SimCorp and OTCX have entered into a partnership to provide SimCorp clients with direct access to OTCX’s Request For Quote (RFQ) platform. The integration of the platform into SimCorp’s core investment system, will enable the buy side extensive access to a wide network of OTC liquidity providers, in one seamless workflow.
OTCX’s platform covers a range of Interest Rate Derivatives, Equity Derivatives and Structured Products, which form a significant proportion of global multi-asset class strategies. The partnership between SimCorp and OTCX leads the way forward for greater automation, providing buy side firms with a smarter, more efficient way to manage OTC trading, in a heavily fragmented space. This burden is highlighted in recent research conducted by SimCorp and InvestOps, where 54% of North American buy side firms stated automation was their top stratgic objective for 2017¹.
Moreover, in Adox Research’s latest Front Office global survey, 47% of buy and sell side participants stated their trade execution flows had automation levels below 60%². The addition of OTCX into Simcorp Dimension® increases Straight Through Processing (STP) by relieving the dependence on manual processes, such as reconciling chat, voice and email data, methods which continue to dominate OTC derivatives trading.
The integration of OTCX into SimCorp Dimension® Order Manager, also has major benefits for the way buy side firms comply with MiFID II. This includes trade reconstruction, compliance with best execution policy and inclusion of UTC clock timestamps. One source of data, available across SimCorp’s investment platform, and OTCX’s structured workflow, provides the buy side with a rich MiFID II-ready audit trail, for each and every trade.
The latest partnership deal is part of SimCorp’s continued investment into its front to back investment platform, which manages over $19 trillion in AUM, across 170 clients worldwide. This includes Merlon Capital Partners, an Australian-based boutique fund manager, who were also the first client to trial the OTCX platform. As a SimCorp client, they will now be able to directly source and trade a range of derivatives, from cross currency swaps and emerging market interest rate swaps, to inflation swaps.
Commenting on the partnership, Andrew Fraser, Head of trading at Merlon Capital Partners said “OTCX simplified our OTC Derivative workflow and enabled us to evidence, on demand, our best execution process. It was important for us to have OTCX integrate with Simcorp Dimension and we are pleased to hear that OTCX and SimCorp will collaborate on further Front Office integration in the near future.
Nicolas Koechlin, Chief Executive Officer, OTCX: “SimCorp and OTCX’s new collaboration will further enhance the trading experience for the buy side with a seamless end to end OTC derivatives electronic workflow. We look forward to providing Simcorp’s clients with the most effective price discovery, execution and settlement of trades for liquid and illiquid derivatives. Together we will provide more intelligent tools and better use of data leading to seamless transparent transactions.”
Matthew Reid, Product Manager, Trading, SimCorp: “This partnership is testament to our mission; to provide clients with a simplified and highly automated workflow, across the entire investment lifecycle, through one core open system. It is our belief that one source of data through the consolidation of systems, which offer extensive coverage across all asset classes and instruments, arms the buy side with the best foundation to achieve their investment goals.”