Financial Messaging Yields Post-Trade Benefits

Terry Flanagan

Financial messaging systems such as Swift and FIX are helping to automate many of the routine post-trade processing functions in trading, such as allocations and confirmations.

FIX Protocol Ltd (FPL) has issued updated guidelines for the use of FIX for post-trade processing.

The guidelines encourage the increased use of FIX for creating a standardized approach to workflows, reducing dependency and risks associated with post-trade processing, and eliminating matching ambiguity and the need for complex matching algorithms through the use of standardized trade identifiers.

“In addition to its expansion into different asset classes like the OTC markets, FIX has the potential to streamline post-trade processes,” said Brennan Carley, global head of the Elektron platform at Thomson Reuters. “The primary area where FIX is not used extensively today, and which could benefit from grater FIX adoption is post-trade, which would allow greater reuse of FIX-based systems, and end-to-end processing of messages.”

Swift, operator of a global financial messaging system, has announced that Credit Lyonnais Securities Asia (CLSA) has become the first Asian broker to go live on Swift’s Global Electronic Trade Confirmation (“GETC”) system for the automation of allocation and confirmation processes.

The system is backed by the ISO 15022 standard, which follows a collaborative effort between Swift and a group of investment managers and broker/dealers to create and agree an enhanced best practice implementation governing the use of the securities GETC messages over Swift.

CLSA can cost-effectively achieve higher levels of operational efficiency in post-trade processes across asset classes, while preserving its existing investment in straight through processing (STP) and matching solutions.

“Not only does GETC enable CLSA to meet our clients’ needs, it also allows us to implement greater STP while driving down our cost base,” said Tom Garside, CLSA’s head of operations.

As the tolerance level for post-trade inefficiencies is minimized, the industry is witnessing a determined drive to adopt free, open and non-proprietary standards as the platform on which firms can manage their operational risk and cost base.

“Post trade STP standardization using the FIX protocol is increasingly important for our clients as they seek to enhance operational efficiencies, streamline processes, and improve resiliency,” said Michael Fiscella, executive director at Morgan Stanley.

The FPL Post-Trade Processing Guidelines, which were originally disseminated in April 2012 by the FPL Americas Buy-side Working Group, enable firms to leverage their existing FIX investments into the post-trade environment, and also benefit from increased straight-through processing.

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