Digitizing interactions between OTC derivatives market participants

Challenge

• Reconciliation across different participants who use different data models is required at every event – periodic cash flows, increases, option exercises, and so on.
• OTC derivatives trades commonly contain about 150 datapoints, which needs to be reconciled between counterparties.
• Post-trade processing of OTC derivatives lacks standardization, resulting in inefficiencies and errors.

Solution

• Trade data flows through the platform, where the data is standardized, and discrepancies between counterparties are flagged.
• Discrepancies can be investigated and amended between counterparties in near-real time via APIs.

Why Corda?

• Corda was selected for its peer-to-peer transaction model allowing for transactions to be broadcasted only between counterparties involved in the transaction. 

Results

• Automates identification and resolution of discrepancies so traders focus on their core duties.
• Frees up 30% to 60% of capital related to counterparty risk.