Investment Operations

SSI Platform Aims to Reduce Settlement Fails, Risks

SSImple Standing Settlement Instructions

SSImple, a SaaS DLT platform that aims to fundamentally change the way standing settlement instructions (SSIs) are stored, shared, and enriched across the financial services industry, has confirmed the launch of its post-trade offering following an extensive testing period. According to the start-up, SSImple has a robust industry rule engine to ensure multi-asset class SSIs are entered correctly, thereby mitigating risk, creating efficiencies, and reducing costs for custodians/prime brokers, buy-side/outsourcer firms, broker-dealers, and third parties. 

It is estimated that €300 million of buy-in penalties, which have been live under the Central Securities Depositories Regulation (CSDR)’s Settlement Discipline Regime (SDR) since February 2022, may have been levied in the first 12 months alone. According to AccessFintech, SSIs cause 30% of settlement failings, meaning that approximately €90 million in SDR penalties for TARGET2-Securities depositories are directly linked to incorrect SSI data or the incorrect SSI being used. With rising interest rates, staff resolution costs and the move to T+1 confirmed for the U.S. and Canada in May 2024, fixing this problem will bring about significant cost savings.  

In terms of other immediate benefits, SSImple notes that: 

  • Custodians/prime brokers can automate their SSI delivery process to their buy-side clients  
  • Buy-side/outsourcer firms can receive automated SSIs as well as permission broker-dealers and third parties access to their SSIs  
  • Broker-dealers can receive automated SSIs from their buy-side clients via Excel or an easy-to-use Application Programming Interface (API), and 
  • Third parties can connect and enrich SSIs from their buy-side and sell-side clients.  

Logical enrichment at the point of electronic trade confirmation, where SSIs are verified as a logical pair, will also ensure that the correct SSIs are selected, and, as systems develop, SSImple can interact with distributed ledger technology (DLT) databases to select the correct SSI based on DLT position keeping records. SSImple says it aims to ensure all entities who need SSIs can have access to them. 

“Poor SSI data quality is not a new problem; it has been around for many years. But it is unlikely to be solved if we stick with the process that is in place today,” said Bill Meenaghan, SSImple’s CEO, who is also a Member of the UK’s Accelerated Settlement Taskforce. “I’m passionate about simplifying the complexities of the trade lifecycle and that has led me to explore innovative technologies to improve the efficiency and automation of SSIs. SSImple uses immutable DLT processes to enable real-time updates and greater transparency in the SSI process,” he added. 

According to company literature, while SSImple has been built using R3’s Corda, it is also capable of interacting with traditional finance systems (TradFi compatible). Users can log in into a graphical user interface (GUI) and upload/download SSIs using Excel or they can connect via a state-of-the-art open-source API. Any firm that wants to take a SSImple node and store it in their systems will be able to do so. SSIs will be stored in DLT nodes and when an SSI change occurs, each permissioned entity will get instant access to the updated SSI ensuring that all entities are using the latest verified SSI. 

“I have listened to my peers and the aim must be to further enhance the accuracy, speed, and security of the settlement process, especially with T+1 on the horizon, benefitting all the parties involved. Most custodians still share SSIs using PDFs, Excel, or Word over email,” Meenaghan added. “Automating this outdated process is an absolute must for shorter settlement cycles. That is my focus and I look forward to helping reimagine the way SSIs are stored, shared, and enriched across the industry,” he said.