New Connectivity Between MarkitWire and triResolve will feed a single FpML record and unique tradeID from the MarkWire affirmation platform directly into the triResolve bilateral reconciliation platform.  I questioned OSTTRA on two areas of this, who kindly provided answers below.

The justification for the link is to provide triResolve with the original FpML representation of the trade, meaning that each bilateral reconciliation break can also reference the original trade booking, in an effort to speed up resolving breaks.

Why do these breaks occur in the first place? I know from experience that the transmission of the FpML record into the processing systems of both parties often leads to a deviation in record keeping due to complexity of the systems and lifecycle events.

My own suggestion (debunked below) is to put the whole of OTC Derivatives onto a blockchain and have a single central record of every contract. Alternatively firms can sign up to SwapAgent and have their trades processed on one platform instead of two. The ISDA CDM project may eventually empower firms to move their record keeping onto a blockchain style of platform, but that will take plenty of time yet.

Read on for more, and thanks to OSTTRA for providing answers on my questions.

OSTTRA Streamlines Trade Reconciliation with Connectivity Between MarkitWire and triResolve

OSTTRA, the global post-trade solutions company, today announced new connectivity between two of its post-trade services – MarkitWire, the leading electronic trade confirmation and processing platform and triResolve, the market leader for portfolio reconciliation, collateral management and reporting reconciliation.

Through this enhancement, trades confirmed by MarkitWire can be seamlessly delivered directly into triResolve, across a common network of more than 2,000 firms. This will drive standardisation of data for reconciliation, bringing improved efficiency, cost reduction and greater transparency between counterparties.
The direct connectivity is live with nine existing customers, covering interest rate derivatives and equity derivatives. It will also include repo transactions following the go-live of OSTTRA Trade Processing for Repos in Q3.

The lack of data standardisation through the post trade lifecycle is a persistent problem in the OTC industry, increasing operational cost and complexity.  This is a challenge OSTTRA is well equipped to address.
OSTTRA was formed in 2021 through the combination of MarkitServ, Traiana, TriOptima and Reset, four businesses that have been at the heart of post-trade evolution and innovation for more than 20 years. The launch of this link reflects OSTTRA’s ongoing commitment to build upon its global network to streamline and standardise post-trade workflows across a broad range of asset classes.

The enhanced workflow leverages the MarkitWire trade ID to link the full MarkitWire FpML trade representation with the existing data in triResolve for customers who opt to switch on the new link. This information allows users to quickly remediate trade breaks identified by triResolve, making portfolio reconciliation a more efficient process.
The connection will bring operational alignment between MarkitWire users and collateral and reconciliation teams using triResolve, with minimal input needed and no additional cost to reap the benefits.

Peter Altero Jr, Head of Rates Business Development at OSTTRA, added: “The connectivity between MarkitWire and triResolve shows that OSTTRA is focused on accelerating innovation in post-trade.  Our clients will only have to flick a switch on the MarkitWire side to see the significant benefits of enhanced data in triResolve.  This is just the beginning.  There is so much more efficiency to be gained up and down the post trade stack by having access to enhanced, standardised transactional data.  Watch this space”.

Sheila Schofield, Head of triResolve Business Management EMEA, concluded: “Data from MarkitWire acts as a gold copy for the majority of OTC derivative transactions. For our clients, seamlessly incorporating this data in portfolio reconciliations will result in improved efficiency with minimal effort and no extra cost, enabling them to focus on their value-add tasks”

OTC Space asked:

Is the purpose of MarkitWire to cause both parties to a trade to agree to a single electronic representation of the trade, e.g. in FpML, meaning that (in theory) both parties should book the same trade and not need further reconciliations? If so, why is this reconciliation needed?

OSTTRA replied:

Yes, MarkitWire is an electronic confirmation platform which creates a single mutual legal contractual record of OTC rates transactions. MarkitWire provides standardised workflows to enable firms process new trades and post trade life-cycle events. Through our proprietary secure connections, confirmed trade details are fed directly into customer risk systems. MarkitServ is not a calculation agent, however the data firms’ source from the MarkitWire platform is essential to all downstream calculations, including cash flows, valuation and settlement and a critical source of data to enable regulatory reporting.

triResolve’s role is to automate the agreement of outstanding OTC derivative trade populations, key terms and valuations. The fully confirmed MarkitWire interest rate transaction is typically reconciled daily on the triResolve portfolio reconciliation service until it matures. MarkitWire and triResolve have a significant overlap of common customers who utilise these workflows to ensure robust operational risk management.

triResolve customers typically source their trade data from internal trade/risk warehouses or collateral management systems where end-of-day valuations are available. The source systems used for this process often lack some trade details and can also lead to some inconsistencies in submitted properties for certain trades, causing unnecessary noise in the reconciliation and dispute resolution process.

By enabling common customers to efficiently pass details of the full MarkitWire legal confirmation to triResolve with their daily updated trade records also on triResolve, customers will receive a much more effective reconciliation workflow for interest rates trades. The availability of bilaterally agreed and legally binding full economic trade details will unlock additional analytic opportunities for identifying and resolving valuation disputes.

Lastly, if the source of the dispute was an incorrect value agreed on the legal Confirmation in MarkitWire, once identified firms can easily bilaterally amend a confirmed MarkitWire record, triggering a new trade message to be fed down to triResolve. This new amended trade record for a previously confirmed trade will supersede all past and future events on the particular trade.

Osttra’s purpose is to provide seamless value-added services driving efficiencies across the post trade stack for both new and existing customers. The connection between MarkitWire and triResolve is only just the beginning.

OTC Space asked:

Would putting the output of MarkitWire onto a blockchain lead to a golden source for the trade and also avoid the need for a central reconciliation service?

OSTTRA replied:

The goal of this service is to create a more complete and integrated dataset. Blockchain will not address the fundamental gaps which exist between the confirmed dataset and daily valuations and cashflows. The initial goal of this workflow is to remove friction which exists in the valuation dispute resolution process. There are typically two different teams who are responsible for the trade confirmation and collateral management / valuations process internally at firms which makes dispute resolution workflows a multistep process.

This workflow aims to remove friction in the process, making dispute resolution a more efficient end to end process. There is a misconception across the industry that central reconciliation is a bad thing, when it’s not. It’s a precautionary measure, to prevent breaks downstream, required by regulation in many jurisdictions, which allows customers to sleep peacefully at night. The big issue is the time it takes for customers to resolve reconciliation which is what this service provides. There is so much more that can be done with this integrated dataset up and down the post trade stack which we’re already exploring.