T-Zero® Goes Live With First Trades Between Goldman Sachs, KBC Alternative IM;
New Platform Provides Immediate Confirmation, "Agnostic" Connectivity
To Achieve T+O Settlement, Avoiding Operational Problems
London & New York, October 3, 2005 – T-Zero®, a platform dedicated to achieving operational efficiencies
in the credit derivatives markets, announced that it has processed its first live trades between a major credit derivative
dealer and a hedge fund. T-Zero® is a post-trade processing system specifically designed to help combat the rising tide of
operational issues affecting the growing credit derivative markets, including outstanding documentation. The dealer in the
trade was Goldman Sachs and the hedge fund was KBC Alternative Investment Management.
"This is a major breakthrough in the credit derivatives markets," said Mark Beeston, president of T-Zero®. "For
the first time, trades have been executed between a bank and its client, processed by an independent third party and electronically
documented by the bank's supplier of legal execution, DTCC. T-Zero® is demonstrating that its 'agnostic' affirmation model
can play an integral role in post-trade handling of trades."
The trades on T-Zero®, which allowed the participants to achieve immediate, or T+0 confirmation and settlement, comes as
the credit derivatives market faces increasing scrutiny by regulators globally, who have directed the industry to take steps
to alleviate the operational problems. T-Zero® has been working with the dealer community to develop solutions to problems
such as unconfirmed trades, cash breaks and margin management issues. By capturing the trade data correctly upfront T-Zero®
helps to address each of these areas.
One of the major benefits cited in using the T-Zero® system is that it does not mandate which systems market participants
must use in trade processing. "Interoperability has really arrived with T-Zero®," said Simon Morris, head of European
credit trading at Goldman Sachs. "This opens the way for true operational efficiency in the credit derivatives market,
cutting through a multitude of unnecessary legacy risks".
"This product should quickly become the market standard," says Francisco Arcilla, Director of Trading at KBC
Alternative Investment Management. "This mechanism will reduce operational risks, and enhance the transparency of the
post-trading process with our counterparties. In addition, we are benefiting from access to a real-time link into DTCC."
In the trades between Goldman Sachs and KBC Alternative Investment Management, T-Zero® processed multiple single-name credit
default swaps. Within minutes of trade completion, the trade information was entered into Goldman Sachs' trade capture system
and routed electronically to the T-Zero® platform. KBC Alternative Investment Management electronically affirmed the trade
on T-Zero® and, simultaneously, allocated it across multiple funds. The timeliness and accuracy of trade allocations, or "splits," are
a major source of operational inefficiency in the credit derivatives market. Major dealers have seen delays of up to 10 days
for receiving notification of allocations.
"T-Zero® is about ensuring our clients capture trade data 100% accurately, on trade date, 100% of the time",
says Beeston. "Our open architecture and standards-based model is not only unique, it is fundamental to unlocking operational
efficiency. Our product offers symbiotic benefits to all participants in the trade and post-trade support environment."
T-Zero® launched late in the summer and has received strong levels of interest from the dealer community globally. The
firm has a number of additional dealers coming online in the near future.
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