ICMA ERCC publishes best practices on pair-offs and error trades
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ICMA ERCC publishes best practices on pair-offs and error trades 21 May 2024 Europe Reporter: Sophie Downes
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The International Capital Markets Association's (ICMA) European Repo and Collateral Council (ERCC) has published two sets of proposed best practices for wider market consultation.
The first set provides guidance on ad hoc bilateral netting or “pair-offs”, in order to support post-trade efficiency and help reduce settlement fails.
Through this, ICMA aims to standardise the pair-off process to make manual pair-offs more efficient, as well as to facilitate automation. The association says this would make an important contribution to settlement efficiency.
Consequently, the ERCC Operations Group has created a proposed checklist for bilateral pair-off agreements, including guidance on the related workflow and deadlines.
The second set of best practices revolves around cancellations by automatic trading systems (ATS) of trades that have been executed in error, following initial bilateral discussions with trading platforms.
The consequent ERCC recommendations provide guiding principles which aim to ensure consistency of error cancellation policies across the various platforms.
The ERCC has invited market participants, as well as infrastructure and service providers, to review the proposed recommendations and to provide feedback to the council.
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