FIA releases progress report on derivatives industry standards initiative

First set of standards will focus on processing time for allocations and give-ups

15 March 2022

  • FIA working towards launch of independent standards body in second quarter 

  • FIA targeting the "most pressing pain points" in trading and clearing workflow 

  • First set of standards focused on processing time for allocations and give-ups 

Washington, D.C. — FIA today released a progress report on the industry standards initiative that it launched last year. The progress report describes three important near-term objectives for this initiative, which is being spearheaded by a taskforce of representatives from leading brokers, asset managers and clearinghouses.   

First, FIA is preparing to establish an independent body to be called the Derivatives Market Institute for Standards or DMIST. This body will focus on developing standards around behaviors, workflows and processes for exchange-traded and cleared derivatives. These standards will be developed through a public consultation process and will be technology- and vendor-agnostic. FIA expects that the specific details on membership, governance and function will be finalized in the near term and intends to launch DMIST in the second quarter.

Second, FIA has identified certain areas in the trading and clearing workflow that are in the greatest need of standardization. To do this, FIA worked with JDX Consulting, a firm with expertise in post-trade operations, to interview market participants and technology vendors to map the end-to-end workflow as trades move through the execution and clearing lifecycle. Based on this workflow analysis, FIA has identified the most pressing pain points. They include allocations and give-up processing, average pricing, reconciliations, and static data.

Third, FIA is preparing to propose an initial set of standards to improve the timing of trade allocations and give-ups. With the eventual aim of real-time processing on trade date, these standards will help advance the industry’s goal of making sure that the right trades are in the right account at the right time. To achieve this, the standards set out specific deadlines for parties to a trade—clients, executing brokers, and clearing brokers—to send instructions and process trades. Today's progress report contains a high-level description of these initial standards and invites industry participants to join in their development.

"FIA is pleased to publish this progress report on our industry’s efforts to standardize certain workflows in the trading and clearing lifecycle," stated FIA CEO Walt Lukken. "These efforts aim to bring greater resilience, efficiency and automation to the industry, and we appreciate the work of taskforce members in moving this goal forward."

The standards initiative was formally kicked off in November, when FIA published a report calling on participants in the futures and options industry to work together on a major initiative to improve the efficiency of the trading and clearing process for exchange-traded derivatives.

The November report, "Modernizing the Listed Derivatives Workflow: A Blueprint for Change," recommended establishing a framework for building consensus and collaboration among all segments of the industry, including clearing firms, executing brokers, exchanges, clearinghouses, customers and technology vendors. The report was based on input from 25 firms and 60 individuals representing a cross-section of the industry.

Previous efforts to improve the workflow in the trading and clearing process have been limited by bespoke processes and the lack of interoperability of systems. The report recommended forming an independent standards body to overcome these challenges. The report also recommended developing a consensus agenda supported by the industry that will provide a foundation for greater standardization.

FIA has been working with a taskforce comprised of experts from Barclays, Cargill, Eurex Clearing AG, Intercontinental Exchange, J.P. Morgan, Macquarie Futures, Russell Investments, Société Générale and other leading clearing firms, clearinghouses, and institutional investors.

"There's been tremendous interest in this initiative since the launch in November and we are anticipating that a wide range of firms will be represented in DMIST at launch," said Don Byron, senior vice president and the head of global industry operations and execution at FIA.

For more information about this initiative and to express interest in participating, visit the standards section of FIA's website and sign up for updates.

Access the full 2022 DMIST report.

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