DTCC has gone live with a new online industry platform allowing market participants to publish, manage and communicate exceptions throughout the trade lifecycle.
The DTCC Exception Manager provides a single view of all post-trade exceptions, as well as analytics to help identify the root cause of operational breaks and the ability to solve problems such as standing settlement instructions (SSIs).
An exception refers to a transaction that requires user attention to ensure it settles successfully. A recent study conducted by DTCC last year showed 78% of respondents highlighted missing or incomplete SSIs as the principal pain point affecting post-trade processes.
“Post-trade exception processing often creates operational risk and a significant amount of inefficiency for all parties to a trade,” said Matthew Stauffer, head of institutional trade processing, DTCC.
“Trade data needs to be consumed and processed from many disparate systems, including matching engines, trading counterparties, settlement entities and market infrastructure providers – and the related communications, which are predominantly emails, are overwhelming, cumbersome to manage and introduce risk.”
It is estimated that a global failure rate of 2% translates into costs and losses up to $3 billion. In Europe, the central securities depository regulation (CSDR) contains provisions within its Settlement Discipline Regime to impose financial penalties and mandate automatic buy-in procedures to address this issue.
DTCC Exception Manager was created following industry consultation with buy-side firms, outsourcers, broker-dealers, custodians and prime brokers, as well as other settlement agencies.
“It centralises and standardises exception processing to enable faster resolution, delivers a significant reduction in the number of exceptions and supports exceptions in trade validation and settlement processing,” added Stauffer.