The funds settlement system INVESTRO
INVESTRO is the funds settlement system based upon XONTRO. Using INVESTRO, BrainTrade Gesellschaft für Börsensysteme mbH has extended the application realm of their core product XONTRO.
Cut off telefaxes
For a long time in the past, the funds trading business executed by banks had been largely based upon “manual” processes. The instructions were issued per telefax, sorted by the recipient, and executed upon the arrival of the prices. The recipient had to calculate the individual conditions, and afterwards enter the trades into XONTRO Trade. These processes were altogether cumbersome, and errors were likely to occur, as the same data had to be processed and entered for multiple times. To some degree, these processes are still applied as of today. Using INVESTRO, however, everything changes.
Straight through processing
Within INVESTRO, the instructions are either collected electronically or taken over from the bank internal order collection system. From this point on, they are solely processed electronically. Within the entire work flow, from the instruction entry, including the contract note, and up to the delivery process, there is only one manual interface remaining – which is located at the beginning of the process.
INVESTRO focuses on existing components. For the transmission of the instructions, XONTRO Order is used, and the contract notes are generated automatically from within XONTRO Trade. Therefore, the existing order routing technique may continue to be used for the instructions; the same logic applies for the contract notes’ generation and transmission. Likewise, the resulting trades are forwarded automatically onto LION (CBF) and set up for deliverery according to the same rules and regulations as for on-exchange trades.
The new feature within this process is the electronic conjunction between order routing and contract note generation: The price assignment, the condition determination, the trade generation is all done automatically. Using INVESTRO, the manual work steps hitherto necessary for the instruction recipient may be omitted.
Specifically, the automated calculation of the bonification constitutes a big relief. The bonification may be set up individually for each instrument as well as for each counterparty by each instruction recipient.
Types of instructions
Of course, all common types of instructions can be handled by INVESTRO:
- Buy at issue price (including standard bonification)
- Buy at issue price (including elevated bonification at re-investment)
- Buy at re-investment price (including standard bonification)
- Buy at redemption price
- Sell at redemption price
In addition, for the price assignment and the setttlement period, there are different variants resp. combinations of these variants available, too:
- The price assignment occurs daily on the order insertion date after acception deadline, the trades will settle after two business days (standard)
- The price assignment occurs on the day after the order insertion, or even still later (forward trading)
- Deviant settlement period (shorter or longer than two business days)
- Collection of orders over a specified period
- Trade per issue date
To a large extend, INVESTRO maps the familiar business work flow. Thus, every bank that participates in XONTRO may insert instructions for INVESTRO, and likewise send them to another bank, with whom they settle funds trades. Recipient of the order may likewise be any bank that participates in XONTRO, provided that – upon their own request – they have been registered as an order recipient in the customer data base previously.
International cooperation with Vestima
By cooperation with the international platform Vestima, foreign investors can buy German funds and German investors can buy foreign funds.
INVESTRO uses the same technical infra-structure as XONTRO. Modifications only result from the fact that, within the execution confirmation as well as for the contract note, the funds-specific contents are to be taken into account. For banks being interested in becoming new INVESTRO participants, individual test and simulation dates and times can be arranged.