Bringing you live news and features since 2013
Bringing you news, views and analysis since 2013

36486

Settlement failure attributed to significant problems in the middle off for the majority of institutions

RELATED TOPICS​

A total of 60 per cent of institutions believe that settlement failures attributed to inadequacies of the middle-office are still a significant problem in their organisation, according to a new global survey conducted by Torstone Technology, a SaaS provider of post-trade securities and derivatives processing in collaboration with GreySpark Partners, a leading global capital markets consultancy.

The institutions surveyed attributed settlement failures to incomplete matching of settlement instructions, issues meeting the settlement deadlines, the inability to borrow or recover, and operational or technology issues. As a result, 45 per cent of respondents stated that they intend to change their middle-office system entirely.

The survey also reveals concerns around the potential joint impact of the proposed US T+1 settlement cycle and incoming CSDR regulations on the middle-office. Respondents indicated that while a shorter settlement cycle could reduce settlement risk, it will introduce operational challenges for banks and brokers, such as navigating shorter timelines to reconcile and repair trades. Further, CSDR will introduce punitive charges and buy-ins for trades that fail to settle, and will drive up the cost of settlement failure – a risk that could increase under T+1.

Data flow disruption and the lack of straight through processing (STP) in the middle-office were other significant issues highlighted by the survey:

Respondents highlighted widespread issues in facilitating the real-time transfer of static, trade and reference data from the back office to the front office and vice versa.

Respondents pointed to the problem of incorrect or missing data in the middle-office resulting from fragmented and siloed front, middle and back office functions that lack API-driven integration capabilities.
Respondents voiced difficulties in automating failed trade notifications to the front office due to fragmented systems’ reliance on manual processes.

Brian Collings, CEO for Torstone, says: “Fragmented legacy middle-office systems built with varying levels of functionality and automation are not only inefficient, time-consuming and costly but present significant operational challenges for banks and brokers of all sizes. Automation in the middle-office via STP platforms is key to solving these problems – remedying data connectivity issues, ensuring the timely delivery of trade data and confirmations to clients, reducing settlement risk as well as preparing for the possibility of a T+1 settlement cycle.”

Rachel Lindstrom, Thought Leadership Manager at GreySpark, says: “A lack of investment, over many years, has stifled efforts to rationalise and automate processes in the middle office in many banks and brokers. However, as firms look to achieve STP to reduce settlement failures and speed up trade processing, transformation programmes in many firms are shifting from the front office to address challenges in the middle office.”

The survey, conducted in partnership with GreySpark, took responses from 58 individuals working in middle-office roles from leading buy and sell-side institutions in EMEA, APAC and North America on how firms are addressing middle-office issues.

Latest News

MainStreet Partners has released its latest quarterly GSS Bonds report “Summer Edition”. This edition of..
Pension and insurance firms have backed a public-private blended finance model to help navigate investment..
MSCI has announced the launch of MSCI Private Capital Indexes, writing that with growing investor..

Related Articles

Rod Ringrow, Invesco
Geopolitical tension has surpassed inflation as the primary concern of sovereign investors and is prompting greater interest in allocating to emerging markets, according to the twelfth annual Invesco Global Sovereign Asset Management Study...
Geopolitical tension has surpassed inflation as the primary concern of sovereign investors and is prompting greater interest in allocating to..
Green energy
2024 has been the strongest ever year for green bond sales, with deals topping USD356 billion in the first six months, according to research from Bloomberg...
2024 has been the strongest ever year for green bond sales, with deals topping USD356 billion in the first six..
infrastructure headline
The new Labour government has launched a GBP7.3 billion National Wealth Fund which will target private capital to support the UK’s growth ambitions...
The new Labour government has launched a GBP7.3 billion National Wealth Fund which will target private capital to support the..
Tom McPhail, lang cat
Today’s news of a landslide victory from the UK’s Labour party, finds that the markets had mostly factored in a widely predicted Labour win...
Today’s news of a landslide victory from the UK’s Labour party, finds that the markets had mostly factored in a..
Subscribe to the Institutional Asset Manager newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by