Industry Targets Post-Trade Breaks01.26.2018
Fintech firm Taskize aims to become the equivalent of SWIFT for solving post-trade exceptions after The Depository Trust & Clearing Corporation, the US market infrastructure, joined its network.
SWIFT is the bank-owned utility for secure financial messaging services which also looks to progress standards across the financial industry.
John O’Hara, chief executive and co-founder of Taskize, told Markets Media that he launched the start-up in 2016 after 16 years at JP Morgan building the technology architecture for the investment bank.
O’Hara said: “No matter how much automation we introduced there were still as many people in the back office. The workflow systems stopped at the boundaries of the firm and staff had to resort to phone calls and emails.”
He continued that post-trade errors were usually due to a problem with static data and took time to solve as no-one knew who was the best contact to resolve the issue. He gave the example of one big bank which generated 4,000 emails to solve one problem with a trade, when it only needed 17.
“We have a smart directory which learns contact details and can solve problems in one fifth of the time,” added O’Hara. “We want to be the SWIFT for post-trade problems.”
In 2016 Euroclear, the international central securities depository, went live on the Taskize platform.
This month the DTCC said it is using Taskize as part to its exception management solution to enable market participants to publish, manage and communicate exceptions throughout the trade lifecycle.
DTCC Exception Manager establishes a central online platform so firms can view all of their post-trade exceptions on one screen and use analytics to help identify the root cause of problems such as incorrect settlement instructions. Taskize then routes issues to the right operations staff in the right bank.
“A year ago we had one customer but we are now used by a large number of top 10 banks,” said O’Hara. “We are also in active discussions with other CSDs and market infrastructures.”
A survey from the DTCC last year found that half of the respondents mentioned their organisation incurred ‘very high’ to ‘moderate’ costs for fixing trade exceptions, with labour (32%) and time (29%) being the most important costs driven by trade failure or trade exceptions. The DTCC surveyed 364 senior buyside and sellside professionals globally.
Matthew Stauffer, head of institutional trade processing at the DTCC, said in a statement: “Trade exceptions have long been a pain point for the industry and DTCC Exception Manager was the next logical step in addressing the inefficiencies facing our clients.”
Regulators are increasingly focused on improving settlement efficiency and the DTCC said a global failure rate of 2% of trades translates into costs and losses up to $3bn.
For example, last year the European Commission set up the European Post-Trade Forum, an informal expert group from across the markets.
The EPTF said in a report: “The post-trade landscape in Europe is still characterized by diversities and fragmentation that cause inefficiency and risks. Operational, fiscal and legal harmonisation and standardisation as proposed in the Giovannini Reports are means to increase efficiency and to reduce risks.”
BNP Paribas Asset Management launched its first European ESG ETF Barometer survey.
By Greta Zhou and Andy Cheung, APAC AES, Credit Suisse
OCC said trading revenue was 47.8% more than in the previous quarter.
Citi intends to integrate METACO's bank-grade digital asset custody and orchestration platform.
Instinet DealMatch automates the deal process which is still highly manual.