Today we put out a press release announcing the real-time reporting of Swap transactions in our SDR View application and I wanted to provide some further insight into the value and importance of this.
First lets start with some recent history, always a good start for financial markets.
The DTCC DDR real-time dissemination dashboard has been publishing files in real-time since the start of 2013.
However while the CFTC Block trade rule was not final, it was agreed that all trades would be subject to a delay of 30 minutes before public disclosure. So even though the DTCC dashboard published new files every few minutes, these files only have trades that were dealt 30 minutes earlier.
Given this we had a public version of our SDR View application that updated every 30 minutes.
However as those of you that read my blog post, “SDR, Block Trade Rule, 30 July Update“, will know that on July 30th we moved from the Interim Period to the Initial Period and the real-time public dissemination of trades is no longer delayed for all trades, only block trades are delayed.
So we created a new version, SDR View Professional, for those folks that are really interested in seeing these trades as soon as possible. This checks every 60 seconds for new files on the DTCC dashboard and makes the new trade data available.
Apart from the pleasure of watching new trade events hit the screen, blink/flash a few times and results update, what have I learned by watching the trades? Well here are the first four.
- The time window from trade execution to visible in our screen for most trades is between 2 to 4 minutes.
- Even many large notional or block trades are disclosed in this 2 to 4 minutes time window.
- Many large notional or block trades do show up after a delay of 15 minutes or 30 minutes.
- A few trades show up at seemly random time delays, 12 mins, 20 mins, 1 hr.
And this is just looked at Cleared USD Swaps, where we would expect the greatest automation. So a trade is voice dealt, affirmed on MarkitServ, routed to a CCP, routed to a dealers systems and reported by the dealer to DTCC.
I guess this is all to be expected as talking to firms that report their swaps, there is a lot of variation as to whether a swap transaction is reported from a Front Office System or a Back Office System.
Either-way we can generally say that trades are being publicly disseminated within a few minutes.
Whether this is as soon as “technologically practicable” as per the CFTC regulation is open to interpretation. If for nothing other than “the love of round numbers”, I would define “technologically practicable for OTC Derivatives” as 60 seconds. A far cry from the milliseconds one talks about in Algo trading but given the nature of the market as one with a low frequency of very large size trades, that 60 seconds is good enough.
I hope as firms start to use the public dissemination feed, there will be pressure from firms themselves, the SDRs and the Regulator, for transactions to be reported within 60 seconds.
Clearly when trading moves to SEFs and the SEFs report directly to SDRs, we would expect to see transactions reported well within the 60 seconds.
This can only help with market transparency and efficiency.
It benefits market participants, whether I am a dealer who has been recently asked to quote, not been dealt and want to find out whether that same trade got away and at what price or whether I am a client that dealt with a dealer and want to see whether the dealer hedged my trade and at what price.
Thats it for the general value and importance of real-time public dissemination.
Turning now to the narrower question of specifically why this is important for us at Clarus Financial Technology?
Well with this we have taken our free SDR View and segmented into three distinct versions; each for a different user profile and introduced a pricing plan. So we now have the following:
- Personal, free to use for those users that have an occasional interest in looking at recent volumes of trades in a product or currency, whether cleared or un-cleared.
- Researcher, for research analysts at financial firms or academic institutions, that need to extract time-series of volume and price data on transactions to inform their research and analysis.
- Professional, for active users at trading firms, sell-side or buy-side, that have a need to know what has traded today, at a given moment, at what price and in what size.
The later two versions are not free and are available under monthly subscription plan, following a free 30 day trial.
With the increased investment in real-time intra-day, new functionality and new hosting requirements, we needed to start charging. Otherwise it would not be possible to continue to provide the transparency that many of you have found interesting and useful enough to send us your feedback and comments.
I look forward to our existing users continuing to use SDR View, hope that many of you will trial the new versions and will also recommend these to your colleagues and contacts.
From our side we promise to keep investing in moving forward; so expect more functionality, more products, more repositories.
I leave you with the message that “transparency is good for all”.
It is good for the Derivatives market and what is good for the Derivatives market is to the benefit of all of us that work in and rely on this market.