Omgeo, the global standard for post-trade efficiency, and the Brazilian Clearing and Depository Corporation (CBLC), subsidiary of BOVESPA Holding, started discussions about the possibility of a partnership between the two institutions.
Together, Omgeo and CBLC will identify areas for improvement in post-trade communications between domestic and cross border participants where trades are executed in the Brazilian marketplace. The two organizations will investigate opportunities to further improve the level of automation and standardization in the post-trade and pre-settlement processes by replacing fax and email communication with a standard, automated workflow for communication between local Brazilian and international investment managers, brokers and custodians.
Efforts by Omgeo in markets such as the US and Canada have demonstrated the effectiveness of Omgeo’s partnerships with regional depositories. Omgeo’s relationship with The Depository Trust & Clearing Corporation (DTCC) in the US and the Canadian Depository for Securities (CDS) affords same-day affirmation (SDA) rates of over ninety percent in those markets. SDA dramatically reduces the risk of failed trades and can lower operational costs as a result. Firms that automate the post-trade, pre-settlement environment benefit from nearly fifty percent higher SDA rates than those that do not.
Omgeo and CBLC will evaluate opportunities to bring similar efficiencies to the Brazilian market’s beneficial owner model, streamlining communication between Brazilian market participants in order to reduce costs and credit and market risk. “The Brazilian market is experiencing a time of tremendous growth,” said Tim Keady, managing director of global sales and relationship management at Omgeo. “Our discdquo;Our discussions with CBLC will allow us to jointly pinpoint the areas of opportunity to improve communication of information between the settlement and pre-settlement environments. Our experience with working with our parent company, the DTCC, and with the CDS stands us in good stead for working with CBLC to grow an efficient community in Brazil.”
As an infrastructure provider, CBr, CBr, CBLC is permanently committed to the improvement in the communications among the institutions involved in the trade activities. In the last 3 years, CBLC has implemented a variety of tools aiming at streamlining the information flow, such as the introduction of messaging standards and the creation of a standardized confirmation note. CBLC is a subsidiary of BOVESPA Holding, which, through its merger with the Brazilian Mercantile & Futures Exchange stands to become the third largest exchange in the world.
“From 2005 to 2007, the average daily number of trades settled in Brazil increased approximately 90 percent,” said Gilberto Mifano, chief executive officer at CBLC. “With such a rapid increase in volumes, it is critical for market infrastructures to evolve at the same pace to ensure stability in the marketplace. Further developments in the automation of the market will play an important role in enhancing foreign investments in the Brazilian market, as it will alleviate operational concerns of investment management firms. Omgeo is known throughout the world for bringing communities together to reduce risk within the post-execution environment and we are looking forward to further our cooperation.”