Post-trade Automation for Fixed Income and Derivatives More Popular than the Beatles

Omgeo Hits One Million Fixed Income Allocations, Euronext.liffe Delivers Third Wholesale Equity Derivatives Product, Thunderhead and T-Zero Integrate Solutions to Automate Credit Derivatives Processing

Omgeo Makes Millionth Fixed Income Allocation

Omgeo, the Boston-based provider of post-trade, pre-settlement trade management services, has processed its one millionth fixed income allocation. The milestone comes with a total trade value of $10.5 trillion processed through Omgeo OASYS, the industry-standard trade allocation and acceptance service, during the first three quarters of the year. The company is on pace to process 50 percent more allocations than last year, which it believes is indicative of the industry-wide movement toward the goal of increasing the fixed income community's commitment to automation.

"Since Omgeo's expansion into fixed income in the U.S. began three years ago with the introduction of fixed income capabilities on Omgeo OASYS, volumes have shown remarkable year-on-year growth," said John Burchenal, Omgeo's managing director of asset class expansion, in a release. "The achievement of our millionth allocation at this point in the year signals significantly-heightened awareness among the fixed income community of the cost savings and risk reduction brought about by post-trade automation."

By automating trade allocations, 80 percent of total confirms are affirmed on trade date using Omgeo's solutions. This high rate of same-day confirms significantly reduces the chance of a failed trade. Non-automated trade allocations currently achieve a rate of 18 percent of total confirms affirmed on trade date. Reducing the number of failed trades through automation will help the investment community realize a considerable cost savings, says Omgeo.

"I don't see any slow down," says Burchenal, in an interview, noting that "adoption rates [of automation] can remain steady for some time."

That, however, does not mean that the challenge of automating the fixed income industry is over – far from it, in fact. It has been a challenge getting broker-dealers on board, Burchenal explains, citing a "chicken and egg" type of problem. Broker-dealers want to see a strong customer demand for the technology, and customers want broker-dealers to offer automation before deciding to adopt it completely.

Kevin Arthur, director of fixed income markets at Omgeo, said in a release, "The road to automating 100 percent of fixed income books is a long one, but Omgeo's momentum continues to build as more clients understand that automation brings efficiencies, scale, cost saving and a reduction in operational risk."

1 of 3