Post-trade operations are increasingly being seen as a source of competitive advantage and capital efficiency rather than a back-office cost centre, as sell-side derivatives clearing firms grapple with T+1 settlement, rising data complexity and mounting regulatory pressure, a new report from Acuiti and OSTTRA has found.

Derivatives Post-trade: From Ancillary to Alpha is based on a survey and series of interviews with senior executives at 45 sell-side firms, comprising multinational banks, non-bank FCMs, regional banks and clearing brokers.

The report finds that 96% of firms with OTC derivatives activity and 89% of those participating in listed derivatives markets saw better post-trade netting and optimisation as a significant route to balance sheet and capital efficiency.

This shift is being driven by the compressed timelines of T+1 settlement, a shifting global regulatory landscape and growing recognition that a modernised post-trade infrastructure is a key platform to mitigate these challenges with.

Investment in post-trade process is also increasingly viewed as a competitive advantage and source of alpha. Nearly nine in ten firms see superior post-trade transparency, speed, and automation as a key competitive differentiator when servicing institutional clients, with 43% saying it is already a significant driver of client decisions.

The research also highlights the operational drag created by manual processes: 66% of firms said their listed derivatives operations teams were spending more than 10% of their time resolving post-trade exceptions, fails and settlement breaks, while 82% said that more than 10% of their bilateral OTC derivatives trades were still confirmed manually rather than electronically.

Poor data quality was found to have wide-ranging consequences. Commissions and fee payments were cited by 64% of respondents as the main pain point caused by poor data quality, while 54% said it impacted T+1 reconciliation and exception management. This is a key area for firms to get right as AI deployment accelerates in the space.

The report’s key findings include:

• Netting and optimisation offer a route to capital efficiency: 96% of firms with OTC derivatives activity and 89% of those participating in listed derivatives markets see better post-trade netting and optimisation as a significant route to balance sheet and capital efficiency

• Transparency and automation are becoming a client differentiator: 86% of firms see superior post-trade transparency, speed and automation as a key competitive differentiator when servicing institutional clients, with 43% saying it is already a significant driver of client decisions

• Manual processes remain a major drain: 66% of firms said their listed derivatives operations teams were spending more than 10% of their time resolving post-trade exceptions, fails and settlement breaks

• Bilateral OTC confirmation lags behind: 82% of firms said that more than 10% of their bilateral OTC derivatives trades were confirmed manually rather than electronically

• Data quality issues bite hardest on fees and T+1: commissions and fee payments were cited by 64% of respondents as the main pain point caused by poor data quality, while 54% said it impacted T+1 reconciliation and exception management

The report also finds that firms which are able to free up capital currently trapped in inefficient post-trade processes would prioritise improving client service and competitive positioning, followed by technology investment and infrastructure modernisation. Adoption of artificial intelligence in post-trade is already well underway, with almost a third of firms in live production deployment and a similar proportion running active pilots.

“Across global financial markets, post-trade capability is proving to be a decisive differentiator in how counterparties collaborate,” said Erik Petri, head of optimisation at OSTTRA. “As compressed timelines like T+1 raise the bar for speed and accuracy, both hedge funds and asset managers benefit significantly from real-time transparency and efficient margin and collateral management. Investing in post-trade infrastructure doesn’t just deepen client relationships – it empowers trading desks to operate with far greater capital efficiency.”

“Greater capital optimisation will require data that is timely and accurate. Firms will be looking to move data seamlessly between the front and middle office, allowing the trading desk to make more efficient and better-informed trading decisions.”

“For years, post-trade has been viewed as a cost centre rather than a source of value,” added Ross Lancaster, head of research at Acuiti. “Our research shows that view is changing. The sell-side has recognised that faster, cleaner post-trade processing doesn’t just reduce risk and operational cost, but also frees up capital that can be redeployed into the front office. Post-trade is increasingly a source of hidden alpha, and the firms that treat it as a strategic capability rather than a background utility will be the ones that pull ahead.”

Source: OSTTRA