System Release Frequently Asked Questions August 2012

Transcription

1 System Release Frequently Asked Questions August 2012 This material may not be reproduced or redistributed in whole or in part without the express, prior written consent of IntercontinentalExchange, Inc.

2 Contents With the upcoming system release, what is the major functionality change in store for ICE Clear U.S. PTMS and ACT applications?... 4 As Broker Allocation functionality is no longer being supported, how will my firm s daily trade processing be affected?... 4 The client for whom the broker executed the trade does not reside at my firm. How will the broker get the trade to correct firm and client account?... 4 How can a broker give-up a single trade to multiple firms and/or clients?... 4 The broker, at the time of trade entry or through the use of PTMS, provided incorrect give-up allocation instructions. Will the broker have the ability to correct inaccurate allocations?... 4 Since brokers will not have access to ACT, how will the brokers, particularly the ones that my firm guarantees, be able to ascertain the status of their give-up activity?... 4 Will firms still have the ability to challenge a block trade?... 5 How will firms that currently use passive acceptance to process broker allocated trades be affected by the system release?... 5 My firm did not claim a give-up that was allocated to us on trade date. Can we claim the give-up the next business day?... 5 With give-up transaction volume increasing, are there any changes in give-up processing that my firm needs to be aware of?... 5 If a trade is accidently marked as a give-up, can the give-up indicator be removed from the trade?... 5 What can be done if a trade from a previous day was given up to the wrong firm?... 5 Yesterday, my firm gave up an incorrect Average Price group. What are the options for correction?... 6 What are some of the other changes that will occur in ACT and PTMS when the system release is implemented?... 6 Even though they may not specifically pertain to the system release, these are some of the common questions ICE Clear U.S. receives about ACT and PTMS?... 7 Who can I speak to if I have questions regarding ACT, PTMS, give-up processing and/or clearing?... 7 Do allocation instructions that represent the full quantity of the give-up need to be completed before the trade is considered to be allocated?... 7 How will unclaimed allocations be handled?... 7 As the take-up firm will I have the ability to update take-up information?... 7 Will I be able to partially claim an allocation?

3 Will I have the ability to claim a take-up into multiple accounts?... 7 Will I have the ability to give-up a claimed take-up to other firms?... 7 What do I do if I do not recognize an allocation?... 7 If the allocation is still unclaimed... 8 If the allocation has been claimed... 8 An Average Price Group that I created today is incorrect. I need to remove and/or add trades to the group or unwind the group altogether. What are my options?... 8 If the group within the PTMS Group Review screen is in an I (Incomplete) status... 8 To add trades To remove trades If the group within the PTMS Group Review screen is in an S (Submitted) status... 8 And in ACT with an UA (Unallocated Status) And in ACT with an A (Allocated) Status And in ACT with a C (Claimed) Status How will unclaimed allocations be handled?... 9 Yesterday I forgot to allocate a give-up transaction, what are my options?... 9 Trade(s) was originally marked for give-up... 9 Trade(s) was not marked for give-up (within two business days of trade date)... 9 Trade(s) was not marked for give-up (outside of two business days of trade date)... 9 I discovered that after the original trade date I forgot to create an Average Price group and allocate it through ACT. What are my options?... 9 Within two business days of original trade date... 9 Outside of two business days of original trade date... 9 My firm does not have a middleware system in place to perform give-ups and take ups. Is there another option available that will automate the allocation and claim process?... 9 My firm already has a middleware system in place to perform give-ups and take-ups. In the event my middleware system goes down, can I use the ACT profile system as a back-up? How will the fees be calculated for give up transactions?

4 With the upcoming system release, what is the major functionality change in store for ICE Clear U.S. PTMS and ACT applications? The Broker Allocation model will no longer be supported. As Broker Allocation functionality is no longer being supported, how will my firm s daily trade processing be affected? The Accept/Challenge screen in PTMS will be replaced by the Trade Review screen. All trades executed by a broker will automatically be cleared by the broker s guarantee firm. A guarantee firm will not have the ability to challenge a trade. The client for whom the broker executed the trade does not reside at my firm. How will the broker get the trade to correct firm and client account? 1. The trading ending will be updated to allow a broker to mark a trade as a give-up along with the claim firm and claim account information. 2. Brokers will also have access to their trades through PTMS where they will be able to mark a trade as a give-up once, along with applicable claim information. This action can be accomplished manually or through the use of short codes. Once submitted the trade will be processed as a give-up through the ACT application. 3. Firms can also work with brokers to automate the give-up allocation process by leveraging FIXML messaging and the firm s middleware. 4. Firms that do not have middleware in place can choose to use the Profile Management system in ACT to define rules to automate the give-up allocation process. How can a broker give-up a single trade to multiple firms and/or clients? The broker will use the Split trade functionality in PTMS, then use one of the methods 1-4 as defined in the previous answer. The broker, at the time of trade entry or through the use of PTMS, provided incorrect give-up allocation instructions. Will the broker have the ability to correct inaccurate allocations? No. A broker is only allowed to allocate a trade once. If an allocation instruction was incorrect. The broker will need to work with their clearing member guarantor s back office to correct a previously allocated give-up trade. Since brokers will not have access to ACT, how will the brokers, particularly the ones that my firm guarantees, be able to ascertain the status of their give-up activity? Brokers, within PTMS, will have the ability to request and export a give-up activity report that will provide them with the current status of each one of their give-up transactions. 4

5 Will firms still have the ability to challenge a block trade? No, once both counterparties have agreed to a trade within ICE Block, the trade is matched and cleared. Confirmation messages are sent and the trade can be viewed in the PTMS Trade Review screen by the clearing member firms that represent the counterparties. If need be, further give-up allocation instructions can be provided. How will firms that currently use passive acceptance to process broker allocated trades be affected by the system release? Passive acceptance will no longer be supported. Your firm will no longer receive trades through the broker allocation model. Your firm will now receive broker executed trades through a give-up allocation from the broker s guarantor firm. Claiming firms are required to review the give-ups allocated to their firm and actively accept them through ACT. Claiming firms (aka take-up firms) can also choose to automate the give-up claiming process by leveraging FIXML messaging using middleware. Firms that do not have middleware in place can choose to use the Profile Management system in ACT to define rules to automate the give-up claim process. Give-allocations not actively claimed by the take-up firm will not clear. My firm did not claim a give-up that was allocated to us on trade date. Can we claim the give-up the next business day? Yes, unclaimed transactions remain in ACT for four additional business days and can be claimed at any time. With give-up transaction volume increasing, are there any changes in give-up processing that my firm needs to be aware of? Yes, specifically in give-up correction processing for both top-day and as/of give-ups. Those changes are highlighted in the Questions and Answers that follow. If a trade is accidently marked as a give-up, can the give-up indicator be removed from the trade? 1. If the give-up trade in question is unallocated then PTMS will allow the give-up indicator to be removed. 2. If the give-up trade has been allocated but not claimed, PTMS will allow the give-up indicator to be removed and the give-up allocations will automatically be deleted. 3. If the give-up trade has been allocated a partially or fully claimed, PTMS will not allow the give-up indicator to be removed until the claimed allocations have been confirmed reversed and the unclaimed allocations deleted. What can be done if a trade from a previous day was given up to the wrong firm? Within four business days of the original give-up, users can search the Prior Day Give-up database in ACT for previously cleared give-up transactions and initiate an as/of Reversal request. If need be, the same transaction can be used to re-allocate the give-up to the correct firm once the requested reversal has been confirmed. At confirmation, the give-up firm can re-allocated the prior day give-up to the correct firm and client. 5

6 Yesterday, my firm gave up an incorrect Average Price group. What are the options for correction? 1. In ACT, within four business days of the original Average Price Group give-up, using the Prior Day Give-Up database, firm users can search for previously cleared Average Price give-up transactions and initiate an as/of Reversal request. 2. In PTMS, within two business days of the submitted Average Price group, using the Previously Cleared Transaction screen, firm users can assign trades a new average price group ID, even trades that were associated with another as/of submitted Average Price Group. Once all trades have been assigned to a new group, the group can be completed and submitted to ACT for further give-up processing. 3. Outside of two business days, back-offices will need to use the Add New Position Transfer screen in PTMS to transfer an AP group to the final take-up firm. Brokerage and Execution fees associated with AP group corrections that were moved as a transfer instead of a give-up may need to be manually adjusted. What are some of the other changes that will occur in ACT and PTMS when the system release is implemented? 1. Presently in PTMS, firms transferring a position through use of the Create Position Screen submit the transfer using the opposite (or offsetting) buy/sell code of the position they hold on behalf of the client. For example, when transferring a long position, the From firm submits a sell and the To firms receives a buy. Conversely, when transferring a short position, the From firm submits a buy and the To firm receives a sell. With the system release, firms will submit the transfer using the buy/sell code reflecting the position as it is held for the client. To transfer a long, the From firm will submit a buy, the To firm will receive a buy. To transfer a short, the From firm will submit a sell, the To firm will receive a sell. This change only impacts the PTMS GUI; no changes to FIXML messages are required. 2. In PTMS, the Add New APT (Average Price Transfer) screen, which allowed back offices to transfer positions at an average price along with rounded price and residual information, will no longer be supported. The Add New Position Transfer screen will be updated to allow back-offices to transfer positions at an average price. 3. Presently in ACT, when the From firm initiates an as-of Give-Up Reversal Request, the buy/sell code is flipped. If a buy was given-up in error, the submitted as-of reversal position is reflected as a sell. If a sell was given-up in error, the submitted as-of reversal position is reflected as a buy. With the system release, the buy/sell code will no longer be flipped. If a buy was given-up in error, the submitted as-of reversal position will now be reflected as a buy. If a sell was given-up in error, the submitted asof reversal position will now be reflected as a sell. 6

7 Even though they may not specifically pertain to the system release, these are some of the common questions ICE Clear U.S. receives about ACT and PTMS? Yes Who can I speak to if I have questions regarding ACT, PTMS, give-up processing and/or clearing? ICE Clear U.S. has set up a Clearing Application Help Line to handle such questions. The new Help Line is (312) Do allocation instructions that represent the full quantity of the give-up need to be completed before the trade is considered to be allocated? No, full instructions are not required at the point of give-up. Give-ups can be partially allocated as instructions are received. How will unclaimed allocations be handled? Unclaimed give-ups will remain in ACT for 4 additional business days (or until the last trading date of the contract, whichever is sooner) and will appear on an Uncleared Trades report produced during end-ofday (EOD) processing. If necessary, the give-up firm will still be able to update the allocation information. As the take-up firm will I have the ability to update take-up information? Yes, take-up firms will have the ability to update the claim account, Seg, and CTI at the time the give-up is claimed. The take-up firm will also have the ability to change this information after the give-up has been claimed. Once claimed, the give-up firm may no longer modify this information. Will I be able to partially claim an allocation? No, take-up firms only have the option to claim the full quantity of the allocation. Will I have the ability to claim a take-up into multiple accounts? Yes, a take-up firm must first fully claim the give-up. Once claimed, the take-up firm can sub-allocate the full or partial take-up quantity into multiple accounts and/or firms. Will I have the ability to give-up a claimed take-up to other firms? Yes, a take-up firm must first fully claim the give-up. Once claimed, the take-up firm can sub-allocate the full or partial take-up quantity to multiple accounts and/or firms. What do I do if I do not recognize an allocation? If take-up firms do not recognize an allocation, they have the option to Reject the allocation. This action alerts the give-up firm that inaccurate allocation instructions may exist and further action may need to be taken before the trade will be claimed by the take-up firm. I allocated a give-up in error today. What are my options? 7

8 If the allocation is still unclaimed The give-up firm has the ability to edit and correct the claim information or delete the allocation entirely. If the allocation has been claimed The give-up firm will need to request a Reversal. Once requested, the take-up firm will also need to confirm the Reversal. After the Reversal has been confirmed by the take-up firm, the give-up is no longer considered for clearing. At this point, the give-up firm if needed can re-allocate the trade. An Average Price Group that I created today is incorrect. I need to remove and/or add trades to the group or unwind the group altogether. What are my options? If the group within the PTMS Group Review screen is in an I (Incomplete) status To add trades. You can add trades to a group by locating the applicable trades within the PTMS Accept/Challenge Screen. Once located, add the group s ID within the Group ID field and click save. These trades will be added to the group. To remove trades. You can remove a trade from a group by highlighting the applicable group within the PTMS Group Review screen, and then click the Review Detail button. The AP Group Detail will be displayed. Highlight the trade that needs to be removed and then click the Remove From Group button. At this point the trade has been removed from the AP group. Alternatively, you can use the PTMS Accept\Challenge screen to update or remove the Group ID from a selected trade. If the group within the PTMS Group Review screen is in an S (Submitted) status And in ACT with an UA (Unallocated Status). A submitted average price group has been sent to ACT for further processing. To edit a group that has been sent to ACT, locate the group in ACT, highlight the Re-Open radio button and click submit. This action will update the same group in PTMS and revert the status back to I (Incomplete) so that the group can be updated. See previous section on updating groups in an I status. And in ACT with an A (Allocated) Status. For Average Price Groups that are in an Allocated status within ACT, the Re-Open radio button will not be available. To access the Re-Open button, all allocations associated with this group must be deleted. Once deleted, the Re-Open feature is unlocked for use. And in ACT with a C (Claimed) Status. For Average Price Groups that have a Claimed status within ACT, the Re-Open radio button will not be available. To access the Re-Open button, all claimed allocations associated with this group must 8

9 reversed and confirmed. Once the requested reversals have been confirmed, the Re-Open feature is unlocked for use. How will unclaimed allocations be handled? Unclaimed give-ups will remain in ACT for 4 additional business days (or until the last trading date of the contract, whichever is sooner). If necessary, the give-up firm is still be able to update the allocation information. Yesterday I forgot to allocate a give-up transaction, what are my options? Trade(s) was originally marked for give-up An unallocated group representing a trade that was marked for give-up during a previous business is retained in ACT for four additional business days. The allocation process can be completed by accessing the unallocated group within the ACT Allocate Group screen and providing the allocation instructions. Trade(s) was not marked for give-up (within two business days of trade date) If a trade had been inadvertently not marked for give-up, the trade, if executed within the last two previous business days, can be accessed through the PTMS Previously Cleared Transaction screen and marked for give-up. Once the as/of trade has been marked for give-up, a group will be available within the Allocate Group screen in ACT to allocate. Trade(s) was not marked for give-up (outside of two business days of trade date) Firm users will need to enter a position transfer to move the trade to the end firm and client. Manual adjustments for brokerage and give-up service execution fees will need to be manually updated within the applicable application. I discovered that after the original trade date I forgot to create an Average Price group and allocate it through ACT. What are my options? Within two business days of original trade date Access the Previously Cleared Transaction screen in PTMS and locate the applicable trades that make-up the group using the search feature. After locating the trades, input the same group ID across each trade in the field provided and click the Save button. This action will create a new group to be managed within the PTMS Group Review screen. Once the average price group has been reviewed, submit the group to ACT where instructions to allocate the average price group can be completed. Outside of two business days of original trade date Firm users will need to enter a average price position transfer to move the position to the end firm and client. Manual adjustments for brokerage and give-up service execution fees will need to be manually updated within the applicable application My firm does not have a middleware system in place to perform give-ups and take ups. Is there another option available that will automate the allocation and claim process? 9

10 Yes, ACT has an Allocate and Claim Profile feature that allows firms to establish instructions that will automatically allocate give-up and claim take-up transactions. For additional information, please refer to the ACT Allocate & Claim Profile Training guide located at: My firm already has a middleware system in place to perform give-ups and take-ups. In the event my middleware system goes down, can I use the ACT profile system as a back-up? Yes, to assist in disaster recovery purposes, ACT profiles can be activated and deactivated quickly. additional information, please refer to the ACT Allocate & Claim Profile Training guide located at: For How will the fees be calculated for give up transactions? Exchange fee billing for give-up transactions will be set up to pass charges to the ultimate carrying (claiming) firm. Each transaction will be assessed an exchange fee. The charge assessed for the trade execution will be offset by a negative charge (i.e. credit) assessed on the give-up allocation record. The take-up firm will then be assessed an exchange fee for the claim record. Take-up firms will also be assessed a clearing fee of $.10 per contract for give-up trades they claim. Brokerage fees assessed in ATOM will also pass to the claiming firm. Brokerage on trades marked for give-up will be assessed as if it is a regular trade execution but will be subsequently offset when the allocation (FROM) record is processed. A credit (negative) fee will be calculated for all FROM records using the same rate parameters that apply to trade executions. A debit (positive) fee will be calculated for all claim (TO) records. See CM Notice for more information. All matched give-up FROM and TO records will be downloaded into egains, an automated billing system which is supported by the FIA and Markit. Clearing members can optionally use egains to assess execution brokerage fees to the claiming firm. Fee rates can be downloaded, if applicable, directly from egus into egains. 10