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The Evolution Of OASYS, Omgeo, and Central Trade Manager

By Brian Driscoll

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What This Presentation CoversThis presentation provides a history

and overview of: The OASYS product line The ALERT service The formation of Omego Central Trade Manager product

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Before OASYS

Post trade allocation and confirmation process manual, slow, error prone.

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Order Allocation System (OASYS) In 1990 Thomson began offering the

Order Allocation System (OASYS) service

Automates post trade allocation and confirmation

Replaced phone, faxing, emailing post trade data between brokers and institutional customers with software and messaging

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OASYS Initial Architecture

Standardized and automated the workflow of post trade allocation and confirmation for US domestic trading.

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OASYS Workflow (Simplified)

Used for US domestic trades. Commission, taxes, net amount, etc. calculated by the buy side and confirmed by the sell side.

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ALERT ALERT is a global service/database for

storing and communicating account information & standard settlement info (SSI)

Standardized communication of account info Supports SSIs for different product &

geographies Buy side puts account info & SSIs in ALERT

and sell side, custodians, etc. use that info Sell side also puts SSI info in ALERT

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How is ALERT used by OASYS Buy side can identify the accounts

on allocations by their account ALERT Access Code

Sell side maps account ALERT Access Codes to their internal account ids

Systems down stream from OASYS use SSI & account info from ALERT to settle the trade

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More on ALERT ALERT is important for post trade processing ALERT is largest service/database of account

info If ALERT not used, another account info

service/database must be used or investment manager & broker must agree on how to identify accounts and settlement instructions

Each broker likely has a different internal account id and settlement instructions would need to be communicated to each broker

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OASYS File Import/Export

Via file import/export OASYS can be directly interfaced to buy side and sell side OMS,

Middle Office, etc. Completely automates the process. Key for STP.

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OASYS Direct

Interface directly to OASYS host server via API middleware

connection over a WAN, eliminates the need for OASYS Workstation.

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OASYS Global OASYS supports US domestic

trading but not global trading OASYS Global was created to

support global trading Global trading is more complicated It has different workflow and

messaging than OASYS (domestic)

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OASYS Global Architecture The OASYS Global architecture is

similar to OASYS (Domestic): Central OASYS Global host server OASYS Global workstations File import/export integration OASYS Global Direct

But the workflow is different

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OASYS Global vs OASYS (Domestic)Major workflow differences: Sell side sends block & buy side must

match block Match may not be exact, has tolerances Sell side calculates net amount of trade

and allocations including taxes and fees Buy side can use sell side’s net amount

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OASYS Global WorkflowBlock Level (Simplified)

To accept or reject a block trade, the buy side must match it to a block trade in its OMS. Amounts may differ within

tolerance.

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OASYS Global WorkflowAllocation Level (Simplified)

Net amount including commission, taxes, fees, calculated for each allocation by broker. Often the buy side uses those

figures.

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OASYS Global & Matching Matching the details of global trades

is complex, trade often don’t match exactly

Blocks and allocations are matched within a tolerance that often depends on currency, type of security, etc.

Calculation of net amount is complex

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AutoMatch Many buy side systems don’t have the

functionality to match & reject trades flexibly

AutoMatch was created by Thomson to do the matching for buy side systems

It can do complex matching with tolerances and also handle when the buy side uses the sell side’s net amounts because global net amount calculation is very complex

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Automatch Architecture

Block trades w/ allocations sent to AutoMatch, AutoMatch does matching & rejecting, sends matched allocations w/

net amounts to the buy side OMS/Middle Office.

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More On Matching Block & allocation matching done at 2 levels 1st level are parameters that must match 2nd level are parameters need to complete

the match Fields used for matching can be customized

& tolerances can be specified If not matched 1st level, trade is unmatched If matched 1st level, but not 2nd level, trade

is mismatched Matches can be forced if necessary

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Formation Of Omgeo Joint venture 50% Thomson Financial

and 50% DTCC created in 2001 Created in response to a competing

industry wide initiative to create a global trade matching & settlement service, GSTPA backed by SWIFT (that initiative eventually collapsed)

Omego is the combination of Thomson’s OASYS product line & ALERT with DTCC’s TradeMatch product line

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Central Trade Manager Omego created Central Trade

Manager Its functionality is a combination of

OASYS Global, AutoMatch, and DTCC’s TradeMatch functionality

It handles post trade allocation & trade confirmation plus settlement instruction enrichment & settlement notification to custodians/agents/etc.

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CTM Initial Architecture

Initially CTM replaced OASYS Global and AutoMatch on the buy side.

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CTM Architecture

Then replaced OASYS Global on the sell side. OASYS Global & AutoMatch were retired.

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CTM Workflow The CTM workflow for matching & trade

confirmation is similar to OASYS Global with AutoMatch

Block = CTM TradeLevel Allocation = CTM TradeDetail Once a trade is matched, its settlement

instructions can be enriched from ALERT, other sources, & manually

Settlement notifications can be sent to custodians/agents/etc via SWIFT or data files

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OASYS (Domestic) & TradeSuite OASYS (Domestic) continues to be used

for US post trade allocation & confirmation

It has been integrated with TradeSuite Trades confirmed in OASYS can be

sent/matched to TradeSuite data Settlement instructions can be enriched

from ALERT, other sources, & manually Settlement notifications can be sent to

custodians/agents/etc

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Omego Fully Owned By DTCC 2013 DTCC purchased the

remaining 50% from Thomson Financial

DTCC is owned by a consortium of banks & brokers

DTCC is operated not just to make a profit, but also to help their owners

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ALERT Unbundled With the change in ownership,

Omgeo unbundled many of its services

Enabling it services to be used even by possible competitors

This benefits DTCC’s owners ALERT has been unbundled and can

be used by possible competitors to Omego’s other services