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In November, CME Group will become the first futures exchange to require a tag on order messages that identifies the execution method—a major milestone in the industry’s efforts to standardize trading and reduce a persistent source of friction in brokerage settlement.
The move is the culmination of almost a decade of work by FIA and FIA Tech to create a standard set of codes to identify widely used methods for executing trades. Those methods range from fully automated algorithmic trading to human-to-human interaction over the telephone. Once these codes are added to order messages, clearing brokers will have visibility into how orders are executed. That is particularly important when clients use one firm for execution and another for clearing.
19 September 2018, London, UK – FIA Tech today launched a new Transfer Protocol to help firms prepare for the transitioning of execution and clearing businesses triggered by the UK’s departure from the European Union.
By adopting the Transfer Protocol, brokers transitioning their exchange-traded derivatives execution or clearing business to EU27 affiliates can simplify and automate the creation of new client agreements with all counterparties. These brokerage execution agreements, commonly called Give-Up Agreements, typically involve three or four parties and are widely used by asset managers, hedge funds, commodity trading advisors and pension managers. The Transfer Protocol automates the agreement transition process, including any related reference and account data changes required in trading and clearing systems. Without the Transfer Protocol, these agreements would require redrafting and execution by all parties which would add significant cost and take months to complete.
“With a great deal of uncertainty still facing the industry, firms want to be prepared and have asked us to help them be nimble,” said FIA Tech President and CEO Nick Solinger. “Our goal with the Transfer Protocol was to ease the burden of contingency planning as firms assess the changing Brexit landscape and evaluate business relocation requirements with their clients.”
As clearing firms prepare for the potential disruption of Brexit, a significant number Give-Up Agreements may need to be transitioned to service clients via EU27-based affiliates or branches. The Transfer Protocol provides the legal and technical requirements for the bulk transfer of Give-Up Agreements from one entity to a qualified affiliate without the need to obtain individual consent of all counterparties. Give-Up Agreements housed on FIA Tech’s Docs platform cover the execution and clearing activity for more than 30,000 legal entities and over 700,000 individual investors and account holders. Most of these agreements cover trading activity around the globe and over 40 percent are in the England & Wales jurisdiction with one or more UK-based entities trading on EU venues.
Developed in consultation with FIA and FIA’s legal community, the Transfer Protocol was fast- tracked onto FIA Tech’s Docs platform, allowing firms to maximize the remaining time prior to the end of March 2019 Brexit deadline to fully engage with clients on Brexit plans and transitions. Larger clients often have hundreds of give-up agreements, and large clearing firms have thousands of agreements which would create significant obstacles to business relocations if required.
“This Transfer Protocol is a tool that will allow our members and their clients to better cope with the disruption of Brexit,” said FIA President and CEO Walt Lukken. “With the alternative being significant legal and operational disruption, I commend FIA’s Law and Compliance Division and Legal Working Group in London on working closely with FIA Tech on this industry-wide solution.”
By adopting the Transfer Protocol once, at no cost, parties to existing Give-Up Agreements agree to a specific legal process of cloning the terms of existing agreements and transferring obligations to a qualified broker affiliate or branch. While created with careful consideration of Brexit-driven transitions, the Protocol has been designed to support other types of corporate or regulatory-driven transitions as well.
FIA Technology Services, Inc. (FIA Tech) is a wholly-owned subsidiary of FIA, the global trade association for futures, options and centrally cleared derivatives markets. We collaborate with the global futures industry to improve operational efficiency via integrated, cloud-based systems. FIA Tech provides key services and processes including managing legal agreements, settling brokerage, meeting compliance requirements and automating reconciliation. Our current core applications and services include Docs (EGUS agreements), Atlantis (brokerage settlement), eRecs (reconciliation), OCR data service (regulatory compliance), MiFID lockbox and the FIA Tech Databank with its suite of position limits and exchanges fees data.
For more information, please visit www.fia-tech.com
FIA is the leading global trade organization for the futures, options and centrally cleared derivatives markets, with offices in Brussels, London, Singapore and Washington, D.C. FIA’s membership includes clearing firms, exchanges, clearinghouses, trading firms and commodities specialists from more than 48 countries as well as technology vendors, lawyers and other professionals serving the industry. FIA’s mission is to support open, transparent and competitive markets, protect and enhance the integrity of the financial system, and promote high standards of professional conduct. As the principal members of derivatives clearinghouses worldwide, FIA’s member firms play a critical role in the reduction of systemic risk in global financial markets.
FIA Tech is pleased to announce the expansion of its Owner & Controller Repository (OCR) service to securely and confidentially store data for firms offering indirect clearing services under MIFID II. The new Indirect Clearing Lockbox capability allows indirect clearers to store their client account data securely to be accessed by their clearing member only in a default scenario, ensuring clients have the full protection of new segregated clearing models provided for under MIFID II.
To bolster client protections, MiFID II established a new category of omnibus clearing; the Gross Omnibus Segregated Account (GOSA). GOSA accounts may be used by market participants in an indirect clearing arrangement where they clear through an Indirect Clearer (Direct Client of Clearing Member) which accesses the clearinghouse via a third-party Clearing Member which services the Indirect Clearer and, by extension, all their Indirect Clients.
In this new clearing model, Indirect Client positions and collateral are held separately at the Clearing Member to insulate those assets from financial instability with the Indirect Clearer. In addition to these financial protections, Indirect Clients are given an assurance of anonymity, which has created the need for a trusted third party to store Indirect Client information to be accessed by the Clearing Member only in the event of a default of the Indirect Clearer.
To facilitate compliance with these new requirements, FIA Tech’s Indirect Clearing Lockbox allows for the secure, confidential storage of indirect client information including contact information, account ownership information and other data needed to aid indirect clients in the event of a default between the Clearing Member and Indirect Clearer. Once the Lockbox is opened in a default, the Clearing Member may then work with the Indirect Client to make or receive margin payments, liquidate positions or port positions to another clearing firm.
FIA Tech’s Owner & Controller Repository is used for secure client data storage for regulatory reporting, client gross margin compliance and indirect clearing lockbox, securely storing account data on over 470,000 accounts across 45 clearing members globally.
About FIA Tech
FIA Tech is a wholly-owned subsidiary of FIA, collaborating with the global futures industry to improve operational efficiency via integrated, cloud-based systems. FIA Tech provides key services and processes including managing legal agreements, settling brokerage, meeting compliance requirements and automating reconciliation. Current services include Docs (give up agreements), Fees (brokerage settlement), Recs (reconciliations), Owner & Controller Repository service (regulatory compliance and indirect clearing lockbox) and the FIA Tech Databank with its suite of position limit and exchange fee data. For more information, please visit www.fia-tech.com
Contact: Andrew La Manna +1 (202) 772-3089 firstname.lastname@example.org
FIA Tech is pleased to announce the expansion of its Position Limits Databank service to encompass position limits for commodity derivatives as set by European regulators under MiFID II. The enhanced position limits service went live as planned ahead of the launch of MiFID II on January 3 2018.
To date, seven exchange groups have issued MiFID II limits which have been captured in FIA Tech’s Position Limit Databank. Additional exchanges will be added as their limit rules are submitted to regulators and approved. Under MiFID II, exchanges and their National Competent Authorities are defining limits on commodity derivatives for the spot month and all contract months outside of the spot month. FIA Tech’s Position Limit Databank gives subscribers both the “liquid” contracts, which will have bespoke limits set per contract, along with the “new and illiquid” contracts which are given a general limits structure of 2,500 lots at the spot and other months level.
Now included in the MIFID II offering, FIA Tech has released trading calendar functionality. This new feature will include the date the next MIFID II designated liquid contracts go into spot along with the number of business days until the spot dates go into effect, giving subscribers an additional tool to accurately calculate spot and other month position limits.
“With this enhanced capability, FIA Tech’s Position Limits Databank provides an essential service allowing firms to easily track and monitor aggregated positions globally, including economically equivalent positions across exchanges, to comply with the position limit regime defined in RTS 21 of MiFID II,” said Mark Davis, FIA Tech’s SVP of Strategy.
“This is another step in our strategic plan to provide market participants and their technology providers with a consolidated golden source of reference data to improve efficiencies, reduce costs and create opportunity through standardization.”
FIA Tech’s Position Limits Databank is a globally aggregated database that includes accountability levels, reporting levels, position limits, contract aggregation requirements, ratios, spot and other month details, diminishing contract indicators, mini contract multipliers, CFTC referenced contracts, and settlement types. As all these factors vary by venue and contract, FIA Tech has a team of analysts who proactively monitor information being published by exchanges and regulators to provide a comprehensive, consolidated, forward looking, and reliable data source of position limits.
FIA Tech’s Position Limits Databank and Equity Option Positon Limits Databank provide daily coverage on more than 55,000 derivative contracts on 85 major global exchanges.
About FIA Tech
FIA Tech is a wholly-owned subsidiary of FIA, collaborating with the global futures industry to improve operational efficiency via integrated, cloud-based systems. FIA Tech provides key services and processes including managing legal agreements, settling brokerage, meeting compliance requirements and automating reconciliation. The current core applications and services include Docs (EGUS agreements), Fees (brokerage settlement), Integrated Recs (reconciliation), OCR data service (regulatory compliance), MiFID Lockbox and the FIA Tech Databank with its suite of position limits and exchanges fees data. For more information, please visit www.fia-tech.com
Contact: Andrew La Manna +1 (202) 772-3089 email@example.com
FIA Technology Services (FIA Tech) announced the creation of a global reference database of exchange-traded derivative product data which is being implemented across all FIA Tech services. The database, which is available free of charge to all FIA Tech Brokerage Services subscribers, was compiled in partnership with JDX Consulting.
The reference database will include industry-wide contract-level specifications including symbols, official contract descriptions, and currency information. Additionally, the database organizes contracts into standardized groupings to simplify brokerage processing.
Agreement combines the advantages of eClerx’s scale, cost-competitiveness and derivatives processing expertise with FIA Tech’s centralized technology platforms for the global futures industry
The first initiative stemming from the strategic partnership is a centralized, EGUS (Electronic Give Up Solution) document digitization solution. EGUS is FIA Tech’s web-based application that streamlines give-up processing resulting in financial savings to brokers, customers and traders. It provides an automated workflow for the execution of give-up agreements and captures rates in an electronic format that can flow into downstream systems.
This solution combines eClerx’s domain and process excellence capabilities with that of Semantic Evolution, which has developed leading edge technology for extracting unstructured data. Executing brokers will now be able to use EGUS as a low cost, scalable solution to implement electronic brokerage rate schedules, improving brokerage settlement processes for their firm. It will also further industry efforts to use EGUS as the golden source of reference data for commissions and fees, improving the ability for the entire FCM community to accurately track and account for brokerage fees.
The partnership between eClerx, a specialist in Business Process Outsourcing, and FIA Tech is in response to industry requests to solve a number of shared challenges, including the need for common data standards such as accurate rate and commission data to ensure precise and efficient commission payment processing, as well to enable systematic forecasting, reconciliations, and insightful operational analytics.
Stephen Ingle, eClerx’s Head of Financial Services Head of Product and Business Development, said, “We are exceptionally happy to be partnering with FIA Tech to deliver projects that will positively impact the cleared derivatives industry. This relationship with the FIA is a logical extension of the critical operational support that eClerx provides to a number of the largest global financial institutions. Our ability to now deliver solutions to the whole industry through the FIA’s member base will ensure that all brokers gain the same deep domain expertise, improved time to market, and technology advantages that eClerx delivers on clients’ engagements today.”
Nick Solinger, President of FIA Tech, said, “We’re excited for this partnership as it allows us to improve our services to our customers. We’ll be able to provide increased operational efficiencies, improved data quality for brokerage operations, and the ability for our users to leverage eClerx’s derivatives domain expertise in conjunction with FIA tech’s services. Existing customers of FIA Tech will gain access to the range of eClerx services through FIA Tech’s market-tested framework with the attendant benefits in the form of common technology, oversight, and conformance with data protection policies and security standards.“
“Our first initiative together aims to digitize the large number of manual eRates schedules on EGUS today. We anticipate that this will provide immediate industry benefits through improving automation and reducing reconciliation breaks in downstream billing and brokerage functions,” said Stephen Ingle.
FIA Tech has shared this initiative with its EGUS user group and has held informational webinars to educate its membership about the availability of eClerx as an industry-leading, ready option to mitigate bottlenecks from reconciliation, data processing or other operational challenges.
eClerx provides critical business operations services to 135+ global companies, including many of the world’s leading financial services firms, online retail and distributors, interactive media and entertainment, high tech and industrial manufacturing, travel and leisure, and software vendors, through operational support, data management and analytics solutions. Incorporated in 2000, eClerx is India’s first and only publicly listed knowledge processing (KPO) company and is today traded on both the Bombay and National Stock Exchanges of India. eClerx was ranked as one of Forbes Asia’s 200 Best Under a Billion List and named as finalist in Teleos’ Most Admired Knowledge Enterprise award. eClerx employs over 9,000 employees across its global delivery centers and offices in Verona, Phuket, Mumbai, Pune and Chandigarh plus global client relationship locations in New York, London, Philadelphia, Silicon Valley, Austin, Dublin, Milan, Munich, Hamburg and Singapore. For more information, please visit www.eclerx.com.
For more information contact Marion Howard at +1 646-368-6164.
FIA Tech is a for-profit subsidiary of FIA that works with the listed derivatives industry to address operational inefficiencies that benefit from industry solutions. FIA Tech was founded in 2008 and operates the industry solutions for give-up documentation (EGUS), brokerage invoicing and settlement as well as ownership and control regulatory reporting for swap dealers, FCMs and exchanges globally.
For more information, contact Heather Vaughan at +1 202-466-5460.
As part of the wider industry effort to streamline brokerage processing, FIA Tech will be introducing mandatory electronic rates (eRates) in EGUS with the deployment of the EGUS 3.5 release in March of 2016.
In response to the industry effort towards reducing aged brokerage and increasing the efficiency of the brokerage settlement process, FIA Tech will make electronic rate schedules standard for Give-Up Agreements executed in EGUS. This feature will be introduced with EGUS 3.5, which is currently scheduled for deployment on March 11th, 2016. Mandatory eRates will apply to any agreement executed after EGUS 3.5 is implemented; existing agreements with PDF rate schedules need not be changed before this date.
For more information, please reach out directly to FIA Tech at firstname.lastname@example.org, or 202-772-3000.
Q&A about Mandatory eRates
Q What is an eRate?
A An eRate is a rate schedule within EGUS that is stored in an electronic format. An eRate can be built either directly in EGUS, or via the eModule, which is an EGUS-supplied Excel spreadsheet built to construct rate schedules to be uploaded into EGUS as eRates.
Q Will there be any documentation to help firms prepare for mandatory eRates?
A Yes. FIA Tech has developed documentation to help firms use electronic rate schedules. This includes an eRate Guide and training modules as well as webinars to assist people in using the electronic rate format. Please refer to our EGUS Documentation page for further information.
Q What do I need to do to prepare for EGUS 3.5?
A While rate schedules can still be attached to agreements in pdf format until the deployment of 3.5, in order to facilitate the transition to eRates FIA Tech recommends that all firms:
Q Why make eRates mandatory?
A In contrast to PDF rate schedules, eRates can feed downstream systems that settle brokerage such as eGAINS and GPS, or firm systems. Brokerage calculations based on PDF rate schedules cannot be automated and must instead be done manually
Q What can be done if the eRate format cannot accommodate a rate type?
A As part of EGUS 3.5 you will be able to contact FIA Tech directly to assist you with these unique conditions.
Washington, DC—October 12, 2015—FIA Technology Services, a for-profit subsidiary of FIA, announced today that Nick Solinger will be joining the company as president, effective January 4, 2016. He will succeed Mary Ann Burns, who will become executive chair of the FIA Tech board of directors.
As president, Solinger will oversee the continued development of products and services that help executing and clearing brokers, trading firms, asset managers and other market participants improve operational efficiency in the listed derivatives business. He will be responsible for strategic direction and growth, as well as day-to-day operations of the company.
“I speak for the FIA Tech board in saying how excited we are to benefit from Nick’s unique combination of technical and business skills,” said Burns. “He is an excellent choice to lead FIA Tech because of his extensive knowledge of the industry and his strong relationships with FIA Tech customers. The demand for an industry utility to address operational inefficiencies has never been greater and Nick is particularly well suited to help FIA Tech address this demand.”
“I am thrilled to join FIA Tech at such an important time for the company and the industry,” Solinger said. “FIA Tech’s services are critical to the industry’s growth and success. I look forward to working with the FIA Tech team, the FCM community and their clients to deliver even greater value in the future.”
Solinger will join FIA from Traiana, where he served as head of product strategy and led its swaps and regulatory business since 2012. Traiana is a subsidiary of ICAP, plc with eight banks who hold minority ownership stakes. He joined Traiana in 2002 when it was a start-up company.
While at Traiana, Solinger led the launch of Traiana’s Harmony Network and its CreditLink service – Traiana’s low latency pre- and post-trade credit service commonly referred to as the Limit Hub – which allows swap execution facilities, futures commission merchants and buy-side firms to comply with certain Commodity Futures Trading Commission regulations, including CFTC rules 1.73 and 1.74.
FIA Tech is a for-profit subsidiary of FIA that works with the listed derivatives industry to address operational inefficiencies that benefit from a coordinated industry solution. FIA Tech was founded in 2008 after it launched EGUS, an electronic system for the execution of give-up agreements. FIA Tech is also the provider of eGAINS, a system that settles brokerage payments between executing and clearing brokers and eRECs, a brokerage reconciliation tool. When the CFTC finalized rules for account ownership and control reporting (OCR), FIA Tech built and delivered a solution for reporting entities to collect and transmit OCR data to the CFTC. For more information, contact Heather Vaughan at 202-466-5460.
Attention executing and clearing brokers: The industry has been working to meet the June 1 deadline to comply with CFTC Rule 1.73 that requires executing firms to agree to screen customer orders for limits established by clearing firms with respect to give-up transactions. The FIA Law & Compliance Division has created a standard version of a “screening agreement,” which can be modified, for executing and clearing brokers to agree to screen for such limits. The agreement is currently available on FIA Tech’s electronic give-up agreement system (EGUS). This webinar will walk you through the provisions of the agreement and how it can be used to comply with Rule 1.73. We will also provide an overview of how the agreement can be executed on EGUS. (This agreement is not applicable to separate requirements in CFTC Rule 1.73 which relate to Account Managers executing Bunched Orders.)
Speaker: David Wilson, Technology Project Manager, FIA Technology Services