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DTCC and Cboe Clear Europe Collaborate to Enhance Post-Trade Workflow for OTC Cash Equities

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DTCC, the post-trade market infrastructure for the global financial services industry, is collaborating with Cboe Clear Europe, the pan-European cash equities Central Counterparty (CCP), to improve settlement efficiencies for over-the-counter (OTC) cash equities trades in UK and European markets.

The collaboration aims to integrate OTC cash equities trades into Cboe Clear Europe’s cleared environment, enabling them to be netted against on-exchange transactions for settlement purposes. This initiative is expected to provide clients with significant efficiency gains and the benefits of an established risk management counterparty.

A key component of this initiative is the development of a proof of concept linking DTCC CTM’s tri-party trade matching workflow with Cboe Clear Europe. This will allow Prime Brokers to access a golden copy of transaction details once a match is achieved between a Hedge Fund and an Executing Broker via DTCC’s CTM service. Upon tri-party match confirmation, CTM will automatically forward matched trades to the CCP, enhancing netting and clearing benefits for clients.

Val Wotton, Managing Director and General Manager, DTCC Institutional Trade Processing, commented: “We are pleased to be working with Cboe Clear Europe on this important initiative to bring greater post-trade efficiencies to the industry as the global markets look to accelerate to a T+1 settlement cycle. Cboe Clear Europe’s extensive venue coverage combined with CTM’s large client base will deliver increased operational efficiency and netting opportunities across European trading venues. DTCC remains committed to bringing greater post-trade automation to increase efficiencies for global financial markets as they work toward implementing accelerated settlement.”

Vikesh Patel, President, Cboe Clear Europe, added: “We are excited to be the first CCP to connect to DTCC’s CTM tri-party matching workflow. This joint solution enables us to bring greater efficiencies to our clients, helping to optimise their current post-trade workflows and operational processes as the global financial markets look to accelerate settlement cycles.”

The new workflow aims to reduce operational and settlement risks and post-trade friction, particularly as markets prepare for accelerated settlement. Expected benefits include decreased post-trade processing times, reduced risks and settlement costs, and lower capital requirements when transitioning from OTC to CCP settlement, potentially leading to fewer trade fails and defaults.

DTCC’s CTM, a central matching service for cross-border and domestic transactions across various asset classes, is utilised by over 6,000 clients in more than 80 countries to streamline workflows. Cboe Clear Europe, the most connected CCP in Europe, provides clearing services to 46 trading venues and is authorised to clear a wide range of equity-related contracts.

Subject to regulatory approvals, the initial phase of linking DTCC’s CTM to Cboe Clear Europe’s CCP is projected to go live in Q2 2025.

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