The International Securities Association for Institutional Trade Communication (ISITC), the industry trade group focused on standards in transaction processing and related communications, has released an updated market practice for standing settlement instructions (SSIs) associated with cash and FX instruments.
SSIs are receiving more attention lately as a way to reduce risk and cost. SWIFT recently launched a global SSI repository of its own, while Markit and Omgeo announced a partnership to link their platforms to streamline the communication of settlement instructions.
This best practices document from ISITC aims to provide investment managers, brokers and custodians with a consistent standard for exchanging SSIs between parties in order to improve automation and efficiency across the industry.
The updated market practice builds upon the standards established in late 2008 for the exchange of SSIs related to global securities transactions, adding coverage specific to cash and FX transactions. ISITC says with regard to cash and FX, inconsistency in how various participants in the settlement chain are identified and defined can lead to numerous errors and operational risks.
The SSI Market Practice defines the various roles within the settlement chain and provides standards for the minimum required content for the exchange of SSIs among trading and settlement partners. Additionally in the document, ISITC provides sample formats to be used by institutions that communicate settlement instructions via manual methods such as fax or e-mail.
The move to automate and standardize the SSI process continues to be a challenge for the industry, says Jeff Zoller, executive sponsor of the ISITC Reference Data Working Group. Three years ago, we first set out to tackle settlement instructions and we identified key opportunities to bring greater consistency to the process and leverage automation. Our updated Market Practice extends our initial work around securities to cash and FX, furthering our ongoing efforts to help all the constituents involved in the SSI process to reduce operational risk and improve efficiency and accuracy.
More information is available on the ISITC Web site here.