Investment Operations

Re-imagining the Institutional Post-Trade Lifecycle and ‘No-Touch Processing’

Failed Trades Management

DTCC shares vision for institutional trade processing that achieves straight-through processing by eliminating inefficient manual touch points

The Depository Trust & Clearing Corporation (DTCC) has outlined a vision for institutional trade processing that realizes the goal of straight-through processing by eliminating inefficient manual touch points.

In a new white paper “Re-Imagining Post-Trade: No-Touch Processing Within Reach,” DTCC explains the need for the new approach and lays out a path for achieving no-touch processing, including the most effective way to leverage existing infrastructure.

“We have a plan to create an open, integrated and resilient post-trade infrastructure that eliminates redundancies and manual processing across an increasing set of asset classes. It is designed so the entire trade lifecycle — from post-execution to settlement — can be managed from one platform,” said Matthew Stauffer, Managing Director and Head of Institutional Trade Processing at DTCC. “With a no-touch processing infrastructure, reference data is centralized and enrichment occurs automatically from golden data sources, which would facilitate downstream processes and eliminate the need for local data stores. Parties would agree on trade economics and SSIs on trade date, resulting in an authoritative trade record. All parties (buy-side, sell-side, depositories) would be notified with the same authoritative instruction and receive the settlement status to ensure settlement finality,” he added.

Analysts say enabling firms to reduce the number of “touches” in their post-trade processing and leverage consolidated exception and settlement management capabilities will drive settlement finality.

Fortunately, many of the components of this no-touch processing vision are already in place today. This improved path to settlement finality will become increasingly important when new regulations such as the Central Securities Depositories Regulation (CSDR), which aims to increase the safety and efficiency of securities settlement, and the settlement infrastructures in the EU takes effect. CSDR’s Settlement Discipline Regime (SDR) will require investment firms to put in place measures to mitigate settlement fails. Under the SDR, market participants will be liable to pay daily penalties or charges against each transaction that fails to settle, along with corresponding mandatory buy-ins for failing transactions after the prescribed number of days.