Real-Time Trade Matching (RTTM) is the widely used interactive tool offered by Fixed Income Clearing Corporation (FICC) that enables dealers, brokers and other market participants to automate the processing of their securities trades throughout the trading day.

Overview

Real-Time Trade Matching (RTTM)¹ is the widely used interactive tool offered by Fixed Income Clearing Corporation (FICC) that enables dealers, brokers and other market participants to automate the processing of their securities trades throughout the trading day. Using standardized international message formats², RTTM provides a common platform for collecting and matching trade data, enabling the parties to a securities trade to monitor and manage the status of their trade in real time. Through RTTM, the parties can track a transaction from trade entry through to clearance and regulatory reporting.

The result is an immediate confirmation for trade executions that is legal and binding.

In addition to its statistical reporting capabilities, RTTM also brings reduced risk and greater certainty and soundness to a marketplace that settles trades valued at more than $3.6 trillion each day in fixed-income products including U.S. Government securities, mortgage-backed securities, corporate and municipal bonds, unit investment trusts (UITs) and money market instruments.

RTTM creates a more streamlined and operationally efficient processing environment.  It maximizes the volume of trades that match on trade date, and it reduces the risk of mismatched or failed securities trades by allowing trading parties to note and fix errors or potential problems in execution or processing as close as possible to trade execution. 

RTTM's standardized, interactive messaging also reduces costs by consolidating the systems needed to process the wide variety of fixed income instruments that FICC's customers trade. The service is available as a mainframe communications service or as an Internet-based service called RTTM Web.

RTTM provides a common trade capture and matching platform, a single communications pipeline, and a standardized interactive message format for the entire fixed-income marketplace.  This includes not only securities settled through FICC, but also corporate and municipal bonds and UITs, which are settled by National Securities Clearing Corporation (NSCC).  Both FICC and NSCC are subsidiaries of The Depository Trust & Clearing Corporation (DTCC).
 
Because real-time trade information is recorded immediately, RTTM further safeguards members in the event of an interruption of business at a member firm level or all across the industry. FICC's immediate capture of trade data, in combination with dual backup of the RTTM databases, server redundancy, and multiple data centers and operating sites throughout the United States, supports customers' mission-critical operations as well as the industry's ongoing business continuity efforts.

1. RTTM^TM is a trademark of Fixed Income Clearing Corporation
2. SWIFT-based formats.

 

Who Can Use this Service

Members of FICC's Government Securities Division (GSD) and Mortgage-Backed Securities Division (MBSD) or members of NSCC are eligible to become RTTM participants. Non-FICC members can use RTTM through FICC's Executing Firm feature, which permits introducing members to submit trades on behalf of non-FICC members, such as institutions and correspondent firms.

Benefits

RTTM addresses the industry need for automation, interactive communications and risk mitigation in the traditionally fragmented over-the-counter debt markets. Covering the breadth of fixed income instruments that customers trade, RTTM brings members closer to achieving the many benefits of STP, including:

• Reduced execution risk by automating error-prone post-trade processing procedures,
• Further risk reduction through centralized trade date matching and the establishment of legally binding confirmations in real-time,
• Reliable communications and standardized interactive messaging,
• A cost-efficient consolidated platform that supports all highly-traded fixed income products,
• A web-based front end allowing members to enter trade-related activity and obtain real-time status information, along with user-friendly search, query, and reporting tools,
• Exception-based screens, allowing members to focus only on discrepancies rather than on the entire post-trade processing flow,
• Standardized procedures across fixed income products, reducing the number of specialized systems and personnel needed to support your operations,
• Ability to comply with business and regulatory demand for more timely and transparent trade reporting,
• Full alignment with business continuity plans by providing for the safe storage of trade data.

How the Service Works

Customers can submit their trades upon execution in real-time, exchange trade status messages, access and transmit reports, and cancel or modify trades in RTTM using one of two methods: via RTTM Web, the web-based user interface, or via mainframe-based interactive messages. (Note: FICC's Government Securities Division does not currently support trade entry, cancels and modifications. GSD continues to use Webterm, terminal emulation software, which runs on a local PC.)

RTTM uses International Organization for Standardization (ISO) formats, the same as those used by SWIFT, for all inbound and outbound interactive messages. This enables members to leverage the RTTM services in a consistent format. The majority of trades processed through FICC are currently submitted using interactive messaging.

RTTM Web is a web-based interface that will, ultimately, serve as a single point of entry, providing transaction management and screen-based error resolution across fixed income instrument types. The application is a secure, browser-based trade entry/management tool that incorporates robust search capabilities, statistical reporting, and exception processing.

(NOTE: FICC continues to support terminal emulation and batch processing as participants migrate to web-based, real-time processing environment.)

Through RTTM Web, customers can enter trade-related activity and, regardless of input method, obtain the real-time status of all transactions received and/or updated by the RTTM system.  RTTM Web's user-friendly search, query, and reporting tools help members proactively identify and resolve processing exceptions that, left undetected, could lead to costly trade discrepancies.

RTTM offers three submission and processing methods:

• Bilateral Trade Submission
  The most common trade submission and matching method, bilateral trade matching,
  requires that the two counterparties submit certain mandatory trade details to RTTM to either match exactly, or within predefined allowable parameters (for example, within a real-time tolerance for final money).
• Demand Submission and Processing
  Demand trades are electronically recorded as compared upon receipt of unilateral trade input entered by an eligible demand submitter (and are thus guaranteed by FICC upon receipt). This form of processing enables demand recipients to DK (Don't Know) trades electronically, preventing such trades from continuing on through clearance and settlement. Trades that are not "DK'd" by end of day on submission date are automatically staged for settlement.  Recipients of demand trades may also optionally submit trade details to effect a match intra-day, or for reconciliation purposes.
• Locked-in Submission Processing
  Locked-in trades are electronically recorded as compared upon receipt of unilateral input from an eligible locked-in submitter (and are thus guaranteed upon receipt). If a locked-in trade recipient enters a DK, the locked-in submitter must explicitly cancel the locked-in trade to prevent the trade from proceeding to settlement. Trades that are not canceled by the locked-in submitter by end of day on submission date are automatically sent on to settlement.

As is the case with demand trades, recipients of locked-in trades may optionally submit trade details to effect a match intra-day, or for reconciliation purposes.

(NOTE: FICC will not accept and process locked-in input unless it has received authorization from a member to allow a specified locked-in or demand submitter to enter trades on its behalf.)

Regardless of how trades are submitted, FICC will generate output to members when trades are compared (whether comparison occurs as a result of matching, or trades are recorded as compared upon receipt). Comparisons generated by FICC evidence a valid, binding and enforceable contract between the trading member counterparties.

RTTM routes compared trades to the appropriate destinations for further downstream processing for netting and settlement and regulatory agencies for price transparency reporting.

RTTM will also send matched NSCC-eligible obligations that qualify for netting to NSCC's Continuous Net Settlement (CNS) system, Balance Order system or the Trade-for-Trade Accounting system. The vast majority of trades settle in CNS, which nets transactions for each participant and facilitates the book-entry movement of depository eligible securities in a centralized, controlled and automated environment.

How RTTM Facilitates Regulatory Reporting
The same trade message that is used for matching and internal member reporting supports  real-time regulatory reporting to the various fixed income regulatory authorities.

In fact, the Municipal Securities Rulemaking Board (MSRB) has designated RTTM as the sole reporting vehicle for the onward delivery of both street-side and customer trades.

RTTM will forward trades to the MSRB as well as all system events, such as matching, deletion, and repricing, for municipal bond street trades.

In addition, RTTM will support an interface to the National Association of Securities Dealers' (NASD's) Trade Reporting and Compliance Engine (TRACE), for the real-time reporting of corporate bond transactions. Like MSRB, NASD plans to reduce the reporting timeframe for TRACE-eligible debt securities to within 15 minutes of execution.

RTTM flexible, automated trade reporting capabilities enable members to more easily adapt to new regulatory reporting timeframes. At the same time, RTTM allows for the more efficient and documented exchange of trade status information, notifications, cancellations, rejects, and modifications among members.

How RTTM Provides Secure and Standardized Post-Trade Processing
FICC members have the choice of connecting to RTTM through DTCC's SMART (Securely Managed and Reliable Technology) network or SIAC's SFTI (Secure Financial Transaction Infrastructure), two high-capacity, fault-tolerant networks.

Members with appropriate user privileges can also access RTTM via FICC's RTTM Web over a secured network connection.

Given the reliability of FICC's technical architecture, and the fact that RTTM trade information is recorded in real-time, members' trades are highly safeguarded against a major financial market or telecommunications disruption. Dual backup of the RTTM databases and distributed server redundancy at multiple processing sites around the U.S. further protect your trade processing while supporting industry-wide business continuity efforts.

For More Information

FICC can supply you with further information regarding RTTM Services, and how they can benefit your fixed income trading operations.

Please contact your relationship manager via the Relationship Services Group Hotline at 800 422 0582, or by email at rmsupport@dtcc.com.