Traiana, a provider of post-trade and risk solutions, has launched Harmony CCP Connect for Equities, which has successfully completed its first trade between two banks.

Clients already include equity broker dealers Credit Suisse, JPMorgan and Instinet, who will use the service to automate the central clearing of their OTC equity trades.

“Equities settlement is still costly and can be inefficient. Increasing efficiency in this process and enabling clearing will reduce risk and costs in the market,” said Adam Toms, CEO, Instinet.

“By working together with other equity brokers, the CCPs, and Traiana, we can resolve errors on T+0 and merge OTC and exchange flow into the same scalable process,” said Fabrice Carrier, managing director, JPMorgan.

The solution matches and clears equity contracts for difference (CFD)-related hedging trades at a customer’s preferred clearinghouse. The service is connected to LCHClearnet, EuroCCP and SIX x-clear.

“In a period of regulatory change and cost reduction, moving OTC equity trades to a centrally cleared model that also provides netting benefits, represents a fundamental improvement to the structure of equities markets,” said Roy Saadon, head of Emea and co-founder of Traiana.

The transfer of OTC equity trades from the existing bilateral settlement model to a central clearing (CCP) model, is a move by the industry to reduce counterparty risk, increase transparency and assist in achieving T+2 settlement through trade compression.

In addition, participating broker dealers will gain efficiency and cost savings as CCPs net these transactions alongside existing on-exchange flow, reducing the cost of settlement. Traiana estimates that participants could reduce settlement costs for OTC equity trades in EMEA by up to $30m a year.