Sunday, June 19, 2011
Current Status And Challenges of STP and Asset Managers Part.I
In recent years asset managers have conducted I their sites, both led to major changes at the organizational level:
* Changing the middle-office business, which has become a business expert responsible for dealing with exceptions STP
* Streamlining and sometimes processing service contracts vis-à-vis external actors (including custodians), and between internal stakeholders (empowerment of front-office concerning the seizure of deals)
* Increased importance of reference for the automation and control requires reliable baseline data (third values, standard instructions and settlement)
* Formalization of business processes and streamlining the distribution of transactions within the information system.
Regarding the matching of transactions and settlement, patterns emerge and process to standardize.
Solutions and centralized automatic matching have emerged as solutions that provide the best rates of STP: 85% of the deals are confirmed on the day when the confirmation is done via a solution centralized matching, only 18% when the confirmation is done by back and forth between asset manager and broker.
ISO 15022 (and ISO 20022, which complements it by adding the XML syntax) makes Swift and fill rules SMPG as a standard interface for the exchange. The standard requires disclosure of such details of RL brokers in the IRL messages sent to custodians.
That said the levels of STP are highly variable, depending on the types of instruments.
For classical instruments (equities, fixed income, forex), the rate of STP is good and almost exclusive breaks STP cross-border transactions and are often caused by contact settlement brokers. The improvement involves the emergence of a global repository recognized by all and a standardization of data exchange between partners. Meanwhile, asset managers shall have in place reference coordinate RL brokers, administered manually.
On the other hand, the level of industrialization is low for complex instruments (derivatives futures, credit derivatives, OTC instruments, etc.). Several obstacles: the lack of standards and "market practices" in terms of formats and exchange protocols; gaps in modeling and benchmarks in information systems, the pace of innovation in front office. The STP is not always possible or appropriate, it requires as a prerequisite to the emergence of standards for external trade, and urbanization work and standardization of trade and in-house repositories.