Swift says it is working with a group of major prime brokers to develop a centralised pre-settlement matching system that cuts the cost and risk of processing equity and fixed income trades originated by hedge funds.
Following a competitive process, Swift was selected by the group - including Citi, Credit Suisse, Goldman Sachs, Lehman Brothers and Merrill Lynch - to develop and operate the matching platform.
Swift says the new system, which will be based on its Accord central matching technology, will improve the timeliness of pre-settlement matching of hedge fund trades between prime and executing brokers. Any errors likely to cause settlement fails will be identified sooner, reducing risk and the cost of the manual processing required to fix breaks.
The system will enable trade matching on trade date or T+1, says Swift. This allows errors that could cause settlement fails to be identified up to two days earlier than they are currently.
Swift will work with the broker dealers involved in the project to launch a pilot of the service in the fourth quarter.