Financial messaging outfit Swift is set to link its securities matching system to a range of central clearing counterparties, including EuroCCP, Six x-clear and LCH.Clearnet, enabling brokers to direct their matched off-exchange trades to a variety of providers.
The initiative will see a direct connection between the matching system, called Accord for Securities, and the CCPs when the service goes live. Testing with the three is slated to begin in the first quarter but Swift says other CCPs are expected to join once the service is live.
Swift says the service will reduce the cost of settlement as well as offer users access to the risk mitigation features of clearing platforms. Using their existing Accord connection, a broker dealer will have the ability to specify which CCP they want to clear their matched trades.
Swift will use its network to send a MT 518 trade confirmation message to communicate these details to the CCP which will then accept or reject using the MT 509 trade status message. Meanwhile Accord would send status updates to inform the brokers on the progress of their trades.
Once testing is complete, Swift says that Q2 will see a pilot for brokers, with BofA Merrill Lynch, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, and UBS all signed up.
Alain Raes, chief executive, Emea, Swift, says: "This initiative will transform Accord for Securities into an industry infrastructure that enables centralised settlement flows and will significantly reduce costs and risks."
Marco Strimer, CEO, Six x-clear, adds: "Offering market participants a choice of CCPs is an excellent decision by Swift and one that will ultimately reduce counterparty risk, open up new opportunities and reduce costs."