From faxes to fintech: reflecting on more than 20 years of industry evolution

The financial markets have undergone a dramatic transformation in the past two decades. From its origins replacing fax-based trade confirmations, to its current role as a leading fintech platform, OSTTRA MarkitWire has helped shape the post-trade landscape and actively participated in its evolution. Michael Wilshere, commercial head of rates, trade processing at OSTTRA, discusses the evolution of the industry and OSTTRA’s role in driving these changes

Momentous change in financial markets

Michael Wilshere, OSTTRA

Looking back on this evolution, the extent of the change is striking. Manual processes, once reliant on couriered derivative confirmations and faxed trade records, have been replaced by seamless electronic post-trade processes. This shift has been driven in part by new technology, but also by pivotal market events that have spurred innovation and ultimately benefited the entire industry. The ramifications of the financial crisis that began in 2007–08 have shaped much of today’s over-the-counter derivative trade workflows. Legislation has been passed and successfully rolled out across market jurisdictions.

Reflecting on the past 20 years, the industry has achieved remarkable progress, with OSTTRA MarkitWire playing a critical role. But the journey doesn’t end here. OSTTRA remains committed to partnering with clients to navigate the challenges and future opportunities. Synergies across the OSTTRA business mean clients have unified, streamlined workflows across large datasets – a marked difference to the siloed interactions of the past.

Twenty years of evolution

The evolution of post-trade processing was driven by technology vendors but guided by financial institutions. In the early days of SwapsWire, now OSTTRA MarkitWire, the focus was on building a platform that could connect counterparties for electronic trade confirmation in the interest rate derivatives market, and then quickly progressed to support clearing. This marked a significant step forward from the manual processes that dominated the industry.

Since then, the service has evolved into a comprehensive platform driven by straight-through processing (STP), significantly reducing operational risk by minimising human intervention. Today it comfortably processes tens of millions of trade records annually, supporting rates, credit, equity and repo transactions across 34 currencies, and various product sub-types, with connectivity to 12 central counterparties (CCPs) and multiple venues supporting eight venue types. Building on this success, OSTTRA MarkitWire is transforming the bilateral repo market with standardised automated affirmation and confirmation workflows, while working with its customers to prepare for the upcoming US clearing mandates.

Furthermore, OSTTRA Trade Manager interacts seamlessly with OSTTRA MarkitWire, providing investment managers and fund administrators with a consolidated matching and confirmation workflow across asset classes.

OSTTRA MarkitWire has consistently supported the industry through periods of significant change and uncertainty. During the Lehman Brothers crisis in 2008, OSTTRA worked with clients and clearing houses to assist in an orderly transition of portfolios. The partnership has continued through the roll-out of clearing best practices and mandates worldwide, with OSTTRA MarkitWire connectivity extended to relevant CCPs, not only for clearing but also for post-clearing events, including cleared trade interbank offered rate (Ibor) transitions. The service now includes CLS settlement and connectivity to trade repositories for regulatory reporting.

In this era of complex and intense regulatory debate, OSTTRA has remained a reliable partner, providing clients and partners with automated, digitised solutions, helping to manage the cost and complexity of change.

Consensus building: the keystone for centralised adoption

One of the most important roles of a large technology provider is to act as a forum for rational industry-wide decision-making. OSTTRA brings together the collective needs of the market and provides expertise and insight on how workflows can evolve to satisfy new regulations efficiently.

Market participants can struggle to collaborate and find cost-effective solutions to benefit the industry without raising legal concerns. OSTTRA has provided a secure forum for discussion since the initial launch of SwapsWire, with a member group of 23 businesses interested in standardising interdealer messaging in the rates market. Today, it engages with a network of  more than 1,600 active participants across multiple working groups, which continues to grow, particularly in emerging markets where the demand for market infrastructure increases.

Together with its partners, OSTTRA has helped guide the industry through the changing post-trade landscape, drawing on new technologies and techniques as they have become available. This progress continues, with OSTTRA entering a new phase, offering enhanced and synchronised benefits to its customers.

Marrying ‘T0’ and ‘T+’ post-trade processes

OSTTRA has aligned its services to enable frictionless workflows for confirmation and reconciliation. Full legal confirmation remains central to OSTTRA’s credit, rates and equity businesses, providing a golden source of agreed electronic derivatives contract information. This creates a point of agreement and standardisation that enables trust among market counterparties.

Using this record in downstream T+1 activities lowers the resource burden for operational teams managing increasing volumes and system complexities. In an environment of ever-increasing regulatory scrutiny, banks must conduct assorted reconciliations across their technology infrastructures to ensure data accuracy and compliance. This includes reconciling data across global business units with counterparties, clearing houses and trade repositories.

Given OSTTRA’s interconnected post-trade services and more than 20 years of expertise, it is uniquely positioned to assist the industry in navigating these processes. Increasing STP, leveraging data, enabling synchronised analytics and optimising resource use reflects OSTTRA’s commitment to uniting post-trade processes for the benefit of the industry.

By connecting OSTTRA MarkitWire with its portfolio reconciliation service, OSTTRA triResolve, OSTTRA endeavours to add further use cases that unlock new synergies within its products. Future use cases will span different asset classes and platforms, amplifying resource optimisation and permanently removing redundant processes.

Partnering with the industry through interest rate reform and transition

The global introduction of overnight risk-free rates (RFRs), replacing legacy Ibors across multiple markets and currencies, has been a major industry milestone. For more than 20 years, OSTTRA has helped navigate industry change such as central clearing, regulatory reporting, compliance timeliness and disclosure of material economic terms. Benchmark reform is no different.

OSTTRA MarkitWire’s CCP Sync services for rates initially focused on netting, compression and portfolio transfers. By integrating multiple CCP updates and absorbing trade messages into customer systems via existing application programming interfaces, it enabled advantageous STP workflows and mitigated the need for additional post-trade connectivity. As clearing continues to evolve across jurisdictions, this connectivity remains crucial.

Benchmark reform through clearing events brought the challenge of running high-risk, multi-year projects, transitioning millions of trades from Ibor rates to new RFRs. Using OSTTRA’s CCP Sync service, hundreds of customers have avoided expensive ‘blue ocean’ builds and instead utilised the OSTTRA MarkitWire connectivity to multiple CCPs and coverage of key market currencies, to achieve transitions in an automated manner. OSTTRA partnered with the industry through the initial Ibor transitions in 2021, as well as the notable US dollar Libor transition events in 2023 – and this work continues.

As various markets and regulators continue to review and update legacy rates – most recently in Canada, and soon in Mexico, Japan and Israel – OSTTRA is ready to deliver exceptional CCP Sync services that reduce cost and risk through low-latency resilient frameworks. While legacy rates will persist in certain markets, the aim is to partner with the industry across broader portfolios of trades, cleared or non-cleared, while supporting rates transition activity when the time is right.

Shaping the future of post-trade together

Where does the industry go from here? OSTTRA’s experts are following the development of exciting new technologies, such as distributed ledger and artificial intelligence, and applying innovative and incremental changes to its products – OSTTRA Trade Manager’s Paper Digitisation module, for example. These changes are natural improvements to the existing products that have served the industry so well.

OSTTRA looks to its clients to shape its functionality road map. Their input may be driven by technological advances, operational efficiency or challenges arising from new ideas or regulatory and compliance needs. Whatever the use case, OSTTRA is committed to working collaboratively with the industry. Not in the business of advocating shiny new technologies for its own sake, OSTTRA’s philosophy is to advance the needs of the industry, building on more than 20 years of connectivity, resilience and partnership.

As post-trade evolves, OSTTRA is embracing the challenge and the technology, collaborating with its clients to build a future defined by efficiency, innovation and connectivity. The future is post-trade, and it starts now.

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