Automation Could Cut Post-Trade Costs By 25%
Certain post-trade processing costs for cash securities at large broker-dealer firms could be reduced by 20-25% through automation, according to a recent survey of nine of the world’s leading broker-dealer firms by The Depository Trust & Clearing Corporation (DTCC), the premier market infrastructure for the global financial services industry.
With the industry facing increasing cost pressures and evolving regulatory requirements, DTCC’s survey confirmed that by leveraging post-trade automation, firms can eliminate redundancies and manual processes, reduce associated costs, and mitigate operational risks.
DTCC analyzed individual broker operating costs to estimate potential efficiency and cost savings by leveraging the full suite of DTCC’s Institutional Trade Processing (ITP) solutions, which enable no-touch processing from trade agreement through to settlement finality.
— DTCC (@The_DTCC) November 18, 2020
The survey found that, for large global broker-dealers that typically spend roughly $150 – 175 million globally on post-trade services related to cash securities, implementing a no-touch processing workflow can reduce headcount, repair charges, technology expenses and claims and fees significantly.
More specifically, DTCC was able to estimate cost savings that could be achieved within larger broker-dealer firms in the following operational areas through the adoption of ITP solutions:
SSI reference data – $1.5 million per firm
Trade support – $7 million per firm
Settlements – $10.8 million per firm
Agent bank fees – $2.3 million per firm
Asset servicing – $2 million per firm
Financing – $5 – 10 million per firm
Technology expenses – $5.4 million per firm
For mid-sized and smaller broker-dealers, the use of a no-touch workflow could enable higher levels of automation and increased scalability to more effectively handle volume spikes, all of which would not typically be affordable or possible to replicate with internal resources.
Matthew Stauffer, Managing Director, Head of Institutional Trade Processing at DTCC, stated, “The findings of our survey highlight the benefits of leveraging automated post-trade solutions to reduce the costs of operational functions and the risk inherent in manual processes. The adoption of a no-touch workflow allows firms to focus their resources on the parts of their business that create true value.”
RBC Capital Markets paid more than $800,000 to resolve charges that it engaged in unfair dealing in munis.
Upstart exchange has seen market share increase to near 4%.
OCC reported trading revenue of $8.1bn in the second quarter of 2021.
Industries leading this year’s D&I Index Top 100 are banking, investment services & insurance.
Members are evaluating payment-versus-payment for currencies not yet eligible for CLSSettlement.