In response to the fast growth in trading in the $5.3 trillion per day foreign exchange market, traders are about to get a new trade confirmation system designed to speed up and maximize efficiency in the trade lifecycle.
The new Markit service matches FX option trade terms to generate legally binding trade confirmations which are recorded centrally, allowing counterparties to manage trade lifecycle events more efficiently. {IMGCAP(1)]
So far, Markit said that Citi and J.P. Morgan were the first to confirm FX options trades using the new service which is part of the MarkitSERV trade processing platform. More than 50 asset managers are among the firms recently signed to use the service.
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Markit’s service also provides electronic, auditable tools for managing options exercise, updating records dynamically. This helps reduce risk by replacing manual processes such as chat, email or phone.
“The bilateral confirmation process plays a central role in mitigating operational risk,” said Mike Lawrence, chief administrative officer, foreign exchange and local markets at Citi. “While the cash FX market has well established automated confirmation practices, it is encouraging to see innovation in more complex products and new tools that help the industry become more efficient in managing the post trade requirements of FX derivatives.”
Markit also said that it plans to expand this service to other more esoteric FX securities.
The FX trade confirmation service can be accessed using industry standard interfaces as well as Markit’s Trade Manager portal for investment managers.
