TradeWeb – the online fixed income trading platform that recently formed an STP Advisory Committee consisting of representatives from 17 leading Wall Street firms – says that major broker/dealers, asset managers, and custodians rank block-trade confirmation and allocation processing as the top priority for fixed-income trade processing automation.
This, says TradeWeb, is the most striking result of a recent industry opinion poll the STP Advisory Committee conducted in the United States. TradeWeb argues that the finding is at odds with the conventional wisdom, which has centred on the creation of central matching utilities or VMUs, such as Omgeo, as the most pressing issue. The survey group, by contrast, says there is more immediate benefit in full automation of the block trade and allocation process.
The survey was conducted in September by the STP Advisory Committee, whose members include Alliance Capital Management, Barclays Global Investors, BlackRock, Brown Brothers Harriman, Citigroup, CSFB, Deutsche Bank, Fidelity, Fischer Francis Trees & Watts, Goldman Sachs Asset Management, Goldman Sachs, JP Morgan Chase, JP Morgan Fleming Asset Management, Lehman Brothers, Merrill Lynch, MFS Investment Management, Morgan Stanley, and State Street IMS.
In the survey, asset managers ranked electronic processing of trade allocations either first or second as priorities. Broker/dealers ranked electronic processing of allocations their first priority, and real-time trade status reporting as second.
The STP Advisory Group also sees the full automation of the block-trade confirmation process as critical to reducing market risk that can result from trade errors.