As global markets prepare to shorten their settlement cycles, particularly with the upcoming transition of North American markets to T+1, buy-side firms are facing new challenges in managing trade fails. The transition to accelerated settlement cycles promises enhanced efficiency and reduced risk, but it also requires investment managers to strengthen current processes to minimize the impact of trade failures.
Understanding the root causes of trade failures is crucial in identifying actionable steps to prevent them. In our "Criticality of Accurate SSIs in a T+1 Environment" blog, we discussed the criticality of accurate SSIs (Standard Settlement Instructions) and the solutions available to mitigate incomplete or outdated instructions. Other common causes include inaccurate or delayed trade confirmations, late matching in local markets due to workflow bottlenecks, and mismatches in trade details. As settlement cycles shorten, the margin for error diminishes, making it crucial for buy-side firms to identify and have solutions in place to address these issues promptly.
Buy-side firms can benefit from partnering with a middle-office provider experienced with the intricacies of local markets to deliver operating support in areas such as:
- Provide real-time coverage, which is key for foreign firms trading in the US market that may lack dedicated regional coverage teams.
- Access to local market teams who are knowledgeable in investigating trade failures and well-versed in market best practices.
- Ensuring both an efficient settlement process and timely resolution of any trade failures.
- Leveraging the latest technology also assists to identify and rectify settlement issues.
- Implementing a straight-through messaging process, such as SWIFT, helps expedite trade communication updates while also reducing manual intervention.
To learn more about how SS&C can help you conform to the T+1 settlement cycle, download our "T+1 Settlement FAQ" guide.
