Friday, May 17, 2024

TECH TUESDAY: Financial Market Infrastructures Need New Framework to Assess Cloud Total Cost of Ownership

TECH TUESDAY is a weekly content series covering all aspects of capital markets technology. TECH TUESDAY is produced in collaboration with Nasdaq.

Financial market infrastructures (FMIs) support the capital markets ecosystem by offering a range of critical services around custody, trade execution, clearing and settlement. They are heavily regulated and subject to strict requirements around resiliency, security, and capacity, which means assessing when to migrate mission-critical functions to the cloud can be challenging. Consultancy Celent has suggested that the typical formula for total cost of ownership (TCO) of a technology stack needs to be specifically amended for FMIs in order to present a clear business case.

In a report commissioned by Nasdaq, Celent said: “Our primary research shows that in comparing on-premises and cloud costs, the traditional TCO formula can sometimes fail to adequately address the unique needs of an FMI.”

FMIs are unique in their public interest imperative and being subject to severe reputational risk due to the impact of any outages on wider financial and economic ecosystems. Their systems need to handle unpredictable and volatile market conditions and ensure fair and equal access for all participants with very limited time for upgrades or maintenance. As such, FMIs have typically been very cautious in pursuing any transformation of essential market infrastructure, whereas they have been quicker to adopt cloud for data and back-of-the-house.

“FMIs must pre-emptively over-provision technology resources, such as compute and networking environments, to meet peak demands and comply with regulatory requirements around capacity planning,” added Celent. “As equipment is typically a capital expense, sunk costs are high.”

Still, the conversation amongst FMIs has progressed from “if” to “when” in terms of mission-critical cloud adoption according to the report. However, due to their unique role and the associated high sunk costs, the standard TCO equation may show little to no cost savings from moving to cloud. Celent suggested the introduction of a new multiplier, “StrategicFriction,” which represents the not just the costs of technology but rather the cost of standing still as markets evolve. The new formula boils down to:

(Capital Expenses + Operating Expenses) x Strategic Friction = Total Cost of Ownership.    

“Our primary research shows that in comparing on-premises and cloud costs, the traditional total cost of ownership (TCO) formula can sometimes fail to adequately address the unique needs of an FMI,” said the report. “A new FMI-specific TCO framework is needed to account for intangible costs and better capture opportunity costs.”

Celent identified different strategic drags that can impact an FMI’s business and relevance given the shift to cloud. These frictions include slow time to market, lack of appeal to top talent, and increased costs to maintaining legacy systems.                 

Migrating to the cloud enables transformation and optionality when it comes to future technologies that can unleash enterprise-level innovation and ignite a network effect leading to exponential growth. FMIs also need to keep pace with their clients who are moving their most critical workloads to the cloud across the trade life cycle. Capital markets participants view cloud as an enabling technology across multiple areas, including leveraging data, supporting resilience, and managing risk. Celent research in 2023 found that 67%, of FMI clients expected to upgrade critical systems to the cloud last year and half, 48%, were looking to move at least one critical workload to the cloud within 18 months.

“Market participants are finding the pace of technology and regulatory change has accelerated to a point where those in the cloud have a material advantage over non-cloud competitors when it comes to supporting innovation,” said Celent.

FMIs are already seeing rising revenues from providing source data, and demand is only likely to rise due to increasing electrification of trading across asset classes and the advent of new asset classes, such as tokenized securities. Celent added: “These are all opportunities for FMIs to grow and diversify client base and revenues.”                        

Follow this link to download the paper and learn more from a video with the author, Celent’s Monica Summerville.

Creating tomorrow’s markets today. Find out more about Nasdaq’s offerings to drive your business forward here.

Temenos Launches The First Responsible Generative AI Solutions For Core Banking

Temenos has launched its Responsible Generative AI solutions as part of its AI infused banking platform.

These secure solutions seamlessly integrate with Temenos Core and Financial Crime Mitigation (FCM), revolutionizing the way banks interact with their data, boosting productivity and profitability to realize substantial return on investment.

Prema Varadhan

Prema Varadhan, President Product and COO, Temenos, said: “We all use AI in our daily lives and benefit from the personalized services and insight. Temenos Explainable AI offers transparent, auditable insights while our Generative AI infused platform delivers these insights instantly in an intelligent and personalized way. Temenos ensures responsible AI practices by providing explainability, security, safe deployment, and banking-specific capabilities. With our AI platform, banks can rapidly implement real-world use cases that enhance efficiency, boost profitability, and create hyper-personalized customer experiences.”

Temenos has invested extensively in R&D to support its AI initiatives, resulting in patented Explainable AI (XAI) solutions. Temenos is now extending its leadership to Generative AI for banking and with its AI infused platform is enabling banks to deploy AI solutions faster and safer.

With Temenos Generative AI, users can engage in natural language queries to generate unique insights and reports, significantly reducing the time it takes for business stakeholders to access and unlock the power of crucial data. For example, responses and results for the most profitable customers by customer type and demographics become instantaneous and accessible.

Temenos Generative AI is transparent and explainable, allowing users and regulators to verify the results produced. Furthermore, with a robust permissions and access security framework, these solutions can transform efficiency, operations, and product management in banking.  Temenos Generative AI both addresses the main challenges banks face in deploying and integrating this type of technology with their existing data infrastructure, while also addressing their data security and privacy concerns.

The new Generative AI solutions can be applied in customer and middle office operations or product development, enabling banks to create products in real-time based on customers’ preferences. The new solutions help banks augment the power of their users and their expertise with the insights drawn from Explainable and Generative AI. They can be deployed as standalone for banks, connecting with their existing core systems with minimal integration. The solutions can be deployed on-premise, on any public or private clouds, or delivered via Temenos SaaS.

Bola Rotibi, Chief Analyst, CCS Insight, said: “GenAI heralds a new era of efficiency and competitiveness in banking, with the potential to revolutionize customer experiences, streamline processes, and uncover actionable insights. Banks are naturally cautious in embracing generative AI to the full and want to ensure they do so responsibly.  A proven track-record in delivering responsible AI will be vital for financial institutions to confidently experiment and deploy generative AI models for critical business functions across the enterprise. Providers such as Temenos that place responsible AI operations at the heart of their banking solutions, are well-placed to give financial institutions confidence to experiment and deploy GenAI solutions to critical business functions across the enterprise.”

In core banking operations, Temenos Generative AI enhances user workflows, journeys, and day-to-day queries, enabling banks to revolutionize productivity in product creation and account management. By reducing the time and effort required to produce insights, reports, and actions, Temenos Generative AI empowers business users to communicate with data using free text speech, gaining unique insights expressed in a simple manner. This streamlined process promises to substantially cut the time spent on these tasks, allowing banks to focus on optimizing operations and enhancing customer experience. 

In Financial Crime Mitigation, Temenos Generative AI is empowering business users to extract intelligence from data using free text. This enables bank staff to quickly catalogue information, such as financial crime alerts, identifying themes or root causes that could otherwise take humans hours or longer to perform manually. Temenos Generative AI can also help managers unlock productivity information, providing pertinent insights tailored to each institution. For example, it can inform where tuning can be applied to improve Straight Through Processing (STP).

In the near term, Temenos will release Generative AI solutions for Temenos Wealth and Temenos Digital. Temenos is already first to market with an industry-first secure solution for banks using Generative AI to automatically classify customers’ banking transactions.

Fireblocks Forms Digital Asset Licensed Custodian Program

The digital asset infrastructure provider will use its technology to connect qualified custodians on the Fireblocks Network with clients.

Fireblocks, the institutional-grade digital infrastructure provider, has announced the launch of the Fireblocks Global Custodian Partner Program, a first-of-its-kind global network of licensed digital asset custodians to support its customers at meeting rapidly rising regulatory standards.

Built on the Fireblocks Network, the Global Custodian Partner Program will launch this quarter with an initial group of licensed custodians based in the United States, the United Arab Emirates, the United Kingdom, Singapore, Thailand, and Australia. Once live, Fireblocks customers will be able to connect to licensed providers securely while seamlessly managing their digital asset operations on the Fireblocks platform.

The move comes amid growing institutional demand for qualified custodians in the digital assets space as asset managers, registered investment advisors and other major financial market participants accumulate exposure through tokenization, ETFs, allocation or advisory.

It’s also in response to rising regulatory requirements, including the proposal from the US  Securities and Exchanges Commission for more stringent asset safeguarding requirements for registered investment advisors in February last year.

Adam Levine

To facilitate client access to asset safeguarding services, Fireblocks is also announcing its intention to launch a limited-purpose trust company that is under the regulation of the New York Department of Financial Services (NYDFS). Pending final regulatory approval, the Fireblocks Trust Company will offer cold storage custody solutions to US clients.

“The global custodian landscape is evolving quickly, and the launch of the Global Custodian Partner Program is a big step toward meeting the growing demand for a diverse network of solutions,” said Adam Levine, SVP of Corporate Development & Partnerships at Fireblocks. 

“We are proud to continue accelerating our technology and ecosystem to serve the growing needs of digital asset businesses, and this represents a major step forward.”

Since the launch of bitcoin spot ETFs, the need for segregated functions and professional grade safeguards for assets has become a key priority. As a result, Fireblocks is leveraging its technology to enable clients and RIAs to comply with new rules by making custody arrangements easily accessible.

Clients will be able to use the Fireblocks infrastructure as a single point of access to licensed  custodians as well as liquidity pools, exchanges, on/off ramps, and staking, among other services built on the Fireblocks Network. More custodians are expected to join the Program over the coming months.

The addition reinforces Fireblocks’ commitment to providing self-managed technology solutions to clients with the goal of significantly reducing counterparty risk.

Source: Fireblocks

Broadridge to Buy Kyndryl ‘s Wealth and Capital Markets Tech Platform

Broadridge Financial Solutions has announced that it will acquire Kyndryl’s Securities Industry Services (SIS) wealth and capital markets technology platform.

SIS solutions include clearing and settlement, account record keeping, tax and regulatory reporting, and integrated order management activities for Canadian financial services firms.

Kyndryl intends to partner with Broadridge Canada by providing managed services and capabilities to SIS.

Karin Kirkwood

“The partnership with Kyndryl and the acquisition of the SIS business further underscore Broadridge’s long-standing commitment to being a leading technology provider to Canadian financial services firms,” said Karin Kirkwood, President of Broadridge Canada.

“The combination of the SIS technology business and Kyndryl managed services with our industry-leading Broadridge Wealth Platform will further accelerate our ability to bring innovation to Canada and meet the increasingly complex needs of Canadian firms.”

“Broadridge has been a long-standing partner and this latest collaboration is a win-win for our Canadian clients,” said Farhaz Thobani, President of Kyndryl Canada.

“Broadridge shares our commitment to drive technology innovation at scale, making them the right acquirer for the SIS business and bringing additional innovation to our clients.”

The transaction is not expected to have a material impact on Broadridge’s financial results and is expected to close in the coming months subject to customary closing conditions, including regulatory approvals.

RBC Capital Markets acted as the exclusive financial advisor to Broadridge on this transaction. 

ON THE MOVE: FalconX Hires Jonathan Yam; Tom Holmes to KeyBanc Capital Markets

Jonathan Yam

Jonathan Yam has recently transitioned from his role as CTO at Nasdaq Private Market to embrace a new challenge as Head of Trading Technology at FalconX. “It’s a return to crypto and digital assets for me since 2021 when I headed up the Coinbase exchange engineering teams,” he told Traders Magazine. In this new role, Yam will be leading the FinTech engineering teams at the largest crypto prime brokerage to build high-performance trading systems that will power the next generation of digital asset markets for the world’s leading institutions.

Tom Holmes

KeyBanc Capital Markets, the corporate and investment banking arm of Cleveland-based KeyCorp, has appointed Brendan Grady and Tom Holmes to co-heads of Institutional Sales and Trading reporting to Doug Preiser, KBCM Chief Operating Officer. In these new roles, Holmes and Grady will share management of the equity sales and trading teams and overall strategy with the goal of continuing to grow clients and market share. Tahira Afzal, director of equity research will report to Doug Preiser. In addition to her existing responsibilities, Tahira will join Brendan and Tom to form the leadership group charged with developing strategies to advance the equities platform. Kevin Kruszenski, head of KBCM’s Institutional Equities organization, retired at the end of April after more than 20 years of service.

Rob Kaplan

The Goldman Sachs Group has announced that Rob Kaplan will rejoin the firm as Vice Chairman of Goldman Sachs and a member of the Management Committee. He will be a member of the Executive Office and will be based in Dallas. Most recently, Kaplan served as President and CEO of the Federal Reserve Bank of Dallas from 2015 to 2021. Before serving at the Federal Reserve, he was the Martin Marshall Professor of Management Practice and a Senior Associate Dean at Harvard Business School. Prior to that, he had a distinguished career at Goldman Sachs over the course of more than two decades.

Wells Fargo & Company has named Fernando Rivas as SEVP and Co-CEO of Corporate & Investment Banking (CIB), reporting to Wells Fargo CEO Charlie Scharf and joining the company’s Operating Committee. Rivas and Jon Weiss, who has been CIB’s CEO since February 2020, will lead the business together. Rivas joins Wells Fargo after a nearly 30-year career at JP Morgan Chase & Company (JPMC). He was most recently JPMC’s Head of North American Investment Banking. Prior to that, he was Co-Head of JPMC’s Global Financial Institutions Group. 

Jeffrey Haller has joined Evercore as a senior managing director in the financial institutions group based in New York. Haller has more than 20 years of experience working with financial institutions clients. Prior to joining Evercore, he was a managing director in the financial institutions investment banking group at Goldman Sachs, where he helped lead coverage of the wealth and traditional asset management sectors. Prior to that Haller was at RBC Capital Markets in New York and focused on building out investment banking coverage of the U.S. asset management sector. 

If you have a new job or promotion to report, let me know at alyudvig@marketsmedia.com

Money Never Sleeps: Why Algos are the Beating Heart of 24/7 Equities

By Sylvain Thieullent, CEO of Horizon Trading Solutions

Sylvain Thieullent

“Money never sleeps pal” – remember that infamous line from the 80’s classic Wall Street? Who would have thought this saying would become a literal reality. For over three decades since Michael Dougals graced our screens as go getter Gordon Gekko, making money in cash equity markets has been at the mercy of speed – as the pinstriped Gekko’s have been replaced by high-speed hoodie geeks. Milliseconds may have made the next generation of Gekko’s, but they have also broken fortunes of others – all at the click of a button. It is therefore intriguing to see the New York Stock Exchange (NYSE) contemplating what would be, frankly, a seismic shift to trading stocks around the clock, 24/7.

Equity investors have the rise of cryptocurrency trading to thank, or not thank depending on your preference. Operating 24/7, crypto has set a precedent for round-the-clock market activity. Stock exchanges, traditionally confined by time zones, could now find themselves playing catch-up in a world where trading knows no bounds. As other major markets, from U.S Treasuries to leading stock index futures embrace continuous trading, the pressure on traditional stock exchanges mounts.

The issue is that sustaining high-speed trading operations in a 24/7 cash equities market would require underlying infrastructure capable of handling constant information streams, executing trades rapidly, not to mention responding to unforeseen market changes. Maintaining such infrastructure could become more costly than a Gordon Gekko stop loss. Particularly when one considers the cold hard commercial reality of trading around the clock. It essentially means encountering a diverse range of market conditions, including overnight news about wars breaking out. As regulators continue to assess the implications and market participants weigh in too, one thing becomes abundantly clear – the quality of algos deployed by financial institutions will be paramount in navigating this potentially brave new trading world. But why? Well, unlike humans who need their sleep, algos operate around the clock.

For financial institutions eyeing opportunities beyond U.S. hours, trading in the dead of night requires the need to navigate potentially volatile markets with precision and extreme quickness. The likes of Nvidia or Apple may be up for grabs between 8pm and 4am Eastern time, but seizing these opportunities demands algos that can operate effectively in the absence of human intervention. Outside of regular trading hours, liquidity tends to be thinner, meaning there are likely to be fewer buyers and sellers in the market at 2am (who would have thought). Thin liquidity can result in wider bid-ask spreads and increased price slippage, making it more challenging for high-speed traders to execute trades at desired prices. Only algos capable of analysing vast volumes of data, detecting patterns, and executing trades with split-second precision will separate the winners from the losers. Moreover, with regulators scrutinizing every move, ensuring the integrity and reliability of these algorithms is key.

The transition to a 24/7 stock exchange is not without its challenges. Yet, it presents a wealth of opportunities for those equipped to navigate its complexities. While the allure is undeniable, the risks are equally substantial. As the NYSE contemplates the future of trading, one thing is clear – in the 24/7 era, the quality of algorithms reigns supreme. Failure to adopt the right algo risks consigning them to irrelevance in a market that never sleeps.

ICE Clear Credit Adds Royal Bank of Canada

Intercontinental Exchange, a leading global provider of technology and data, announced that Royal Bank of Canada (RBC), Canada’s largest bank by capitalization and designated as one of the global systemically important banks, has become a clearing member at ICE Clear Credit LLC, the leading global clearinghouse for credit default swaps.

Santosh Sateesh

ICE Clear Credit provides a comprehensive product offering, robust mark-to-market services and state-of-the-art risk management approach. As a clearing member, RBC will have access to industry-leading solutions for clearing Single Name and Index CDS instruments, as well as CDS Index Option instruments referencing the major North American and European corporate indices.

“Our ability to access central clearing for the full range of our actively traded CDS products enables RBC to achieve significant capital and operational efficiencies across our CDS portfolios,” said Santosh Sateesh, MD, Global Head of Credit Derivatives Trading at RBC.

“RBC is one of the largest banks in North America and globally, and we’re very pleased to have them join ICE Clear Credit as a clearing member,” said Stan Ivanov, President of ICE Clear Credit. “The addition of RBC to our world-class roster of clearing members brings an important participant to our ecosystem and builds on the leading liquidity we offer for global CDS markets.”

Launched in 2009, ICE Clear Credit clearing solutions offer clearing for more than 500 Single Name and Index CDS instruments referencing corporate and sovereign debt and have reduced counterparty risk exposure by clearing over $330 trillion in two-sided notional amount, with open interest of approximately $1.75 trillion.

Source: ICE

FLASH FRIDAY: AI and Data Critical to Transforming Asset Management 

FLASH FRIDAY is a weekly content series looking at the past, present and future of capital markets trading and technology. FLASH FRIDAY is sponsored by Instinet, a Nomura company.

The future of asset management is a hot topic as both Boston Consulting Group and Northern Trust have published reports on how the industry needs to change as costs have been rising faster than revenues. 

Assets under management in the global fund management industry increased by 12% in 2023 to nearly $120 trillion, but costs rose far more than revenues, according to Boston Consulting Group.  The 22nd edition of the consultancy’s global asset management report, AI and the Next Wave of Transformation, released this month, said the industry’s revenues increased by 0.2% in 2023. However, costs rose by 4.3% leading to an 8.1% decline in profitability. In addition almost all, 90%, of the industry’s revenue growth has come from market appreciation since 2005.

Dean Frankle, BCG

Dean Frankle, partner at BCG and co-author of the report, said in a statement that structural challenges facing asset management will continue to grow. He said: “To remain competitive, asset managers will need to seize the opportunities offered by artificial intelligence and double down on investing in enhanced productivity, product personalization, and the opportunity of private markets.”

BCG, in partnership with the Investment Company Institute (ICI) and the CFA Institute, conducted a global survey of asset managers in the first quarter of this year on the adoption of generative artificial intelligence (GenAI). Nearly three quarters, 72% think that GenAI will have a significant or transformative impact on their organization within the next three to five years and two thirds, 66% have made GenAI a strategic priority for their business.

Peter Czerepak, senior partner at BCG and co-author of the report, said in a statement: “Generative AI opens up tremendous potential for innovation within the asset management industry. Achieving results will require strategic thinking and the ability to execute at scale.”

For example, AI can support investment teams by accelerating investment research through quickly gathering, synthesizing, and analyzing both proprietary data or  alternative data sources including public filings, macroeconomic statistics, and geospatial reports. AI  tools can also  facilitate effective knowledge management and data sharing by organizing reports, data sets, and research developed by investment teams. BGC said; “As a result, AI can break down silos and minimize redundant analyses, which occur frequently when investment teams managing different funds or products are exploring similar themes.”

Investment managers are prioritizing the quality and accuracy of their products to enhance the investor experience and grow their distribution in the next two years, according to a survey of 300 global asset management firms sponsored by Northern Trust.

Northern Trust has also issued a white paper, The Next Chapter in Driving Growth in Asset Management 2024, which found that nearly three quarters, 72%, of fund managers said enhancing quality and accuracy of data was their top strategic priority in the next two years. Northern Trust said the results marked a shift from manager priorities in the prior survey in 2022, when just 45% of managers identified enhancing quality and accuracy as the top priority, behind efficiency and cost controls.

The survey, conducted for Northern Trust by WBR Insights, highlighted that 83% of respondents plan to change their product strategy in the next two years, with a focus on meeting diverse investor needs.

Clive Bellows, Northern Trust

Clive Bellows, incoming president of Northern Trust in Europe, Middle East, Africa, said in a statement: “Many of the challenges we’re seeing today come back to the same core issue: data. As a result, managers are looking to leverage new technology, and the survey found that many managers are looking to enhance their data management strategies by engaging their custodians for outsourced solutions.”

Data management was overwhelmingly identified as the area where asset managers are considering outsourcing (83%), and almost half (42%) of respondents identified their biggest challenge with data management as ensuring that the data is easily understandable/consumable and insightful.

2024 Markets Choice Awards: The Winners

Markets Media Group’s 12th-annual U.S. Markets Choice Awards event was held Thursday, May 9, at Central Park Boathouse in New York City

Congratulations to the winners!

Instinet Positive Change: PhilanthropyMarc Wyatt, T. Rowe Price
Instinet Positive Change: SustainabilitySustainable Trading
Instinet Positive Change: Jerome Pustilnik VisionaryRoman Ginis, Imperative Execution
Mizuho Corporate CultureBlackRock
Best New ProductState Street Alpha Data Quality
Best in RegTechSaphyre Inc
Best M&A DealSimCorp – Axioma
Excellence in Fixed IncomeDeirdre Dunn, Citi
Excellence in TradingJohn Panichi, Mizuho Americas
Best in AILTX, A Broadridge Company
Best Fixed Income Trading PlatformTrumid
Best in Wealth ManagementPark Avenue Securities
Best New ServiceClear Street Fixed Income
Best in ClearingMizuho Americas Futures Clearing
Best Trading AnalyticsInstinet Analytics
Best Order Management System (OMS)Broadridge
Best Global Exchange GroupNasdaq
Best Liquidity Provider – EquitiesCitadel Securities
Best Sell-Side Trading DeskGoldman Sachs
Best Agency Trading DeskMizuho Americas Agency Mortgage Trading
Best Buy-Side Trading DeskAllianceBernstein Global Equity Trading Desk
Best CompanyTradeweb
Rising StarJake Glasser, Citadel Securities
Neil DeSena Market Advocate AwardKyle Czepiel, BTIG
Best in Market StructureChuck Mack, Nasdaq
Excellence in FintechSarita Bakst, JP Morgan
Excellence in TradingMark Gurliacci, AllianceBernstein
Excellence in TradingJason Lenzo, Russell Investments
Excellence in TradingWeimin Zhu, Government of Singapore Investment Corp.
Lifetime AchievementKevin Cronin, Invesco (Ret.)

Firms Need to Choose the Right Affirmations Model under a T+1 Timeline

As financial institutions approach the T+1 settlement change, determining the right affirmations model will be critical in getting the most out of the new deadline, according to Derek Coyle, European Custody Product Manager at Brown Brothers Harriman.

Derek Coyle

When it comes to how trades can be affirmed, there are two main options to consider, Coyle said: 1) the custodian supported confirm matching model and 2) direct affirmations, also known as self-affirmations. 

He explained that for confirm matching, custodians will align the trade instructions against the broker-dealer confirmations to complete the affirmation steps ahead of the DTCC deadlines on Trade Date. 

“The result of the affirmation is then communicated to Trade Suite and the trade becomes eligible to settle as an affirmed transaction,” he said.

Coyle added that Confirm Matching means that the custodian will be responsible for completing. 

“Depending on the custodian, they can have a slightly earlier instruction deadline (ahead of the DTCC 9PM EST affirmation deadline) to give some buffer in case of any operational support being needed,” he said. 

With Direct Affirmations, firms can choose to perform the matching steps themselves by aligning their instructions against the broker-dealers confirmation, Coyle said. 

The affirmation is then completed in the DTCC systems, after which the custodian will receive the result of the affirmation that can act as a trade instruction for the custodian or be matched to a secondary trade instruction sent via standard means form the client to the custodian for further processing and settlement in the market, he said. 

According to Coyle, direct affirmations can provide more control over the affirmation process, which can be “beneficial where firms have end-to-end oversight over reconciliations and so on”. 

“Direct affirmations also give direct access to the visibility and reporting of successful affirmation and related timestamps,” he said, adding that this can be valuable for those Registered Investment Advisors (RIAs) who need to provide affirmation timestamp reporting. 

Coyle told Traders Magazine that Registered Investment Advisor (RIA) firms with regulatory oversight from the SEC will need to be prepared to provide evidence of their activity in successful affirmations, with date and timestamp records of instruction activity needed to show efforts at meeting the DTCC 9PM EST affirmation deadlines on Trade Date.

He noted that the reporting requirements do not differ between the direct affirmation and custodian supported affirmation models – both require the date and timestamps to show actions taken and the responsibility to comply with the requirement under both models will remain with the RIA. 

According to Coyle, timestamps showing date and time of the trade execution steps (allocation, confirmation and affirmation) leading to successful settlement are required. 

“Firms can maintain this internally or ask a third party to support the recordkeeping requirement,” he said. 

DTCC are also preparing a Trade Archival tool, which can be used to source SEC required timestamps, he added.

Coyle stressed that having a Tradesuite ID (TSID) in place to correctly be identified as a trading party is key. 

“DTCC have been supporting requests to provide such IDs in the past weeks and months,” he said. 

“After that – the main focus would be on adjusting the timing of trade instructions to be completed before 9PM EST on Trade Date, and then engaging with counterparties to understand their alignment to be ready to affirm and settle with you according to the new requirements from the end of May,” he said.

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