We recently hosted a podcast to discuss the tools investment managers need for an efficient trade matching process, as well as how to respond to changing regulations and what to look for in a service provider.
Trade matching is an important function for investors because hedging and trade decisions are based on contractual settlement date. Ineffective matching and settlement process leads to a high number of trade failures which impedes investment managers’ ability to manage cash. In many markets, settlement delays can expose managers to market penalties or interest claims, as well as the reputation risk of being unable to settle trades in a timely manner. Investment managers need a trade matching service to help mitigate trade failures and manage settlement risk. Choose a service with product-specific expertise and local coverage to resolve settlement-related delays before they become an issue.
Industry changes have been impacting the settlement process. Due to regulatory changes like CSDR, investment managers trading in European markets, regardless of domicile, are subject to late match and settlement penalties. Similarly, the proposal to shorten the US settlement window beginning in 2024 would mean that all parties would lose a day to address break resolution. Choose a service provider that treats all trades like they should be confirmed and allocated on T-0.