With financial services embarking on the journey towards near real time settlement, member firms must meet the time challenges inherent in making this change. If they do not, the industry’s record transaction volumes will continue to bring about unsustainable risk, liquidity requirements and capital needs.
As experts in all aspects of banking operations, we believe that shortening the settlement cycle to T+1 is a business process issue more than a technology advancement issue. The proprietary technology developed by individual firms along with today’s vendor solutions can support the move to T+1. However, real time gross settlement or the migration to T+0 would require significant technology rewrites as well as wholesale business process changes.
Now, with preparation time under even more pressure, we are recommending that firms review their support processes in the following areas in order to stay ahead of the shortened settlement cycle curve:
- Trade affirmation timeline process (Fails processing)
- Clearing fund management (limiting large daily fluctuations)
- Payment’s processing
- Financing and securities lending
- Asset servicing risk mitigation (Dividend/Income processing)
- Counterparty risk assessment
- Administration and management of data (date driven documentation)
But prioritisation is critical. Choices need to be made.
To that end, we’re currently running a poll on LinkedIn as part of a wider states of readiness analysis of where firms most urgently need to concentrate.
Download our related whitepaper: Why the time is now for accelerating the settlement cycle