Press Releases at FpML.org
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Syntegra Expects Broad Application of FpML e-Commerce Standard in OTC Derivatives Trading NEW YORK, Sept. 5 - Syntegra, a member of the FpML.org Equity Derivatives Working Group, is participating in the development of an online OTC trading system for interest rate swaps and interest rate derivatives, reports Brian Lynn, co-chair of the non-profit FpML.org standards committee. Lynn, one of several major securities industry volunteers working to develop Financial products Markup Language as the standard for Internet trading of OTC derivatives, is a vice president responsible for e-trading systems, and FpML program manager at JP Morgan. Syntegra is a global consulting and systems integration firm. Tony Belverstone, a business consultant in Syntegra's Financial Services group, says the company is acting as a technology partner to SwapsWire, a consortium accounting for more than 80 percent of the global OTC swaps business. "With FpML incorporated in SwapsWire's online trading of swaps and interest rate derivatives, traders will be able to negotiate transactions securely and then transfer the contract details to participants' back offices in a way that eliminates the need for contract reconciliation," he said. "Syntegra is a strong proponent of FpML as a means of streamlining and lowering the cost of OTC derivatives trading," Mr. Belverstone said. "In financial centers around the world, traders can spend up to 25% of their time dealing with back office inquiries or sorting out administrative problems, largely because many trading systems do not always communicate well with each other. This means," he explained, "that many tasks which might otherwise be automated have to be handled manually. This is not only costly, but means that highly paid traders are taken away from what they do best: doing deals and making money." He added, "Contract reconciliation errors can sometimes lay undiscovered for several days, a risk that often is not recognised and rarely is fully quantified. We see FpML as an enabler of widespread e-commerce in the financial derivatives market by allowing trading information to flow automatically across the entire derivatives and client network, regardless of the underlying software. This will pave the way for a whole range of services such as trading, error-free confirmation, portfolio management, settlement and risk analysis to be integrated into a coherent system based on Straight Through Processing (STP)," he said. "All trading communities stand to derive significant benefits from FpML," Mr. Belverstone concluded. "With the current pressure on the market, e-commerce systems based on a common, structured language could deliver considerable costs savings and reduce risk. Looking ahead, there will be tremendous opportunities for these communities to increase their share of the global market." FpML is the XML-based, freely licensed, e-commerce standard supporting OTC trading of financial derivatives. FpML.org is a non-profit consortium comprised of leading global derivatives trading institutions, and financial, technology and consulting firms. FpML.org endorsed FpML version 1.0 in May 2001. It covers interest rate swaps and forward rate agreements. Version 2.0 will be released for trial recommendation later this year and will cover interest rate options, such as caps, floors and swaptions. See www.fmpl.org for information on working groups. Organizations actively participating in the FpML
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