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Buy-Side Overview

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Buy-Side Overview BUY-SIDE OVERVIEW DYNAMICS AND CHALLENGES IN THE CREDIT DERIVATIVE MARKET Credit Derivative volumes have grown exponentially over the last few years reflecting their increasing popularity with Investment Managers. Despite the existing environment of OPERATIONAL ISSUES AND THEIR CONSEQUENCES increased liquidity and product standardisation the processing of transactions in the Credit Derivative market remains largely manual. In turn the exponential volume growth of the asset class means that it is more crucial than ever to practice efficient processing in order to minimise both operational and regulatory risk and to maximise profitability. ICE Link is a multi dealer and customer post-trade platform that addresses and resolves the numerous operational challenges experienced by Investment Managers and shown opposite. THE ICE LINK SOLUTION ICE Link fills the missing piece in the credit derivative processing jigsaw. ICE Link provides an easily adoptable post-trade affirmation and ICE LINK: THE MISSING PIECE OF THE JIGSAW messaging service. This allows dealers to affirm trades with their buy- side counterparties prior to processing. The addition of this affirmation layer ensures that all the key economic details of the trade including allocations, reference entity, payment dates etc. are agreed to between both counterparties immediately after execution. ICE Link’s easy adoptability means that no change is required to an Investment Manager’s existing process or infrastructure. Instead, the ICE Link platform augments performance and consequently improves the return on investment of existing vendor services, such as Risk Systems and Fund Administrators, by ensuring that the trade data which passes through them is 100% accurate and timely. ICE Link is agnostic (fully open and complimentary) and is currently working with numerous vendors and market utilities to deliver tangible benefits to both dealers and buy-side clients. KEY FEATURES AND ADVANTAGES OF DEPLOYING ICE LINK FEATURES ADVANTAGES • ICE Link is an affirmation model • Legal execution on trade date (ICE Link) via DTCC • Supported Instruments: ICE Link currently supports Single Names CDS, • Complimentary to existing processes and systems Indices & Tranches trades • Supported trade types: New Trades, Novations, Terminations & • Easy to adopt and deploy Allocations, Prime Brokerage Give-up • ISDA novation protocol compliant • Dealers initiate new trades the Buy-side initiate Novations and • Improves efficiency and timeliness of paper process Terminations • Supports DTCC and paper trades • Robust and cost efficient two-way connectivity to DTCC • Fully ISDA, FPML, RED compliant • Agnostic connectivity enables 100% leverage of any 3rd party • Java API vendor platform • Unique Transaction Identifier • Real time trade monitoring and notification • Integrates with a number of 3rd party vendors • Web based • Complete electronic audit trail • Real - time MQ link to DTCC • Automated trade capture THE ICE LINK CREDIT DERIVATIVE TRADE PROCESS NEW TRADES ICE Link enables dealers to allege new trades against their customers, who are in turn able to verify the key economic trade details, affirm and allocate these trades on screen. Robust messaging also exists to facilitate timely dispute resolution. The ICE Link platform brings benefit to both paper and electronically executed BUYER SELLER documentation. By providing a two-way automated link to DTCC for trade messages, ICE Link reduces the need for manual intervention or spreadsheet uploading, and greatly enhances STP. Since the trades are affirmed and allocated in advance, the match at DTCC is guaranteed since both parties submission will be identical. In the case of paper trades, the accuracy of the documentation is also vastly improved since the trade details have been accurately recorded in a timely manner SUBJECT TO DTCC SUPPORTING OPTIONS prior to documentation being sent out by the drafting party. NOVATIONS 1A Adherence to the 2005 ISDA Novation (TRANSFEREE) 1B Protocol, and the novation/termination DEALER 2 1C process in general, provides significant 3 challenges for a dealers customers. ICE Link’s robust workflow messaging makes complying with the ISDA Novation Protocol a three-click exercise. ICE Link’s multi dealer (REMAINING PARTY) 2 platform and multilateral approach adds DEALER 1 1C BUY-SIDE significant value to all sides in the transaction. 1A ICE Link reduces the difficulties associated with novations (and terminations) by providing an 7 electronic, transparent and auditable process that allows asset managers to message NOVATION EXECUTED quickly and directly to concerned parties 5 6 (including their Prime Broker) to gain consent 5 4 from remaining parties, affirmation from the 6 DTCC transferee, and to fulfil their obligations on the trade. BUY-SIDE BENEFITS ICE Link resolves operational issues allowing managers to Cost efficient DTCC connectivity concentrate on producing performance • Utilize ICE Link’s IBM MQ link to achieve robust two-way DTCC connectivity. Saving time and money Reduce operational risk • ISDA Novation protocol compliant Dealers committed • Reduced outstanding trade confirms, cash breaks, margin problems • Bank of America, Barclays Capital, BNP Paribas Capital, Calyon, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan, Lehman Improve middle office efficiency Brothers, Merrill Lynch, Morgan Stanley, Rabobank, Royal Bank of Scotland and • Real time trade notification and monitoring UBS are all live • 3-clicks allows you to meet novation protocol requirements • Licence under review by numerous other dealers • ICE Link improves efficiency of both paper and DTCC ICE Link is free to the buy-side • ICE Link is paid for by the dealer For more information, please contact: London +44 (0)20 7429 4500 | New York +1 212 323 6000 www.theice.com © 2009 ICE, Inc. All rights reserved. This document and the information contained herein are for information purposes only and remain confidential and proprietary to ICE, Inc. and its affiliates. All information is provided “as is” with all faults and with no warranties of any kind. Any unauthorized reproduction, distribution or use is strictly prohibited. This information is intended to be used by investors who are either eligible counterparties or professional clients only and not retail participants. Accordingly, services and products mentioned or referred to in this document are not available to retail clients..
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