Traiana has embedded Duco data matching and reconciliation technology in its CreditLink service to help customers reconcile client reference data when the Commodity Futures Trading Commission’s mandate for electronic trading of swaps on swap execution facilities (SEFs) comes into force in mid-February.
The Duco technology uses sophisticated algorithms and fuzzy logic to reconcile reference data in any format from disparate sources including central counterparties, SEFs, futures commission merchants (FCMs), buy-side firms and swap data repositories. Its implementation by Traiana will allow CreditLink users to reconcile large volumes of data and ensure their clients are not prevented from trading by clerical errors or mismatches in static data covering accounts, limits or SEF trading identifiers.
The enhanced service has been piloted with a large SEF and is now being rolled out to CreditLink customers. To date, Traiana is working with more than 400 customer organisations with more than 10,000 clearing accounts across three major central counterparty clearing houses. It is also working to reconcile data from 17 FCMs.
Nick Solinger, head of product strategy and chief marketing officer at Traiana, says: “There will be a huge surge of clients moving into electronic trading, many for the first time, and the volume of data that the industry will deal with during the shift to a new market structure is unprecedented. Duco offers a powerful solution to reconcile the data and we are investing resources to ensure all clients are ready to trade when mandatory SEF trading goes live.”
Traiana had started to hire people to solve the problem of mapping SEF and FCM data before a fortuitous meeting between its CEO and the CEO of Duco offered an off-the-shelf, yet flexible and quick to deploy, solution for automated reference data reconciliation. The company’s pilot project with a large SEF took about a day to deploy the Duco technology in the Traiana production environment and reconciled account information from the SEF with information from the 17 FCMs using the service. This allowed a list of accounts to be agreed with any mismatches of data being highlighted for manual checking and correction.
Solinger suggests SEFs that had large numbers of clients at set up will face the biggest data reconciliation challenge as many of the clients will have proprietary account codes that must be reconciled. In contrast, newer SEFs, such as truEX and Capital Markets’ Javelin SEF, are using legal entity identifiers to code accounts, which should make the reconciliation process less complex.
Traiana expects many of its FCM customers to use the enhanced CreditLink service for reference data reconciliation. It has also embedded the Duco technology in its CCP Connect service to cover rates and credit default swaps and is likely to evaluate the technology for inclusion in some of its other solutions. Solinger concludes: “Duco provides a very flexible reconciliation tool. Traiana is one of the first companies to use it for reference data, but it can be used for all sorts of data. The data reconciliation challenge is acute for SEFs, but there are similar problems in trade reporting and meeting reconciliation rules under EMIR, so we will look further at whether to include the Duco technology in some of our other post-trade services.”