The Investment Dealers Association is proposing a rule change that would facilitate straight-through processing for trades between IDA members

This is to be accomplished by mandating the use of the new broker-to-broker trade matching utility for non-exchange trades and by requiring that for each non-exchange trade, involving CDS-eligible securities, executed between IDA member both firms must enter or affirm the trade in the broker-to-broker trade matching utility within one hour of executing the trade.

The IDA says that it believes that implementing the proposed changes would have no effect on market structure or other rules. It will however, shorten the time and improve the process used to get a trade between brokers ‘accepted’. Matched trades will be processed straight through with no human intervention. Only unmatched trades will require intervention.

CDS’s CDSX system-matching functionality was intended to support both broker-to-broker and broker-to-custodian trades. But the requirement to flag trades for match processing was not generally accepted. Also, the dealer community did not support the original design because it did not provide for an automated lock-in facility. At the same time, the model for automatic confirmation was not yet a concept fully supported by the custodian community. The broker-to-broker trade matching utility was agreed upon to facilitate STP between IDA members until a broader solution could be agreed upon.