Mercari markets operate on a purpose built, OTC trading and matching platform known as Mercari eSEF (electronic swaps execution facility). Connectivity is available through the Mercari trader client or Mercari broker client.
Mercari eSEF was designed by OTC market professionals for OTC market professionals for OTC market conditions and conventions.
Mercari eSEF powers OTC markets by offering numerous features to assist participants with managing their order and trade books, incorporating best practice trading, order management and audit features. In addition to trade and execution efficiency, Mercari eSEF also offers trading security whereby each transaction is encrypted. Once a trade is completed, it is archived for 7 years with only the central system operators, parties to the trade and regulators having access to trade records.
As an electronic system, Mercari eSEF meets user and regulatory requirements of fair, orderly, transparent and efficient markets, offering multiple market structures configurable at the product level.
At its core, Mercari eSEF is a dealer-to-dealer price distribution network (D2D). The Mercari eSEF can also act as a dealer to customer price distribution network (D2C), and/or a Dealer to Sales Desk (D2S) network. Mercari eSEF can also be configured as light grey or dark pool.
Mercari's investment in technology underpins its philosophy to bring together the best trading concepts with key and relevant end user functionality. Mercari eSEF uses Microsoft's C# and .NET framework technology.
If required the Mercari eSEF technology also offers multiple market structures configurable at the product and tenor levels.
Mercari eSEF can offer both RFQ (request for quote) and CLOB (central limit order book) structures delivered via intermediated (brokered) and disintermediated (direct) market models.
The flexibility of the Mercari eSEF technology is such that the price discovery model and distribution model can be set at the product level.
- Inter-dealer (dis-intermediated)
- Brokered (intermediated)
- Hybrid inder-dealer/brokered
- Order driven markets – Request for Quote (RFQ)
- Price driven markets – Central Limit Order Book (CLOB)
All versions of Mercari Direct markets are convened by central market administrators. It is the responsibility of the designated administrator to oversee the smooth running of any marketplace acting as a central, neutral support for all participating dealers and their brokers.
Mercari Direct has many automated and manual features ensuring all participants receive the consistent and professional OTC trading experience they should expect of such a service.
- Configuring the market view, displays and functionality for the specific needs of each individual market. These include curve order management features, cloaked features and sonics
General Market Operations
- Supervise marketplace operations
- Have access and manage all information relevant to the market over which they have authority
- Responsible for opening and closing markets with the added ability to lock or clear markets both individually or in entirety on the fly if they deem necessary
- News and information, displays and notifiers
- Authorisation approvals
- Access level management. Dealer, manager, middle office, back office or view only
- Create new companies and users
- Manage a broad range of company and user defaults for trade advise, market movement notifications and correspondence
Product Default management
- Price wizard starters
- Indicative levels
- Out of market price boundaries
- Order increments
- Counter starter levels
- Minimum and Maximum amounts
- Large amount warning level protection
- Firm timers
- Curve trigger warnings
- User notifier setting
- Menu timers
- Initiating direct contact should a ticket or active notifier not be acknowledged
- Modifying trade ticket fields when requested such as increasing amounts or any other agreed structural changes
- Dealer emulation when required to assist either broker or dealer
Reporting and Auditing
Authorised participants using Mercari can access a variety of different logs, histories, communication records and participation statistics. Mercari's commitment and obligation is to store this data for 7 years.
Mercari also allows for 4 other access status levels other than Dealer. Manager status allows access to all screens and logs for review, with no ability to trade. Desk managers can use this to log in at anytime from anywhere (subject to remote authorisation) to see what their traders are doing real time.
Compliance officers are also able to log in and review trades, their timing, their pathways to execution and any associated chat correspondence. Mercari records all direct line phone conversations which can be quickly reviewed at any time.
Back and Middle office authorisation allows convenient online access to trade data and histories that can easily be downloaded in custom Excel files.
Time stamped audit Logs retained for 7 years include:
- Transaction histories
- Cancel trade details
- Amended trade details
- Order entry logs
- User access logs
- Automated Mercari quick text logs
- RFQ request statistics
- RFQ price making statistic
- RFQ entry logs
- Mercari Private Chat feature
- Deal Discuss feature
Mercari eSEF is an OTC specific trading platform. Its flexibility allows it to effectively facilitate the trade of any OTC product through market specific tailoring, including multiple market structures and distribution models.
Using an brokered/intermediated distribution model, Mercari eSEF's automated features allow an OTC broker to multiply themselves. This means that a broker is able to service more clients over more products without a drop in their personal service levels. Their service is made more efficient and their workday made easier.
When Mercari is set up as an intermediated broker market place, brokers emulate their client to act on their behalf so that each order is attributed to a trader. Moving from one client to the next or from market to market is as easy as clicking the mouse. Placing an order can be as simple click and send. There are many additional broker best practice options that customise how an order is delivered into Mercari OTC market place maximising the chances of trading at the dealer's optimum level in their preferred amount.
Relevant, unambiguous and timely communication between traders and their brokers is paramount to effective order promotion and trade execution. Mercari OTC trading platform enhances traditional dealer communication in its markets through a series of manual and automated chat and notifier features.
Mercari gives brokers another communication option with their dealing clients through the Mercari Private feature. The broker can initiate a chat with his trader; elect to leave it on the dealers desktop if unanswered or remove it from their screen should it be only relevant for that moment. Group chats can also be had.
Notifiers are designed to keep both the broker and dealer fully informed. This allows both to either act on new information or ignore it, and continue their work with minimal interruption. The Mercari notifier system makes life easier for brokers and dealers alike. Many orders placed in the system can become "set and forget" with the comfort that you will know immediately when something has changed. Brokers have no need to interrupt their dealer unnecessarily. If the dealer has left his desk and an important notifier goes unacknowledged, the broker can then takes steps to make direct contact. This feature ensures that intermediary intervention in the transaction process is restricted to the important or relevant.
There are different forms of notifiers built in to the Mercari Direct OTC trading platform
- News and Alerts
- Manual Personal Notifier
- Automatic Personal Notifier
- Negotiate notifier
- Action notifier
- Name passing notifier
- Communication notifier in C and D check
- Detail passing notifier
- Screen scroll displays
- Deal Discuss
Once names are passed for credit checking purposes Mercari's Credit and Detail Check feature can be configured to allow trading counterparties to chat directly with each other. If necessary dealers can here negotiate any special arrangements or amendments to a trade in view of the broker who can then make any agreed changes on the fly.
Contact details for each client are preloaded for Trade Advice Notification. Settlement risks are minimized with Mercari's automation of the calculation and structure processes of each trade allowing notifications to be sent automatically and immediately once trader's terms are agreed. Should changes be negotiated later, an automatic version 2 of the documentation will be sent after the new details are formally agreed upon.
For broker flexibility, all fields within the Mercari Credit and Detail Check are configurable so that dealers can negotiate changes between themselves; for example, a bigger trade amount.
Market screen setups can allow for online post trade transfer and confirmation of acceptance of registry or clearing house details.
The Mercari credit manager accepts credit rules from users and also automatically creates credit rules immediately following any bilateral credit decline event.
In OTC markets, this can be an important feature as it allows the participants to re-enter the market seamlessly, maintaining any queue position priority and without generating another trade that will fail. Unmatchable prices due to credit or clearing house mismatch can result in choice prices for others to trade if they desire.
Traders involved in these orders now see the best prices they can trade with a specific highlighter denoting if any unmatchable prices exist for information purposes.
Some markets, particularly those involved in rate setting periods, thrive on noise. Mercari Sonics are automated voice calls of orders and trades. In faster markets, the Sonics engine will prioritise trade reports over other reports.
Order Optimisation Features
- Exchange for Physical (EFP)
- Iceberg amounts
- Product switches (Volatility Matched)
- Implied/Derived switches
- Auto Bid/Offer on
- Ask me first orders/Expression of Interest
- Auto notify levels
- Curve notifiers
- Curve cancellations levels
- Meet in middle negotiator
- Timer to cancel or refer orders
- Order park and edit
- Price maker run protection
- Credit restriction input
- Cloaked or Hidden levels
- Off market trades
- Switch trades
- Parent/Child orders
- Improve to trade
- Firm Up notifiers
- Price Level notifiers
- Currency bounds protection
- Auto cancellation time based
- Global order parking
- Specific group requests
- Custom New Run structures
Permission levels control the access that each type of User gets to the various Front, Middle and Back Office Screens. Permission levels are controlled on a product by product basis by the administrator with the potential for a "Dealer" on one product to have "View Only" rights on another.
- Broker intermediary Level: Access to all relevant areas. Information limited to the trades they acted for. Can emulate dealing clients to enter manage and execute trades on their behalf. Cannot see the identity of other brokers or their clients that have orders in the market.
- Dealer Level: Access all areas. Can view and input to all Screens & Reports.
- Manager Level: Can view all screens and reports but has no input rights.
- Middle Office Level: Cannot view or input to trading Screens. Can input limited details and view all reports.
- Back Office Level: Cannot view trading screen or input to any screen but can view reports.
- View Only Level: Can only View Trading Screens.
- Administration Level: Market convener that overseers market place and has access to all areas. The administrator is able to change a multitude of market setups and defaults.