Misys, the global application software and services company, has extended its Confirmation Matching Service (CMS) to include MT306 messages for matching Exotic FX Options. This extended capability within Misys’ matching engine enables the buy-side counterparties to benefit from increased automation and improved risk management, whilst also reducing manual processes executed by banks.
The US Federal Reserve and the Bank of England have recommended banks to improve automation and reduce manual processes in order to reduce risk associated with errors. In response, Misys joined the Exotic FX Options Group that was set up by the banks to address automation of MT306 messages for confirming and matching Exotic FX Options and has been an active participant in the group.
MT306 messages through SWIFT enable banks to exchange Exotic FX Options between each other in a simple automated manner. However, many of these are also traded with fund managers and other buy-side organisations that are not on the SWIFT network. As such, traditional post-trade confirmation via fax or over the phone was still necessary for organisations trading outside of the banking network. With Misys adding the MT306 to its Confirmation Matching Service, its non-bank customers will now also be able to benefit from the automated post trade confirmation and matching of Exotic FX Options.
Patrick Fisher, head of the post trade automation industry working group at JP Morgan Chase, said: “It’s good news for the industry that Misys is opening up MT306 and confirmation of exotic trades to non-banks. Every opportunity for the industry to mitigate risk and streamline processes through automation should be explored and exploited. We intend to further expand the range of currency products that we can automate in 2010, and will continue to work with Misys to ensure their continued involvement with this key initiative.”
Gil Bray, solutions director CMS at Misys, said: “This step is the latest in a long line of market-led enhancements by Misys that respond to the changing industry dynamics and the regulatory framework in which it operates. We have more than 950 customers who all put their trust in our service for confirmation, netting and settlement needs around the world.
“Ultimately, this will make their businesses more efficient with faster processing and settlement times and fewer errors, leading to an increase in margins. At the same time they will ensure they are attractive partners for the banks by simplifying the confirmation of complex trades that were otherwise manually completed.”