1. Order, Trade, and Position Drop Copy
The Commission is inquiring about the potential advantages of increased standardization of real-time order, trade, and position reports for use by clearing firms and market participants. Real-time information is critical to market participants managing the risk of their own, and their customers' trades. The Commission is inquiring as to the advisability of requiring all exchanges and DCOs to provide real-time order and trade reports to each market participant, and the clearing firm serving that client for that particular trade. This information would give clearing firms real-time updates of their customers' order and trading activities.
These reports could improve the effectiveness of automated credit risk limits, which require current order and trade information in order to calculate current positions and monitor credit risk effectively. In some cases order information may be available to a trading platform before it is available to the relevant clearing member (e.g., in the case of DMA-enabled participants), and trade information is always available first to the trading platform. Therefore, there is a strong interdependency between exchanges, DCOs and clearing firms as the latter seek to manage their credit risk.
Any time lag in the clearing firm's ability to construct a retrospective view of their customers' positions could diminish a clearing firm's ability to assess its customer's risk profile before such customer enters additional orders or establishes additional positions and accumulates greater risk.
More generally, widespread use of order and trade reports may be beneficial in both DMA and non-DMA situations to help market participants to track all order and trade activity quickly and efficiently. The Commission notes that some or all DCOs already provide post-trade information to clearing members, and that some DCOs charge for that information and others do not. /87/ However, the Commission believes that the content of the data vary among DCOs and that not all market participants choose to purchase data when it is available. As described above, the Commission preliminarily believes that more standardized access to real-time data from exchanges and DCOs could be valuable to clearing firms, and possibly to trading firms, as they manage their risks. The Commission encourages interested parties to comment, again, on the current use of real-time reports, the consistency of this use, and the potential benefits and nature of additional order and trade reports.
FOOTNOTE 87 See Carol Clark &
42. What order and trade reports are currently offered by DCMs and DCOs? What aspects of those reports are most valuable or necessary for implementing risk safeguards? Please also indicate whether the report is included as part of the exchange or clearing service, or whether an extra fee must be paid.
43. If each order and trade report described above were to be standardized, please provide a detailed list of the appropriate content of the report, and how long after order receipt, order execution, or clearing the report should be delivered from the trading platform to the clearing member or other market participant.
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