After a trade, post-trade work includes allocation and give-up, portfolio reconciliation, margin exchange and dispute management, and portfolio compression. Staff in operations, collateral management, and systems may use outside providers' services for this work.

"Post-trade efficiency services" is a collective name for the four roles. It does not claim that efficiency improves.

The four roles and the services

The names, scope, and operators of the services are based on official materials.

Role Step the service handles Services covered
Allocation and give-up Allocate a block trade to accounts such as funds, and match it with the receiving party OSTTRA's Give Up Messaging
Portfolio reconciliation Match the main terms and market values of trades with the counterparty and resolve differences OSTTRA's triResolve
Margin exchange and dispute management Exchange margin calls and their acceptance, and manage differences as disputes Acadia, OSTTRA's triResolve Margin
Compression Terminate trades that participants have pooled, all at once, to reduce notional amounts and trade counts OSTTRA's triReduce, Quantile

OSTTRA was formed in 2021 by combining four businesses: MarkitServ, Traiana, TriOptima, and Reset. OSTTRA describes Traiana as the business that built the post-trade infrastructure for FX prime brokerage and TriOptima as the business that pioneered multilateral compression1. The history and the operators' changes, along with post-trade electronic confirmation services, are covered in Post-Trade Confirmation and Matching Services.

Allocation and give-up

The service covered for this role is Give Up Messaging, built on the Traiana infrastructure. When an asset manager executes in one block for several funds, it allocates the trade to trades for each fund's account after execution. Give-up is the transfer of a trade from the executing broker to another broker that the asset manager designates. OSTTRA's materials call the receiving party a Prime Broker. There is a form that sends block-level and allocation-level details to the receiving party and a form that allocates through give-ups, and which of allocation and give-up comes first is not fixed.

Service Scope
OSTTRA's Give Up Messaging Sends block and allocation trade details to prime brokers and swap providers, who match them2.
OSTTRA's Trade Processing allocation Allocation matching, processing, and break management3.

In Give Up Messaging, executing brokers, investment managers, and trading venues send the details, and when they match, a confirmation returns to the investment manager. It places particular emphasis on FX, equity swaps, and CFDs2. Trade Processing allocation includes Traiana's Harmony and Clientlink. An investment manager allocates after the trade, either bilaterally with the counterparty or through give-ups to several prime brokers. In FX, Harmony supports give-up among prime brokers, executing brokers, and clients, and allocation processing covers both before and after the trade3. OSTTRA operates both.

Portfolio reconciliation

The service covered for this role is OSTTRA's triResolve. It matches the main terms and daily market values of trades with the counterparty and handles the steps from sending data to resolving differences4.

triResolve covers bilateral, cleared, internal, exchange-traded, prime brokerage, and client clearing trades, as well as collateral balances and cash flows. The steps are sending data, normalizing and reconciling it, seeing the same results as the counterparty, and resolving differences. It also validates and reconciles data reported to trade repositories, and the list of reporting regimes includes the U.S. Dodd-Frank Act, EMIR, Switzerland, Australia, Hong Kong, Japan, and Singapore4. OSTTRA operates it.

An OSTTRA announcement dated July 6, 2022 presented a connection that delivers trades confirmed in MarkitWire directly to triResolve. When a user enables it, the MarkitWire trade ID links the FpML representation of the trade to the existing data in triResolve5.

Margin exchange and dispute management

The services covered for this role are Acadia's services and OSTTRA's triResolve Margin. The operator of Acadia is LSEG (London Stock Exchange Group plc), and the operator of triResolve Margin is OSTTRA. LSEG completed the acquisition of Acadia at the end of March 20236.

Service Subject Step handled
Acadia's Agreement Manager Collateral agreement data Matching with the counterparty and recording the confirmed agreement7.
Acadia's IM Exposure Manager Initial margin and sensitivities, under ISDA SIMM and the schedule approach Central calculation, reconciliation, dispute resolution, and recalculation when SIMM data (CRIF) is resubmitted during the day8.
Acadia's Margin Manager Agreements covering bilateral OTC derivatives, cleared OTC derivatives, exchange-traded derivatives, repo, securities lending and borrowing, and others Messages pledging and receiving margin, dispute resolution, and an audit trail9.
OSTTRA's triResolve Margin Variation margin and initial margin, including margin on cleared and exchange-traded trades Calculating and exchanging calls (including the connection to Acadia), data quality checks, and tools for resolving disputes10.

triResolve Margin includes comparison with the counterparty's valuations in its data quality checks. It also offers collateral selection and booking, payment instructions for collateral through SWIFT, and connections to clearing brokers and others10.

Acadia also offers Collateral Manager, Payments Manager, and Settlement Manager, among others11.

For SIMM files, OSTTRA's triCalculate Initial Margin Analytics has a connection that sends them directly to IM Exposure Manager. It also has a connection with triResolve Margin12.

Compression

The services covered for this role are OSTTRA's triReduce and LSEG's Quantile Interest Rate Compression. LSEG acquired Quantile Group Limited on November 30, 202213.

Service Subject Step handled
OSTTRA's triReduce Cleared and non-cleared OTC derivatives Reduces gross notional and the number of line items, by cycle. Some cycles link with central counterparties14.
Quantile's Interest Rate Compression Interest rates. Several currencies can be targeted at once Reduces gross notional and trade count while preserving the overall risk and valuation15.

triReduce has cycles for interest rate swaps, inflation, cross-currency swaps, CDS, FX forwards, and commodity swaps. FX also covers NDFs and precious metals14.

In Quantile's process, participants and the central parties (the materials say "central parties") send data and set constraints. Proposals appear for the trades to terminate, the trades that remain, and the trades that replace the risk. When participants accept, it is executed at a central counterparty. There is also internal compression between units or legal entities within the same group15. Quantile also has services for initial margin optimization and capital optimization16.

A mismatch example and where each role fits

Consider a fictional example in which Company J, an asset manager, executes an FX forward with a notional of JPY 3 billion as one order at Bank K. Company J sends the block trade, and the allocation of JPY 2 billion to Fund 1 and JPY 1 billion to Fund 2, to Bank L, which Company J designated, and gives up the trade. In allocation matching, Company J's notice shows JPY 1 billion for Fund 2, while Bank L's records show JPY 800 million. The numbers do not match. How it is handled after the mismatch is found depends on the service and the contract.

Once an allocation matches, the trade's terms and market value are matched with the counterparty in the daily reconciliation that follows. triResolve Margin has tools for resolving differences in margin calls as disputes. Compression is done by cycle, with participants pooling their trades.

Alloc/give-upReconcileMarginCompressMatchallocationand give-upMatch termsand valuesExchangemargin callsManagedifferencesas disputesTerminatetradesin one go
Figure 1The four post-trade roles in the order they might act on one trade
Figure description

The steps from matching allocation and give-up to managing differences as disputes are one illustration of the order in which a single trade passes through the roles. Compression is not linked to the other steps, because participants pool their trades.

The materials confirm four connections between services. triResolve Margin and Acadia are linked for the exchange of margin calls. triCalculate sends SIMM files to IM Exposure Manager and connects with triResolve Margin. MarkitWire and triResolve are linked for confirmed trades.

Changes of operators

Date Event Source
December 6, 2021 LSEG announced that it had agreed to acquire Quantile Group Limited LSEG announcement17
October 26, 2022 The UK Competition and Markets Authority (CMA) cleared LSEG's acquisition of Quantile, finding no substantial competition concerns CMA announcement18
November 30, 2022 LSEG's annual report gave this as the date of the Quantile acquisition LSEG Annual Report 202213
December 19, 2022 LSEG announced that it had agreed to acquire Acadia. LSEG had held a minority stake in Acadia since 2018 LSEG announcement19
End of March 2023 LSEG completed the acquisition of Acadia LSEG trading update dated April 27, 20236

This page does not cover which service is better, the number of users, market share, fees, whether Japanese financial institutions can use each service, or services from providers other than OSTTRA, Acadia, and Quantile.

Notes

  1. OSTTRA, "About us", the paragraphs on the positioning of each business. ↩

  2. OSTTRA, "Give Up Messaging", the "Powered by Traiana" label and the two opening paragraphs. ↩ ↩2

  3. OSTTRA, "Trade Processing", the opening paragraph, the Allocate item, and the Coverage for Foreign Exchange item. ↩ ↩2

  4. OSTTRA, "Portfolio Reconciliation", the opening paragraph, the four steps under How it works, the Coverage table, and the Repository Reconciliation list. ↩ ↩2 ↩3

  5. OSTTRA, "OSTTRA Streamlines Trade Reconciliation with Connectivity Between MarkitWire and triResolve" (dated July 6, 2022), the two body paragraphs. ↩

  6. LSEG, "London Stock Exchange Group plc: Q1 2023 Trading Update" (dated April 27, 2023), the paragraph on the completion of the Acadia acquisition. ↩ ↩2

  7. LSEG, "Agreement Manager", the opening paragraph. ↩

  8. LSEG, "IM Exposure Manager (IMEM)", the opening paragraph and the Features & benefits section. ↩

  9. LSEG, "Margin Manager", the opening paragraph and the sentence on the agreement types covered. ↩

  10. OSTTRA, "Collateral Management", the Benefits, How it works, and Included Services sections. ↩ ↩2

  11. LSEG, "Acadia", the Our solutions section. ↩

  12. OSTTRA, "Initial Margin Analytics", the Seamless connectivity item under Benefits. ↩

  13. LSEG, "London Stock Exchange Group plc Annual Report 2022", the table of acquired businesses in note 1 (PDF page 168). ↩ ↩2

  14. OSTTRA, "Portfolio Compression", the opening paragraph and the Rates and Foreign Exchange items under Coverage. ↩ ↩2

  15. LSEG, "Interest Rate Compression", the opening paragraph and the three steps under How it works. ↩ ↩2

  16. LSEG, "Quantile", the Our solutions section. ↩

  17. LSEG, "LSEG to acquire Quantile Group Limited" (dated December 6, 2021), the paragraph on the agreement to acquire. ↩

  18. UK Competition and Markets Authority, "CMA clears LSEG / Quantile merger" (dated October 26, 2022), the paragraph on clearance. ↩

  19. LSEG, "LSEG to acquire Acadia to enhance post trade offering" (dated December 19, 2022), the paragraph on the agreement to acquire and the sentence on the minority stake since 2018. ↩