Jasdec launched its own pre-settlement matching system (PSMS) in 2001 covering domestic equity transactions. The deal with Omgeo involves linking JasdecÆs own PSMS with OmgeoÆs Oasys Global system, thereby providing a single point of access for the both domestic and cross-border trades in Japan.
The deal is being announced at Sibos today.
By international standards, trade failure rates in Japan are high, so the availability of a broader pre-settlement matching system will be welcome news to fund managers who trade in the market, at least to those Omgeo clients.
ôThis link in Japan should leverage the same straight through processing benefits that have been experienced in markets like the US where automated pre-settlement matching is used across the board,ö says Martin Brennan, managing director of global sales and marketing for Omgeo. ôOne major US investment manager has estimated savings in the region of $200,000 to $300,000 by reducing the number of failed trades and removing the need to support two matching systems.ö
Omgeo has been testing the link with a number of early adopter clients, making simulated trades between Hong Kong and Japan. ôWe are now working with a few of our clients to put live trades across the link by the end of the year,ö says Brennan. Omgeo has about 60 clients in Japan.
The reason the PSMS link saves market participants money is because it reduces the number of steps needed to confirm a trade. In the past, investment managers have been charged with sending trade instructions to each trust bank in order to affirm a trade with a broker. The trust bank would then send instructions to Jasdec to settle. A lot of this communication happened by fax.
ôUnder the link, matched institutional trades will be sent automatically to Jasdec who then sends the trade instructions directly to the trust bank,ö says James Drumm, executive director of sales and relationship management in Asia for Omgeo. He says, down the track, the company hopes to include confirmations for foreign exchange trades and derivatives trades in the Jasdec link.
Omgeo is now seeking to forge similar links with other domestic pre-settlement systems in the region such as Hong Kong and Korea.
¬ Haymarket Media Limited. All rights reserved.
