Julian Eyre | published on 22nd September 2017

Doing more with less – STP/Zero-touch

Many Securities Finance businesses are under pressure to increase their straight through processing (STP) capabilities thereby reducing the need for manual intervention. With growing settlement volumes, it is not economically viable to increase headcount in support functions in a linear manner. As such, the desire to achieve a zero-touch post trade settlement environment continues to be the nirvana state.

Achieving a zero-touch protocol allows support functions to process more transactions without increasing workload and eliminating the need for hands-on re-entry of data.  This will improve productivity, reduce errors, improve controls and increase the service offered to clients.   So why are settlement volumes increasing? Volumes have steadily increased over time, partly due to the increase in market efficiency and lower margins – allowing for greater volumes, whilst changes in trading strategy have also contributed including the resurgence of statistical arbitrage trading where high volume of small sized transactions is typical. When supporting these trading strategies, it is critical to develop an operating model that allows zero-touch processing. The profits in supporting business like statistical arbitrage, where high volume activity with low valued transactions provide for paper thin revenue and as such the support levels come at a cost that can often outweigh the benefit of the trade.

How can we help? TFE can help you create a structured front to back operating model to achieve maximum STP to enable your business desks to support all trading strategies.