The T+1 settlement cycle is due to be instigated in May 2024, and efficient trade processing systems are critical for the smooth operation of any financial institution. However, when such systems fail to address demands for accurate, efficient, and fast-paced processing, it can have far-reaching consequences for an organisation. This article dissects key factors that can lead to the failure of a trade processing system being fit for purpose, with a focus on common technical and operational issues.
Root causes of problems with dated trade processing systems
Technical issues
Inadequate infrastructure: one of the primary technical issues that contribute to the failure of such systems is outdated and inadequate infrastructure - Dated systems often struggle to handle an increasing volume of trades, leading to performance bottlenecks and frequent outages.
Integration challenges: the lack of integration with other critical systems, further exacerbates technical shortcomings - This results in a disjointed workflow and hinders real-time decision-making.
Scalability problems: many in-house systems can fail to scale effectively with the growing demands of the business. As a result, increasing numbers of trades lead to delays, inaccuracies, and ultimately economic and reputational costs from failed trades.
Operational issues
Inefficient processes: poor or manually orientated operational processes play a significant role in the failure of many trade processing systems. Manual data entry, redundant workflows, and a lack of automation lead to errors, delays, and increased operational costs.
Inadequate training or intuitive functions: lead to suboptimal utilisation of a system’s capabilities and an increased risk of errors.
Insufficient monitoring and alerts: the absence of robust and timely alerts means that potential issues are not identified and addressed in a proactive manner. A reactive rather than proactive approach further exacerbates the impact of operational challenges.
Needing more people: reducing operating windows, where exception management is not maximised, results in a need for ‘more hands on deck’, in order to beat the clock. Changing working hours for operational staff can be challenging and costly.
Implementing changes
Organisations need robust solutions to address the technical, operational, and procedural challenges that lead to failures associated with ineffective systems. Two prominent platforms that have demonstrated effectiveness, governance, and controls in trade processing management are Salerio and SureVu from corfinancial.
Salerio is a trade management platform known for its ability to streamline trade processing operations and enhance efficiency, addressing technical issues that plague trade processing systems.
Here is how Salerio can serve as a solution:
- Scalable infrastructure: designed to handle high volumes of trades, ensuring that the system can adapt to the evolving needs of the business without compromising performance.
- Seamless integration: Salerio offers seamless integration with other critical systems, including OMS and position-keeping platforms. This integration fosters a cohesive workflow, enabling real-time decision-making and reducing the risk of disjointed operations.
- Automation and workflow optimisation: by automating manual processes and optimising workflows, Salerio minimises errors and delays associated with inefficient operational procedures, leading to increased operational efficiency and reduced costs.
SureVu is a failed trade management solution designed to enhance an organisation’s adherence to industry standards and regulations. In the wake of the new Settlement Discipline Regime (‘SDR’) introduced by the CSDR, SureVu plays a pivotal role in failed trade avoidance, rather than failed trade management activities still adopted by many firms.
SureVu provides governance to reduce the risk of settlement discrepancies. Its intuitive interface empowers users to avoid settlement failure rather than manage it, enabling high levels of STP.
Solving the problems
By integrating Salerio or SureVu into the operational framework, organisations can easily address the root causes of previous system failures.
Salerio’s technology addresses trade matching and processing issues, while SureVu helps firms avoid settlement failure as opposed to managing it after the fact. As part of a core middle office solution, these systems provide a comprehensive approach to trade management, fostering a resilient trade processing operation for sustainable growth when replacing dated solutions.
Salerio and SureVu resolve operational headaches and fears of a costly operational team that are destined to be a reality in the second half of 2024 cost-effectively and comprehensively. Salerio and SureVu do it well… and that includes the price.
If you would like to discuss any of the points raised here, please contact us at resources@corfinancialgroup.com or click here to learn more about corfinancial’s post-trade settlement solutions, Salerio and SureVu.
