Future Trends in Processing Security-Related Derivatives
Current State of Affairs
Futures Processing • Transaction Registration/ Reconciliation • Matched Trade Clearing • Payments • Position Keeping/Marking • Margining • Delivery • Dividends/Interest • Corporate Actions Where Function Handled Securities Processing • Transaction Registration/ Reconciliation • Matched Trade Clearing • Payments • Position Keeping/Marking • Margining • Delivery • Dividends/Interest • Corporate Actions
• Leslie R. Sutphen, President, Financial Markets Consulting, Inc. • Stephen P. Auerbach, President, SunGard Futures Systems • James Birney, Chief Financial Officer, Rolfe & Nolan • Eric Wicart, Global Head of Sales, Ubitrade • Leonard Musso, First Vice President, Lehmann Brothers
Eric Wicart: The European Experience
Lenny Musso: Likely Customers
• Hedge Funds • CTA’s • Retail Clients
Integrated Processing Solution Securities System
Customer Physical Cash and option position
Trade Rec and Settlement
OCC SEG SIPC
Steve Auerbach: Margining Across Asset Classes
• Legal Perspective: What am I allowed to do? • Operational Perspective: What can I do? • Business Strategy Perspective: What do my customers want?
Margining Across Asset Classes
• Algorithm favors equities • European/Asian experience show listed derivatives win
Key: Know Your Customer
• Daytrader would favor futures treatment • Position trader would favor equity treatment
Jim Birney: Handling Physical Delivery
• What unique delivery problems are presented by narrow based index products?
• Where is equity derivative processing headed?
• What problems do lack of product fungibility present?
• What do “securities only” firms do to process security futures?
• Will securities futures processing impact other financial futures?