| Services | Description |
|---|---|
| Order management | • Refers to the collection, routing and management of orders; |
| Order execution | • Refers to all the means and services by which an order is executed. • Responsibility of the OTC Facility Operator. |
During the trading phase, services are performed off-chain outside of the DLT, leveraging current services. It is only after the off-chain trading of the Securities Tokens that the ownership transfer will be registered on the DLT.
At first, during the trade phase, instructing parties submit their orders directly to the OTC Facility Operator or to the executing parties. In the latter case, the execution parties can then either route the orders to an OTC Facility for execution by the OTC Facility Operator, or handle the execution themselves over the counter (OTC), typically by telephone or other relevant means chosen by the execution parties.
Instructing parties and/or executing parties are generally granted access to an OTC Facility through a specific application program that requires due diligence (including KYC/AML-CFT diligence) to be performed by the OTC Facility Operator.
Once the orders are executed, trades are generated and notices of execution (including trade details) are sent to the respective counterparties of each trade.
The counterparties of a trade can agree that the trade will settle as recorded at the time of execution (unless both agree to cancel). These are referred to as “locked-in” trades.
In such cases, the OTC Facility Operator generates and submits the settlement instructions related to the “locked-in” trades to the Registrar off-chain, outside of the DLT. This requires that counterparties document their crypto SSI in the OTC Facility.
Otherwise, where executing parties proceed with the execution of the trade between the instructing parties, the executing parties (and their instructing parties) are in charge of sending the settlement instructions to the Registrar, after passing their internal trade processing services.