailed a direct correlation between same-day affirmation and settlement efficiency. Same-day affirmation is defined as verifying trades on the day of execution. Chiles local same-day affirmation rate (67.4%) is above average for the Americas region of 53.8%, but is below both Europe and Asia where averages are 81.4% and 94.4%, respectively.
According to the paper, regional same-day affirmation differences can be attributed to local regulation, cultural and market practices, including behavior and automation levels. Markets that embrace higher levels of post-trade automation typically demonstrate higher same-day affirmation and settlement efficiency scores. It is anticipated that the partnership between Omgeo and the Depsito Central de Valores, which brings increased levels of automation to the local market, should greatly improve the same-day affirmation rates.
As Latin America increases its presence in the global market, this partnership with Omgeo, combined with our efforts to provide increased local market automation, will allow DCV market participants to effectively communicate with trade counterparts globally, while reducing risk and promoting scalability as market volumes fluctuate, Fernando Yaez, CEO of the Depsito Central de Valores, says.
Tim Keady, managing director of sales and relationship management at Omgeo, adds: The connectivity to the DCV demonstrates our ongoing commitment to automation across the global community, improving post-trade, back-office processes. By eliminating cumbersome manual steps, DCV broker participants will be able to access Omgeo CTM via their trading systems to yield higher SDA rates in Chile while taking advantage of greater levels of risk management.
In addition to the Depsito Central de Valores, Omgeo also offers links from its services to the Depository Trust & Clearing Corporation (DTCC), Canadian Securities Depository (CSD), Korean Securities Depository (KSD) and the Japanese Securities Depository (JASDEC).
(CM)