OTC and ETD clearing are processes characterised by complexity. Duco offers a new way of approaching reconciliation that eliminates manual effort and gives you better risk management and control.
Both OTC and ETD derivatives must be cleared through a central counterparty (CCP). However, the reconciliation of derivatives has long been a challenge due to:
- Multiple products
- Multiple CCPs
- Regional variations in compliance requirements
- Poor quality or inaccurate data due to a lack of standardisation
- Disparate teams running their own reconciliations with a lack of global governance and control
Together, these factors combine to hinder effective reconciliation processes, especially as legacy on-premise point solutions typically struggle to cope with this level of complexity.
At Duco, we spoke to a firm recently whose legacy reconciliation system could only match their derivatives transactions on six individual fields. This was inadequate considering the volume and range of their daily OTC and ETD activity. As a result, they needed high levels of manual effort to identify, investigate and resolve breaks.
The Duco Way
At Duco we strongly believe that the challenges of OTC and ETD clearing reconciliation can be solved by enabling middle and back office experts to set up and manage these processes themselves.
This eliminates the reliance on disparate teams or key technical staff to build and maintain the reconciliations, and also removes the need for handovers and complex specification documents.
By offering a new, agile approach to derivatives clearing, Duco enables firms to build new robust controls in a matter of hours, rather than weeks or months.
1. Fast and accurate data ingestion
Unlike other reconciliation systems, Duco is completely data agnostic. Regardless of which OTC or ETD products are involved, users can simply upload their data and the system will automatically ingest and transform it ready for the building phase. This takes a fraction of the time previously needed to resolve data quality issues.
2. Efficient reconciliation build
Duco features Natural Rule Language (NRL) technology that enables business users to build reconciliations without the need for coding. Operations staff can quickly create complex logic and rules in easy-to-read English sentences.
3. Automated workflows
Once the reconciliation is built, users can employ Duco’s NRL to automatically allocate breaks to other users, groups or a combination of both, cutting the time required for resolving exceptions.
Why OTC and ETD clearing users are turning to Duco
Duco has its origins in solving derivatives reconciliation challenges. Today, over 50 clients trust us for their OTC and ETD reconciliations, ranging from tier 1 investment banks through to asset managers, brokers and hedge funds.
We are recognised as a disruptive solution in the reconciliation market, enabling operations teams to leverage existing internal and external data across products, geographies and CCPs.
For more information and to see how Duco works, download our guide to OTC and ETD clearing reconciliation.