Using Docs to manage Clearing Accounts when clearing references are not a customer account in Clearing Brokers’ books and records
Certain clients prefer to have give-ups instructed to accounts at their clearing broker which are referred to as allocation accounts, average price accounts or client-specific suspense accounts. Once give-ups are claimed into these accounts, the client will then allocate the trades to the end customer accounts. As these accounts are used only to simplify processing and are not customer accounts, they are typically not added to give-up agreements in Docs.
In other circumstances clearing references used by a clearing broker represent aliases to end customer accounts which, again, do not appear in their books and records and thus are omitted from Docs agreements.
The Clearing Broker should add a reference for each processing account or alias used by the client to the DOCS agreement in the Clearing Account section, and when doing so enter “Processing Reference” in the Description field for each added reference*. In addition to any Processing References, ALL CUSTOMER ACCOUNTS which ultimately receive allocations of trades claimed into the processing account must appear on the give-up agreement governing the original trade, even if those final ownership changes are not written back to the exchange.
Adding the Processing Reference to Docs will enable Docs agreements to be identified and aid firms’ efforts to reconcile their books against trades received from the exchange. It will enable execution brokerage rates to be identified on trades in downstream brokerage settlement systems such as GPS and Atlantis.
FIA Tech is planning a future enhancement to the Docs platform to implement specified account reference types, such as Processing Reference, as an account tag/drop-down selection, and will migrate manually entered tags accordingly.
*Note: When an account is added to the Docs Agreement, any related, untouched trades in Atlantis will resynce and match to the Docs Agreement. HOWEVER, if the related trades have already been actioned by one or more of the parties, they will not resync/recalculate until the trades are Rejected by the Payer. Once rejected, the trades will resync and match accordingly.
Managing Clearing Accounts in Atlantis/GPS when clearing references are not a customer account in Clearing Brokers’ books and records
There are other cases in FIA Tech’s Atlantis or CME’s GPS platforms where clearing references are not easily used to find the appropriate give-up agreement and cause fee calculations to fail.
Issue 1: Use of prefix/suffixes by clearing brokers when claiming give-ups
Some clearing firms use prefixes or suffixes, such as the addition of a letter to indicate regions, desks or other internal operational designations. For these clearing firms, the reference in the clearing account field received from the exchange varies in a consistent, predictable manner, and the actual customer account number contained within the reference is readily identifiable once the prefix/suffix is removed.
Amend the trade(s) in Atlantis/GPS by changing the Give-up Reference field to refer to a proper customer clearing account reference or processing reference recorded on the Give-Up agreement in Docs.
GPS provides a similar mapping/substitution capability which firms can use for these cases as well.
Issue 2: Clerical errors during clearing process result in incorrect clearing reference.
Clerical errors by the client, executing broker or clearing broker staff result in reporting of give-ups to FIA Tech or GPS which will not match a Docs agreement.
Amend the trade(s) in Atlantis or GPS by changing the Give-up Reference field to refer to a proper customer clearing account reference or processing reference recorded on the Docs agreement.