Securities Finance Industry News | Uneconomic trade data, customer onboarding and uncompensated margin are areas where ‘change is particularly urgent’ in the back office, BoE says


Uneconomic trade data, customer onboarding and uncompensated margin are areas where ‘change is particularly urgent’ in the back office, BoE says

The Bank of England (BoE) has released a report which highlights that change is “particularly urgent” in the areas of non-economic trade data, customer onboarding and uncompensated margin as it relates to improved efficiency post-trade.

The results were published in “Charting the Future of Post-Trade: Findings from the Post-Trade Task Force”, which presented a diagnosis of the main problems with current post-trade processes.

The task force also highlighted recommendations for next steps in market-driven reform with the aim of raising awareness of post-trade issues to further drive innovation in this area.

Among other proposed initiatives, the task force recommended the creation of a new post-trade Industry Leadership Group, made up of willing participants from across the industry – including smaller market players – to work alongside existing industry bodies where appropriate.

With respect to non-economic business data, the working group recommended that the aforementioned steering group develop and promote a set of best practices regarding the sharing of Legal Entity Identifiers (LEIs) at the start of business lifecycles, as well as efficient electronic processes for sharing standing settlement instructions (SSI).

The leadership group should design next steps to increase adoption of best practices, the task force added, which would include defining, collecting and publishing industry-wide metrics and studying the creation of a fully digitized system.

In addition, the task force also advised the leadership group to convene forums to discuss standardizing document requirements – making existing platforms more interoperable while creating a single passport platform.

Commenting on the BoE’s suggestions, the DTCC said it “welcomes the findings” which recommend sharing LEIs earlier in the exchange lifecycle, greater automation of SSI processing and increased use of processes efficient uncompensated margins.

DTCC added: “In the research we conducted, inaccurate SSIs were highlighted as one of the main reasons for failed transactions. Therefore, ensuring that market participants take advantage of available automated solutions will increase operational efficiency and mitigate risk, especially in times of market volatility. Sharing LEIs earlier in the transaction lifecycle will also allow easier identification of problematic transactions, leading to a more efficient post-transaction process. »

“Increasing levels of automation in the handling of uncompensated margins will improve operational efficiency and help affected businesses comply with the upcoming Phase 6 of the Uncompensated Margin Rules, while driving more efficient use of collateral, thereby improving overall capital and liquidity management capabilities for users of these services.


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