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Ensuring financial markets operate efficiently

Sachin Somani
Sachin Somani
Global Director - Customer Proposition, Refinitiv

How can technology be used by central banks around the world to help improve the operational efficiency of financial markets?

  1. Around the globe, customisable technology can be employed by central banks to enhance the operational efficiency of financial markets.
  2. These technology solutions can be operated across primary and secondary financial markets, and post-trade, surveillance, data and analytics.
  3. Operational efficiency can be further enhanced by using technology to create benchmarks and indices, which aids central banks in formulating monetary policy.

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As technology advances, global financial markets are evolving rapidly, with the frequent launch of new products and services, combined with high levels of data and workflow automation. To keep pace, the role of central banks must change, supported by customisable technology solutions to ensure the smooth operation and oversight of the world’s financial markets.

Tailored technology solutions are key. It is clear that central banks in frontier and emerging markets have different challenges from those in the more developed world. Different solutions need to be tailored to the requirements of a central bank, and also to the financial institutions, corporates and brokers operating in their markets.

Recognising the requirements of both central banks and the financial markets, Refinitiv has developed a holistic central bank proposition, offering a range of technology solutions to more than 150 central banks, helping them to operate the financial ecosystem, from primary and secondary markets through to post-trade, surveillance, data and analytics.

Refinitiv provides highly secure and bespoke solutions empowering central banks to act with confidence through every step of the financial market ecosystem

Primary financial markets: open market operations and auctions

The role played by central banks in enabling robust markets by managing liquidity and price stability is essential to all, from primary dealers to secondary market participants, regulators and industry associations.

Using existing market infrastructure to connect with market participants, Refinitiv offers an automated workflow platform to conduct open market operations and auctions.

Refinitiv’s Auction solution connects central banks with primary dealers in their countries, streamlining the entire process using existing infrastructure. 

Secondary financial markets: serving individual market participants

As central banks manage foreign exchange (FX) reserves and market liquidity, they are faced with challenges to ensure the efficient operation of these secondary markets.

Technology offers solutions to address these challenges, with Refinitiv providing a suite of FX trading tools, including Conversational Dealing, Matching and FXall.

With a network of 4,000 users, Conversational Dealing enables bilateral negotiations between traders. This is of particular value in frontier and emerging markets and for trading desks needing to access liquidity in these markets.

Matching provides access to spot and forward prices via an anonymous central limit order book and can be used to access liquidity in a transparent, efficient and cost-effective way.

FXall is a multi-bank trading platform with a range of functionality from accessing liquidity to straight-through processing, allowing transparent trade execution in compliance with local regulations and codes of conduct.

Beyond the front office: post-trade processing, reporting and surveillance

Recognising that there is more to a strong financial market than the front office, central banks banks are leveraging technology to automate and streamline post-trade and compliance services.

As central banks monitor markets constantly and intervene should there be any breach, or potential breach, of trading regulations, Refinitiv has developed Market Tracker, which supports real-time regulatory reporting of Refinitiv and non-Refinitiv trading venues consolidated into a single stream.

The service assists central banks with tracking and monitoring trading activity, provides systemic risk monitoring, and assists in liquidity management, inflation targeting and benchmarks.

Straight-through processing (STP) reduces keying errors and delivers efficiency in post-trade processing. Refinitiv Trade Notification connects trading counterparties worldwide, supporting STP to ensure the smooth functioning of middle- and back-office operations.

To further assist in post-trade, FXall Settlement Center automates middle- and back-office trade processing with SWIFT confirmation messages, trade matching, settlement instructions, trade netting, third-party notifications, trade receipt splitting and more.

As central banks ensure orderly financial market operations, market surveillance is an important area of responsibility. Refinitiv’s market surveillance solution helps central banks execute this important function with confidence.

Benchmarks, data, analytics and ESG

Benchmarks are an important part of the financial market ecosystem and help central banks to monitor financial markets. This, in turn, informs their decisions on monetary policy and helps them to assess the impact of these decisions. Refinitiv’s benchmark services are used extensively by central banks and financial authorities globally.

To formulate monetary policy, central banks need high quality data and analytics. Refinitiv meets these requirements, providing macroeconomic analysis to central banks with OTC and exchange reference data, normalised and cleansed, via a single feed or data link. Refinitiv Datastream includes over 50 years of back data.

Refinitiv News is also available, offering exclusive access to Reuters financial news, combined with more than 10,500 other sources, providing central bank clients with the broadest possible source of content and information.

Central banks around the world are increasingly paying attention to the opportunities of responsible investment. Refinitiv’s ESG data, covering nearly 70 percent of global market cap and over 400 metrics, helps central banks make sound, sustainable investment decisions.

How does technology enhance central bank operations?

Whether serving a frontier, emerging or developed market, central banks are using technology to enable high levels of oversight and to ensure that their markets continue to operate efficiently.

Refinitiv’s suite of services is designed to support central banks across their whole ecosystem. By efficiently providing data, benchmarks, news, reporting, monitoring and surveillance services, multi-asset trading venues and primary market auction platforms, Refinitiv delivers end-to-end functionality to support central banks around the world.

Refinitiv provides highly secure and bespoke solutions empowering central banks to act with confidence through every step of the financial market ecosystem