The solution combines matching, reconciliation, exception management, human workflow services, and message creation and validation, helping financial firms manage rising transaction volumes and bring new OTC derivatives products to market faster, increasing their potential revenue.

Proactive Derivatives marries together the range of derivatives products from Message Automation and City Networks. It was developed specifically to addresses the unique needs of OTC derivatives and enables financial firms to ensure the effective and efficient matching, reconciliation and validation of these asset classes, which are of a much higher complexity than traditional trades.

Working together seamlessly, Proactive Derivatives helps financial firms decrease risk and ensure accurate data is transmitted both internally and externally. It provides organisations with the ability to process transactions across all asset classes and helps reduce confirmations backlogs created by high levels of manual processing and rapidly increasing transaction volumes. Proactive Derivatives also minimises breaks in straight-through processing (STP) by quickly and consistently identifying inaccurate transaction data, before flagging it to relevant employees for appropriate action. The solution facilitates communication both internally and bilaterally with counterparties, brokers and third party administrators and allows organisations to communicate effectively and efficiently with central services, either directly or via SWIFT.

"With huge volumes of OTC derivatives being traded and increasing numbers of organisations connecting to central services such as DTCC and Swapswire, there is a need for technology that not only facilitates these connections, but can handle both the complexity of the products and the many and varied asset classes in play," says Hugh Daly, CEO, Message Automation. "Proactive Derivatives has the functionality to do each of these things, as well as ensuring data accuracy to help financial firms increase revenue from OTC derivatives."

At its core, Proactive Derivatives utilises highly efficient, Financial Products Mark-up Language (FpML) based, deep structure matching algorithms that are effective across asset classes. This allows financial institutions to ensure all levels of trade information are fully reconciled at every stage of a trade, as well as between internal and external systems, counterparties, and service providers such as custodians or fund administrators. Around this, additional components facilitate the passing of accurate OTC derivatives data into the matching suite and manage outputs to enable operations staff to efficiently process the resulting information. It can also control the routing of trades according to asset class and ensure conformity with external central service rules in order for information to be directed back into the matching suite, or to external sources as required.

Proactive Derivatives is a task-driven solution and facilitates the identification and organisation of tasks and trade workflow activities throughout the entire trade lifecycle. Financial institutions are also able to make significant improvements in exception handling as, once errors are identified, a recommended course of action is presented, allowing for significant productivity improvements. The FpML-based validation engine also checks trade information against internal and external validation rules, including those set by the International Swaps and Derivatives Association (ISDA). This improves the quality of the data, dramatically reducing exceptions and the need for manual intervention.

In line with SWIFT's successful pilot running FpML messages over SWIFTNet, financial firms are now even more responsible for ensuring validation has occurred internally, prior to sending FpML messages to external sources. For organisations not currently using this standard, Proactive Derivatives can take trade information from any source and convert it into FpML format, allowing data to be sent to organisations such as SWIFT or DTCC. It is also able to deconstruct any responses received into the appropriate format, for inclusion back into in-house systems.