Trade
pre-matching

Client-first is at the heart of everything that JDX does.

We shape our consulting capabilities, services, and experiences around our clients, working with them, and our partners, to design and deliver solutions with outcomes that target our clients’ pain points, unmet needs, and real business problems. We use our unique perspective to provide optionality in the client outcome, while unlocking value throughout the journey. Today’s JDX client story showcases one of our Post Trade projects.

JDX was engaged by a Tier 1 investment bank for a 4-month period to agree the economic details of trades and standard settlement instructions (SSI) with the counterparty, and to ensure this was matched in the central securities depository (CSD) prior to the intended settlement date.

Context

JDX deployed a team of 17 to assist the client with the pre-matching of trades across Equity and Fixed Income products, the overall goal was to reduce the number of failed trades by capturing and matching trades on settlement day -1.

The team were deployed mid-May and focused solely on S-1 population of trades to begin with, but due to the large number of daily fails the JDX team started taking on value data & failed trades for Equity products.

The JDX Equity team had an average of 1,800 trades daily to work through including S-1, Value date and fails. The Fixed Income team focused on S-1 population only with a daily average of 600 trades. A total of 6 JDX team members were on FI and the rest on EQ ( the client’s main focus).

The project focus was to ensure matching was performed on intended settlement date -1 (ISD-1) for all unmatched trades.

Our approach

Priorities were driven by a combination of factors such as Market Risk profile, Trade Value & Client volume/Sensitivity. The objective was to agree economic details of the trade and standard settlement instructions (SSI) with the counterparty & to ensure that this was matched. Where the unmatched trade was due to internal issues, the root cause was captured and resolved at source by setting up correct SSI & Price / Commission defaults. All trades were narrated accurately with the root cause specified using ‘scratch codes’ which allows open risk to be tracked.

JDX’s team consisted of 1 Assistant Manager (Team Lead), 1 External Hire (SME) sub team lead of Equity team and 1 Senior Consultant as sub team lead of Fixed Income Team. The Equity Team had 4 Consultants and 5 Associate Consultants. The Fixed Income team had 3 Consultants and 2 Associate Consultants.

The matching process focused on an agreement with the counterparty on key matching fields such as Economic attributes which covered:

  • Client name/fund
  • Settlement location
  • Trade date
  • Settlement date
  • Directions
  • ISIN
  • Quantity
  • Cash amount
  • Currency
  • Settlement instructions which covered place of settlement, agent, custodian, account number
  • Client contact information
  • Standard Settlement instructions (SSIs)

Allocations of the S-1 unmatched trades population were set daily, it was then with the consultants to own each trade until fully matched. If this did not match on settlement date then they were prioritized until matched. Once the trade failed (did not match on Value date) they became priority. If the trade failed for 3+ days it was raised as a red flag and was escalated to senior management. The JDX team prioritized work based on this information.

Consultants logged all trades accurately to capture a clear, concise and detailed audit trail of each trade. The purpose was to show that each trade had been worked on and all options had been exhausted to match the trades. This also allowed MI to monitor real time risk.

Outcomes / Measurable impact

  • Equity team took on 100% of overall allocation list
  • Fixed Income team took on 75% of overall allocation
  • Average of 65% matching efficiency for EQ team
  • Average of 70% matching efficiency for FI team
  • Reduced number of fails
  • Helped clear backlog caused by impact of Covid

Contact us

For more information on our Post Trade services, contact Dominic Amura.

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