DTCC has laid out plans to implement a no-touch processing infrastructure to eliminate redundancies and inefficient manual touch points in the post-trade lifecycle.
In a newly-released white paper, DTCC highlighted that current post-trade processing has failed to keep up with the pace of digitalisation throughout the industry, with spending on post-trade processing estimated at $6-9 billion a year.
To meet this, it has revealed ambitions to develop an open, integrated platform for delivering no-touch processing, from post-execution to settlement.
“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, DTCC.
The plans include centralising reference data, with enrichment occurring automatically from golden data sources, which would facilitate downstream processes and eliminate the need for local data stores.
Parties involved – banks, brokers, custodians, asset managers, depositories – would then agree on the trade economies and standing settlement instructions (SSIs) on trade date, creating an authoritative trade record.
“All parties would be notified with the same authoritative instruction and receive the settlement status to ensure settlement finality,” added Stauffer.
DTCC stated the platform will reduce operational costs for market participants, and would eventually eliminate all settlement fails.
This could prove to be a welcome development for the post-trade industry as the onset of the settlement disciple regime (SDR) under the central securities depositories regulation (CSDR) approaches.
Under the SDR, market participants will be liable to pay daily penalties or charges against each transaction that fails to settle, along with mandatory buy-ins for failing transactions after the prescribed number of days.