Trade management servicer Omgeo has announced a joint venture with the Korea Securities Depository (KSD) to provide investment firms in that country with automated trade matching and processing.
Slated to begin testing in the first half of next year, the service bureau will give Korean asset managers access to the Central Trade Manager matching platform and Alert, Omgeo’s standing settlement instructions (SSIs) database.
“Korean asset management companies will be able to process and match trades automatically by accessing KSD in the local market instead of processing manually over fax, e-mails or the telephone with overseas broker-dealers,” said Tony Park, senior manager in the depository’s fund services planning unit. The firms will “reduce transaction costs and operational risks, while also enhancing time-efficiency in cross-border operations.” Boston- and New York-based Omgeo’s client base includes more than 6,000 firms in 45 countries.
“Clients will not need to separately send trades to KSD,” explained James Drumm, executive director of Omgeo in the Asia-Pacific region. “Rather, this is all handled through Omgeo. By having trades centrally matched, investment managers need only worry about exceptions where details do not match those of their counterparty.” By automating SSIs–messages that indicate where to deliver securities or cash–on Alert, the risk of errors due to manual entry will be reduced, added Drumm.
For KSD, the initiative marks an increased emphasis on straight-through processing. “This partnership allows Korean asset managers to join Omgeo’s worldwide community of clients, thereby reducing operational risks and improving efficiency,” said Do-Yeal Lee, managing director of deposit settlement services, in a statement. The reduction of operational and counterparty risk will be key to the growth of Korea’s securities market, he added.
“In 2009, counterparty risk management is going to be a global effort for technologists at capital markets firms,” said Adam HonorÃ©, an analyst at Boston-based Aite Group.
The deal with Omgeo “will allow Korean investment managers to expand their global reach without having to install and learn new technology and new processes,” said HonorÃ©. The move also pushes Omgeo deeper into the emerging markets. “Coupled with some of their recent technology acquisitions, they are building a standardization framework that should allow them to duplicate this model in almost any market in the world,” he noted.
Jointly owned by the Depository Trust & Clearing Corp. and Thomson Reuters, Omgeo offers similar services to the central securities depositories of Canada and Japan. The vendor recently entered into discussions with the Brazilian Clearing & Depository Corp.
“Omgeo is pleased to have the support of the Korean Securities Depository as we continue to build momentum in Asia,” said Tim Keady, managing director of global sales and relationship management, in a statement. In February, Charles River Development said that it had linked its order management system to Omgeo to provide mutual clients in Japan with a front-to-back-office solution for processing domestic and international trades.