Finextra reports the latest exchange looking at the OTC markets – lch.clearnet eyeing up the FX market to work out how they can get clearing involvement.
This is just days after the news confirming fxmarketspace is being closed down (by CME and Reuters) because there was not enough activity on the platform.
Given everyone’s fear of counterparty risk at this point, you’d think the timing cannot get much better for offering centralised clearing for OTC products. So why is it so difficult to onboard clients to these offerings? I can’t believe its just a documentation hurdle – sure the lawyers are probably quite busy with one thing or another at this point, but surely any business/risk manager looking to be a hero would have legal review and signing way up their todo list.
So what’s missing from the pitch?
The news has covered it many times – yes companies losing millions in terms of lost productivity because people are facebooking each other rather than getting on with their latest excel spreadsheet. The world is doomed with everyone spending their day in Facebook installing and using apps to prod/poke or conduct zombie or werewolf wars against their friends. Just scoot around Facebook looking for your colleagues and you’ll see a gazillion US students with names similar to those you are seeking, and when you do connect with your colleagues you’ll quite possibly get to see their holiday snaps – yes the bloke who is always Mr Sensible in the smart suit every weekday is Mr Speedo (or worse) on the beach…. So sure – I can see why there might be reluctance to site your business in that environment (though would that environment remain so “personal” if more businesses set up shop there?)
So why would one of the existing platforms integrate one of the social networks such as linkedin for their clientbase? Well, is there any value in making the user group for the venue in question more public (at least among that user group) and providing some form of authentication of their identity, just as Bloomberg do with their MSG userbase? And if people are using social networks from where they aggregate everything then dig into whatever they wish to spend their time on, then shouldn’t the etrading platforms offer them a route to do this for their offering too?
An FPL Account Management Working Group is being established to examine where a messaging standard will assist in the setup and maintenance of front office and back office accounts and their interaction with clients, clearing firms, execution firms, the give up process and exchanges.
Initial objectives of the group include:
– Programmatic Account Setup within one or more systems
– Programmatic Account Maintenance within one or more systems
– Programmatic Risk Controls at an Account Level
– Linking Front Office Systems Accounts with Back Office System Accounts
– Better Process Control Around Account Management
– Better Communication with Exchanges and Contra-Brokers
Hey!! Looks like my dream of a “sane” onboarding standard just might come true….
Funny that while all of the platforms and venues are keen to wave the flag about the massive workflow improvements they can deliver by replacing human steps in the trading and settlement workflows with electronic, scalable, systematically repeatable steps instead, they still all run client onboarding processes which are generally full of human intervention, and if not paper based then will often utilise spreadsheets or emails that tend to change format and content with each “good idea” that the sender has.
Surely with the amount of expertise that we as an industry collectively have in terms of protocols and feeds and integration of systems, it would not stretch the imagination to come up with an open standard for a client onboarding feed: eg a simple xml feed of client info from the vendors system to each dealers CRM system to present the requests and initiate their take on process, then give a status update back as the request is being processed.