Omgeo, the global straight-through processing joint venture between New York based Depository Trust & Clearing Corporation (DTCC) and Boston based information and technology solutions provider Thomson Financial, has been granted an exemption from full registration by the US Securities and Exchange Commission and is to start operations this month.
The venture has already been authorised in the UK by Financial Services Authority.
The company will combine the institutional trade processing businesses of DTCC’s depositary subsidiary DTC and Thomson Financial ESG, in an attempt to link more than 6,000 investment managers, brokers and custodian banks in 40 countries.
By this summer the company is planning to link ESG’s and DTC’s processing systems to allow easier trading, which will mainly benefit the US market.
A pilot programme for its central matching service will also be launched in the summer.
At the same time, the Securities Industry Association is working on moving the US industry from the current t+3 to t+1 settlement by the middle of 2004, a process in which Omgeo says it will participate.
“By combining our talented and experienced staffs and complementary products, Omgeo is able to provide customers with a single path to a much earlier and easier adoption of the systems needed to move to straight-through processing and, ultimately, to t+1 settlement,” says Robert McGrail, chairman of Omgeo and managing director of New Business Ventures for DTCC.
The Securities and Exchange Commission’s order also calls for objective industry involvement in the negotiations between Omgeo and its competition, a condition that will be imposed on all similar services, which will also be given an exemption from registration.
“There has been a lot of rhetoric in the industry without any precise definition of inter-operability. Now that we have a definition, it is up to ourselves and potential competitors to work diligently and in good faith to implement these linkages,” says Adam Bryan, president and chief executive officer of Omgeo.
The company’s board includes five industry representatives from Fidelity Investments, Deutsche Bank, Morgan Stanley Dean Witter, Bank of New York and Merrill Lynch Investment Managers, and two members each from DTCC and Thomson Financial.