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Highlights
- Eurex Clearing wanted to modernize its securities clearing platform to deal with high trade volumes from customers and revamp infrastructure to improve time-to-market for new features.
- The clearing house partnered with TCS to migrate the legacy central counterparty clearing house (CCP) application to the modern C7 securities clearing service (SCS).
- The new system brought operational efficiencies and enabled Eurex Clearing to launch new products and services quickly.
Context
Clearing and settlement of trades is key to processing critical liquidity financial centers need to attract investors.
For Eurex Clearing, a part of Deutsche Börse Group, managing a collateral pool of over EUR 100 billion and clearing transactions with outstanding notional valued at EUR 16 trillion every month are crucial operations. Building and maintaining trust among its customers through on-time and error-free operations is one of its foundational values.
As part of its strategic vision, the clearing house intended to simplify business processes such as netting, delivery management, and corporate action management. This would enable it to enhance operations to facilitate high trading volumes for its customers. It also aimed at standardizing corporate action processing across various markets and aligning the clearing of general collateral pooling repo transactions with the Eurosystem collateral management system (ECMS). Further, Eurex Clearing planned to adopt a flexible cloud-ready system to reduce technical debt, boost growth, and enable faster time-to-market for new products.
Challenge
Maintenance of the legacy application was very expensive and time-consuming.
Innovation was restricted to a great extent due to the monolithic and inflexible architecture of the application. There were various bottlenecks in the system that restricted the processing of high trade volumes and extensive operational efforts. Functions such as risk management computation and delivery management were causing delays on extreme high-volume days.
TCS has been an excellent partner in our journey of CCP modernization.
TCS’ intervention
To overcome these hurdles, Eurex Clearing partnered with TCS.
In 2019, the clearing house embarked on a journey to migrate the legacy central counterparty securities clearing application to the modern C7 securities clearing service (SCS).
Leveraging our expertise in application development, we designed a microservice-based architecture deployed on the RedHat OpenShift platform. The operations graphical user interface (GUI) was redesigned to a more user-friendly one.
The program was divided into two phases:
Phase 1 entailed the clearing of the securities market and derivatives settlement transactions. We designed robust, high-performing system components to tackle high throughput and latency-related challenges.
In phase 2, TCS focused on the clearing of the repo market. The main challenges during this phase were the complex functionality of the system and the need for timely migration to a new collateral management system. We brought in industry experts with deep business understanding to iron out the problems.
TCS helped Eurex Clearing create a cloud-enabled, future-ready application.
Business benefits
Eurex Clearing is now able to handle high trading volumes.
With TCS as its partner, the company was able to scale the securities clearing application with a flexible architecture and an independently scalable component design.
The solution has streamlined transaction management and augmented operational resilience. Its optimized workflows and highly configurable services have improved enterprise agility. This has enabled Eurex Clearing to quickly launch products and services such as support for more currencies and extended trading hours.
The new system can handle significant increases in the trade traffic in a seamless manner without burdening the operations or development teams.
Using the best-in-class distributed agile methods and test automation, TCS was able to ensure a smooth migration. The scalable securities clearing platform has brought down the cost of operations.