LiquidityBook’s new product to reduce commercial breaks
Eliminating trade disruptions is key to shortening the U.S. settlement cycle to T + 1 over the next two years, according to Terrence Cheung, vice president of product management at LiquidityBook.
Business disruptions occur in the back office when there is a disagreement between the buy-side business and its sell-side counterparty, he said, adding that those disagreements can be digital in nature.
âFor example, the price, gross amount, commission, or charge may be inconsistent due to the way different systems round off in their calculations,â Cheung told Traders Magazine.
Business disruptions can also occur due to poor communication, he said.
“For example, if the buy-side business has changed their settlement instructions and the sell-side business has not updated their system, detecting this intraday discrepancy will prevent multiple back office transaction disruptions. days later, âCheung explained.
The reduction in the number of trade breaks reduces the need for human intervention after negotiation is over, according to Cheung.
LBX Trade Match, a new product from LiquidityBook, offers FIX allocations, confirmations and trade claims, allowing customers to leverage the network services they already use and eliminate transaction disruptions through a single solution.
âLBX Trade Match will allow our buying clients to send allocation instructions to their sell brokers through FIX and process FIX trade confirmations from their sell brokers,â Cheung said.
He added that DTCC recently retired its OASYS platform, which served a large percentage of the US stock market.
For this reason, the buy side should now either switch to DTCC CTM or look for a FIX-based solution for post-trade communication.
âThis prompted us to create new features to manage trade allocations and confirmatory claims built into our flagship LBX Buy Side, eliminating the need for a third-party system,â he said.
The new offering enables buyers and sellers to communicate post-trade information effectively and efficiently while adhering to the latest industry standards and best practices, Cheung said.
âInstead of performing tedious manual tasks or bringing in multiple vendors, businesses can perform streamlined processes through the same platform they already use for order and fulfillment management,â a- he declared.
Once the negotiation is complete, the buy-side businesses send allocation instructions to the sell-side to split the transaction into sub-accounts, according to Cheung. This communication can be via email or chat, requiring sales-side users to manually enter the fault into their system.
âThis process can also be done electronically, such as via FIX. These electronic methods allow the automation of many workflows, helping the sales side to achieve straightforward processing, âhe said.
After the allocation process, the seller side is responsible for sending confirmations to companies on the buy side.
For US buy-side companies, the official SEC Rule 10b-10 confirmation document is generated and sent by the sell side back office at the end of the day.
However, some buy-side companies want unofficial, electronic intraday confirmations to get a head start on post-trade error detection.
Unlike documents, electronic confirmations also allow the buying side to perform data analysis on this process.
âFor example, companies can use it to measure how quickly a sell-side counterparty can return confirmations and how often they lead to errors. The buy side can then use this metric to determine the order flow that a sell side counterparty will receive in the future, âCheung said.
The new trade settlement solution meets the needs of buyers and sellers and is cost effective.
Cheung said other email attribution and confirmation solutions charge per message, while their billing model is a flat rate per connection model.
âPlus, having a single point of access reduces the cost of managing multiple vendors,â he said.
The new product comes at a pivotal time for LiquidityBook, which earlier this year received a minority investment from Primus Capital to help accelerate its growth and further develop the business.
âIt has been a very exciting year for us. We unveiled a refreshed brand last month, âsaid Cheung.
The company has also made an effort to serve its sales customer base, hiring several key hires over the past six months, including Sayant Chatterjee as COO, Stephanie Minister as General Manager of Connectivity Services and Frank Kost as sales manager. Commercial Development side, North America.
âGoing forward, we will continue this growth trajectory by expanding geographically, lending our voice to industry issues and adding to our already robust product line, notably through new features such as LBX Trade Match,â said commented Cheung.