A hedge fund was seeking to get ahead of the Securities & Exchange Commission’s (SEC) new mandate for centrally cleared repo transactions in the U.S. Treasury market.
The regulatory requirement, aimed at increasing market stability and transparency, requires market participants to clear eligible secondary market transactions through a covered clearing agency such as the Fixed Income Clearing Corporation (FICC). Market participants are encouraged to assess the eligibility of their transactions and determine their clearing access model well before the deadlines. Upon assessment, the mandate poses operational and compliance hurdles for the hedge fund, which traditionally engaged in bilateral or triparty repo transactions.
The hedge fund successfully navigates the challenges posed by the SEC’s central clearing mandate using TradeBlazer from Matrix Applications.
TradeBlazer ensures seamless regulatory compliance by automating SEC rule adherence and submitting eligible transactions to FICC for central clearing, safeguarding the hedge fund from penalties while ensuring market access. It boost liquidity and market reach by connecting directly with FICC and key participants, allowing the fund to maintain a competitive edge in the U.S. Treasury market.
By integrating effortlessly with the fund’s existing trading systems, it delivers robust reporting and reconciliation tools, reducing manual intervention and mitigating operational risks. Additionally, the system optimizes margin management through efficient calculations, segregation, and capital utilization, enabling the hedge fund to meet margin requirements without disrupting trading strategies.
Matrix Applications’ Managed Services for the back-office augments Hedge Fund’s current operations team. The Managed Services team is made up of a mix of industry veterans and operational professionals that monitor all post trade activity. A service level agreement can be tailored to include minimal aspects or a full suite of operational support that can address everything to include minimal aspects or a full suite of operational support that can address everything from platform maintenance and static data setup to trade matching, clearance and settlement, counterparty margin call satisfaction, cash wires, reconciliations and other daily operational details. With the existing operations team stretched to capacity and this being a new business venture, Matrix’s Managed Services was the perfect solution to augment their current operations infrastructure and support the new business.
The Hedge Fund’s experience of using TradeBlazer and Managed Services has shown they had few technology changes to implement. Matrix has geographically-diverse, fully redundant data centers, secured by a robust cybersecurity infrastructure. The system and infrastructure routinely are upgraded to meet industry, regulatory and cybersecurity requirements. Matrix handles user management, network connectivity to outside venues and system maintenance and reliability.
Matrix Applications, LLC is a New York-based fintech service bureau that offers a suite of collateral management, margining and clearing systems for institutional fixed income trading and equities securities lending. Comprised of a team of capital markets and systems professionals, Matrix Applications delivers financial technology solutions to institutional firms of all sizes. Since 2000, the company has worked hands-on with clients to identify an optimal mix of services to best fit their needs, from systems to back-office operations assistance. With in-house and offshore developers, Matrix Applications provides clients with the right technology at the right price while leveraging extensive technical experience and a deep network to deliver bespoke managed services.