A group of banks, together with Etrading Software are developing an open standards protocol for technical integration between broker dealers permissioning systems and swap execution facilities (SEFs).
It is hoped that the Trading Enablement Standardisation Initiative (TESI), could improve operational transparency and control on the financial markets if it attracts enough users and conforms with the US Commodity Futures Trading Commission (CFTC) final rules governing SEFs, which were introduced this quarter.
The first goal of the working group is to ensure the smooth migration of swaps trading onto the new bank-supported SEF, which is expected to go live later this year. With many new venues now opening up following the CFTC rules, however, the initiative may face challenges from other SEF platforms and protocols depending on the volumes it attracts. An aggregated service does though offer significant efficiency, ease-of-use and straight-through processing (STP) benefits, so it should find a ready audience.
According to the technology provider Etrading Software, adoption of the new TESI standards will deliver the following benefits to the industry:
• Faster client enablement.
• Increased operational efficiency.
• Reduction in STP failures.
• Help meet more stringent operational regulatory requirements.