Ever since the financial crisis of 2008 led to the restructuring of the global financial architecture, market participants have been required to meet increasingly stringent regulatory requirements. This trend is only intensifying.
Seeking to further reduce the credit, market and liquidity risks associated with securities transactions, the US’s SEC is planning to accelerate the settlement cycle to T+1 beginning in 2024. In addition, broker-dealers and registered investment advisers will need to shorten the process of confirming and affirming the trade information necessary to prepare a transaction for settlement. My colleague Kate Chatzopolous wrote about this in her October 2022 blog post, where she shared a number of ways the industry could work towards this goal, including updating communications methods, adopting a verified industry directory and pursuing interoperability across tech solutions.
But even if these recommendations are adopted, new requirements will add further pressure to stretched operation teams who already spend up to 50% of their time retrieving and reconciling data. While national in nature, this legislation’s effects may ripple globally due to the sheer size of the US market and the intertwined intricacies of workflows across jurisdictions.
Meanwhile, communications between distinct but deeply interdependent business groups across front, middle and back offices still rely on traditional tools – such as emails and spreadsheets – developed before the advent of big data, machine learning and AI. Hindered by increasingly obsolete legacy systems, data reconciliation processes remain both time-consuming and highly vulnerable to human errors that can lead to devastating trade breaks, severe reputational damage and hefty capital losses.
Seamlessly moving to a T+1 settlement is only possible with a quantum leap in operational efficiency. Staff need to be able to retrieve the exact data they need in real-time to respond directly to clients and colleagues without leaving their workflow.
That’s why I was proud to work on one such solution – the TaDa bot – which was developed by ETD (formerly Euromoney TRADEDATA) for use on Symphony. TaDa enables users on-demand, automated access to ETD’s trusted reference data that can be added instantly to any Symphony chatroom.
“Firms want to cut down on the time and money wasted on processing problems such as post-trade risk, clearing, settlement and regulatory reporting issues. This begins with relieving teams from having to manually retrieve and reconcile siloed and fragmented data to report updates to clients and colleagues.” says Wendy Askew, Channel Development Manager, ETD.
By freeing valued professionals from what is essentially manual labor, TaDa bot empowers them to focus on performing value-added work that contributes to the bottom line. TaDa bot also:
Accelerate and safeguard processes: By removing the need to collate data across disparate systems within an institution, TaDa bot delivers substantial time saving while sharply reducing the risk of costly human errors. It also enhances overall efficiency while improving the resolution of post-trade risk, clearing, settlement and regulatory reporting issues.
This is particularly critical as operations teams are the backbone of financial institutions. Real-time data access through systems interoperability is key to their workflow efficiency, remediation cost reduction and pivotal to Regulatory compliance.
Instant access to market-leading reference data: TaDa bot users get instant access to the highest quality futures and options reference data across more than 110 global derivatives exchanges as well as to data sets on Corporate Actions, Symbology, Calendar Dates and historical Transaction Reporting.
Easy and cost effective integration with Symphony: Deployed on Symphony when added by a user, TaDa lets users access and share data seamlessly in real-time without having to leave your workflow. In addition, the set-up is immediate, implementation instantaneous and running costs minimal.
Whether T+1 gets implemented now or in 5 years, the pressure it will put on shortening cycles will dominate beyond the US – improving efficiency is an existential challenge for financial firms globally. As regulatory pressure increases and economic uncertainty remains constant, firms need to leverage the full potential of technology to cut costs, transform operations and meet the demands of regulators and customers.
Symphony is now in its tenth year of developing secure and compliant communications technology for global financial market participants. With over 500,000 users and more than 1300 firms using Symphony solutions, our industry relevance [and reliance] is widely recognized by clients, partners, regulators and journalists.
Our latest demo prepares Operations teams for the shortened T+1 settlement cycle. Watch this Q&A with UBS, Citi, JP Morgan, and Wells Fargo as they discuss how Symphony’s Operations Directory streamlines post-trade issue resolution with use cases including escalations, trade exceptions and settlement issues.
Trading during volatile times is tough. In today’s market, commodity traders may have it the toughest. However, with great challenge comes great opportunity.