Looking into the Next Frontier for Post Trade Processing

As financial institutions strive to do more with less, we can expect continued emphasis on eliminating manual post trade processing to enhance efficiency and reduce risk. Increasing automation and transparency is a top priority these days, as organizations continue to work toward a holistic and real time view of their counterparty risk and exposure to mitigate and manage risk on a global level. Also, the derivatives industry needs a communication network that connects the sell-side and the buy-side in post trade processing to foster greater efficiency, transparency and reduced risk. Below are the top 10 trends in shaping derivatives and securities on post trade processing:

  1. Financial institutions have to centralize data infrastructures to get a complete and company-wide view of specific exposures.
  2. An increased focus on transparency that will drive a greater emphasis on real-time views of data and on getting more efficient communication methods throughout the trading process.
  3. Organizations have to improve collateral valuation visibility and monitoring to reduce risk while extending extra credit cost efficiently and on time.
  4. As increasing uses of data are acquired to feed regulatory requirements and credit monitoring, organizations need to leverage information across asset classes and business lines.
  5. The industry requires better communication between the sell-side and buy-side in listed post trade processing to manage intra-day risk.
  6. Improved data quality, modeling and forecasting will help increase accuracy in assessing future performance and reduce risk in post trade processing.
  7. The move to central clearing model will help ease allocations, transfers and settlement, and protect the parties against default by their counterpart.
  8. Pressure to meet increasing client demands and reduce costs in the global futures will drive organizations to use enterprise post trade processing platforms and services.
  9. Organizations in the United States will require more robust and reliable infrastructure to entertain bigger exchange-traded transactions in emerging markets.
  10. Organizations will continue to look at outsourcing not only to lower costs, but to access expertise and knowledge as well.

Financial institutions define efficiencies mostly in terms of operational efficiencies, which means automating whatever manual post trade processing they have and eliminating spreadsheets, so they can meet the needs of their clients cheaper, quicker and better.