8 8 2016 10 53 30 AMTrade Matching / Comparison is the first step in the clearance and settlement process for securities transactions under the DVP Service. Trade Matching / Comparison consists of the receipt, validation and reporting of data received from participating Netting Members on the long and short sides of a securities transaction evidencing a match of trade terms that facilitates timely settlement. Comparison is critical because, under FICC GSD Rules, it results in evidence of a valid, binding and enforceable contract between counterparties whose trades have been compared and it is at time of comparison that FICC provides a guaranty of settlement for all DVP Service Netting Members. Once a netting eligible trade is matched, the trade is guaranteed and novated to GSD.

For the DVP Service, GSD provides for three types of trade comparison: (1) bilateral comparison, (2) locked-in comparison and (3) demand comparison.

Bilateral comparison requires that the two trade counterparties submit trades to GSD, in which certain mandatory details either match or fall within predefined parameters, to affect a match. Bilateral comparison is used for all buy/sell transactions and for some repo transactions submitted after 4:00 PM*. Bilateral matching for buy/sell transactions and DVP Repo transactions occurs between the hours of 7:00 AM - 8:00 PM. To view the Real-Time Trade Matching (RTTM®) bilateral comparison flow chart, click here.

Demand comparison is designed to give Netting Members flexibility and control over the comparison process for trades executed via intermediaries. GSD deems a trade compared upon receipt of the trade data from the demand trade source. GSD has designated the Repo Brokers as Demand Trade Sources with respect to Brokered Repo Transactions (other than GCF Repo Transactions) that are submitted to GSD by the deadline established for this purpose in the Schedule of Timeframes. At the point inwhich the broker submits the trades, the trades are matched and guaranteed. However the dealers are still obligated to submit and affirm/match their trades for operational purposes. Failure by a dealer to submit an affirmation / match results in the Demand Trade being locked in at 4:00 PM. Trades executed with brokers after 4:00 PM require a bi-lateral match as the Demand feature ends at 4:00 PM. Refer to the pdf FICC GSD Rulebook (891 KB) for more information. An example of a demand trade in DVP would be, if an Inter-Dealer Broker (IDB) submits a DVP Repo trade on behalf of two dealers where the IDB has been authorized to act on said dealers behalf. To view the RTTM demand comparison flow chart, click  pdf here (157 KB) .

Locked-in comparison requires only a designated locked-in trade source to submit trade details to affect a match. The locked-in trade source must be authorized by the Netting Member(s) on whose behalf it will be submitting trade data. The Netting Member(s) must provide GSD with authorization to receive any trade data submitted by the locked-in trade source. Eligible trade data submitted to GSD for locked-in comparison are considered compared when GSD receives the data from the locked-in trade source. An example of a locked-in trade in DVP would be Auction Takedown Trades submitted by the locked-in trade source, the Federal Reserve Bank of New York. Inter-Dealer Brokers (IDBs) also submit locked-in trades on behalf of Dealer Members as part of the GCF Repo® Service. You can find out more about locked-in trades for the GCF Repo Service here.

 

*All times herein are EST.

To learn more about the Real-Time Trade Matching (RTTM) application, please select from the topics listed under Trade Matching/Comparison from dropdown menu located to the left of this article.

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