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September 28, 2016

One Clearing Platform to Rule Them All

I wish Millennium and LSEG luck, in what will be the mother of all clearing projects.

London Stock Exchange has an embedded IT company, Millennium IT. An interesting announcement was made here on their website about an agreement to "…provide LCH and other Post Trade clients with a highly-optimised, ‘zero-touch’ real-time framework, able to support all asset classes. "

The announcement implies that LCH.Clearnet will replace all its current clearing systems with this new platform, which makes use of GPUs for high performance. People with a long memory will know that this isn't the first time the same goal was announced, with the Generic Clearing System (GCS) project having the same aim. You can see the outcome of GCS documented in this FT article, an overall cost of €121m was spent for a deliverable of nothing (as in no system completed at all).  The important difference in this case, is that Millennium actually have real software in use at existing customers, whereas GCS was a moon-shot approach starting from nothing and attempted to create the worlds most complex clearing system from a standing start.

I also had the honour to be part of the team that migrated half the worlds OTC derivatives onto Murex in 2011, we ran the two systems in parallel for months, in what must have been the most stressful and successful project I've ever completed. Nobody should underestimate how complex the clearing workflow is now – given the addition of the CFTC timing requirements, plus compression, plus default management.

I wish Millennium and LSEG luck, in what will be the mother of all clearing projects.


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