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Provable Markets has completed the real-time novation of a pre-existing bilateral transaction into DTCC’s NSCC Securities Financing Transaction (SFT) clearing service.
The Depository Trust and Clearing Corporation’s (DTCC) National Securities Clearing Corporation’s (NSCC) SFT clearing service provides central clearing and settlement for overnight borrows and loans of equity securities.
Provable Markets achieved the novation through the use of its alternative trading system (ATS), Aurora. In the first use case, an outstanding bilateral transaction was routed to the firm’s ATS for confirmation, then forwarded to NSCC’s SFT clearing service for processing.
In doing so, NSCC became the lender to the borrower and the borrower from the lender.
According to Provable Markets, the joint offering enabled novation to be completed in real-time, with minimal operations intervention, and without the need to recall and return the outstanding trade.
Aurora provided further downstream processing in near-real time to the respective clients’ books and records systems through its role as an NSCC Approved SFT Submitter.
In conjunction with Provable Market’s broader offering, the company says this workflow now manages both cleared and uncleared activity in one place, “providing manoeuvrability” on demand across settlement types as market dynamics fluctuate.
Provable Markets CEO Matt Cohen says: “It’s hard to underscore the importance of completing this novation, only made possible through detailed and thoughtful collaboration between Provable Markets, DTCC, and our clients.
“Novation often carries the stigma of being extremely difficult to complete between all parties to a transaction. In contrast, capitalising on the benefits of clearing in near-real time can be a game-changer, opening up tangible possibilities for participants of all sizes to realise immediate ROI, at a time when capital relief optimisation and operational excellence are of utmost importance to operate efficiently in today’s market landscape.”
John Vinci, managing director and head of securities finance and collateral management at DTCC, adds: “The SFT Clearing service aims to provide NSCC members with the ability to offset their balance sheets through novation to NSCC, including existing NSCC members as well as their institutional clients.
“We look forward to continuing our work with Provable Markets to deliver our clearing capabilities via our SFT offering to an even larger community of members.”
