Sunil Daswani on MarketAxess Post-Trade Repo: Transforming Securities Financing Operations#

Overview of MarketAxess Post-Trade Repo#

• Purpose and Functionality: MarketAxess Post-Trade Repo is a near-real-time exception management tool designed to streamline trade matching and confirmation in the repo market. It addresses inefficiencies from manual processes and fragmented systems, reducing settlement risks and delays. The platform aims to confirm trades within 15 minutes, with over 50% of trades matched in under one minute and 90% within an hour via FIX API integration.
• Workflow: Counterparties submit trade details via FIX protocol or CSV files through secure FTP. The platform compares critical elements (economics, fund IDs, settlement instructions) and confirms matches instantly or flags discrepancies for resolution via MarketAxess Insight, a web-based dashboard for intraday match rates and exception management.

MarketAxess’ Entry into the Repo Space#

• Historical Context: MarketAxess, with over 30 years of expertise in fixed income post-trade solutions, launched its Post-Trade Repo matching service in 2008, recognizing the repo market’s operational challenges despite its $4 trillion daily volume in the US.Link
• Strategic Fit: Leveraging its fixed income infrastructure and network of over 2,100 firms, MarketAxess extended its matching technology to repo, connecting sell-side and buy-side firms across Europe and the US for efficient trade confirmation.LinkLink

Key Features Valued by Clients#

• Auto-Pairing: Intelligently identifies potential matches despite minor discrepancies, speeding up exception resolution.
• Comprehensive Matching: Covers trade economics, fund IDs, settlement instructions, and lifecycle events like rerates and closeouts, recently enhanced for evergreen, extendible, and callable repos.
• Pair-Off Functionality: Enables firms to agree on pair-offs before the value date, optimizing balance sheet and liquidity management.
• Analytics and MIS: Provides trend analysis and benchmarking against industry averages, helping firms identify and resolve recurring issues.
• Network Effect: Connects over 112 firms, including seven major fund administrators, creating a robust community for standardized, efficient matching.Link

Addressing Regulatory Requirements#

• Accelerated Settlement (T+1): Near-real-time matching supports compressed settlement cycles, critical for T+1 environments where end-of-day matching is obsolete.
• US Treasury Repo Mandatory Clearing: Increased sponsored repo activity on the platform enhances visibility for buy-side clients across bilateral and sponsored flows.
• CSDR: By resolving discrepancies on trade date, the platform helps firms avoid costly settlement failure penalties in Europe.
• SFTR: Provides accurate matched data to support compliance with SFTR’s 150-field reporting requirements, streamlining regulatory workflows.LinkLink

Operational and Risk Benefits#

• Reduced Settlement Fails: Early discrepancy resolution prevents fails, saving costs under CSDR penalties.
• Operational Efficiency: Automates manual processes, freeing staff for value-added tasks and reducing reconciliation time.
• Enhanced Risk Management: Confirmed trades improve exposure visibility, crucial during volatile markets.
• Scalability: Handles growing trade volumes without proportional increases in resources.
• Data Insights: Analytics identify exception root causes, driving continuous process improvement.LinkLink

Integration with Financial Ecosystems#

• Flexible Connectivity: Supports FIX protocols for real-time integration and CSV via secure FTP for simpler setups, accommodating diverse client needs.
• Straight-Through Processing: Matched data updates internal systems automatically, enhancing end-to-end automation.
• Adaptability: Fits both comprehensive digital transformation strategies and targeted pain point solutions, aligning with firms’ tech landscapes.

Future Trends and MarketAxess’ Strategy#

• Compressed Settlement Cycles: Continued global shifts to T+1 require enhanced real-time capabilities, which MarketAxess is prioritizing.
• Intraday Liquidity Management: Basel regulations drive demand for granular repo position data, supported by expanded analytics.
• Blockchain and DLT: Exploring potential applications to transform trade execution, clearing, and settlement, though adoption is not imminent.
• Market Consolidation: Scalable platforms like MarketAxess’ support larger players handling growing volumes, ensuring performance and standardization.Link

Advice for Firms Enhancing Repo Matching#

• Competitive Necessity: Post-trade efficiency is critical in a T+1 and regulatory-heavy environment.
• Network Value: Choose platforms with broad counterparty connectivity, like MarketAxess’ 112+ firm community, for maximum impact.
• Holistic Lifecycle Management: Ensure solutions cover initial trades and lifecycle events like rerates and closeouts.
• Leverage Analytics: Use data insights for process optimization and benchmarking against industry standards.
• Strategic Alignment: Integrate post-trade solutions with broader efficiency, risk, and compliance goals, starting with a detailed assessment of current processes.Link

Conclusion#

MarketAxess Post-Trade Repo, under Sunil Daswani’s leadership, is transforming the $4 trillion repo market by addressing operational inefficiencies, enhancing regulatory compliance, and preparing for future trends like T+1 settlement and blockchain. Its real-time matching, comprehensive features, and extensive network of over 112 firms position it as a leader in post-trade automation, delivering significant operational and risk benefits. As regulatory and market pressures intensify, firms adopting such platforms will gain a competitive edge in securities financing.