• David Pearson, Head of Post-trade Strategy at Fidessa


• 08:00 am
T+2 , Trade , stock

As the dust settles on the main part of the EU’s transition to T+2, the DTCC’s recent announcement that they have formed a steering committee to oversee the US market move to T+2 has shifted the focus across the pond. The EU move appears, by many accounts, to have gone smoothly. But under the hood many firms are bearing additional operational costs, providing tactical solutions to keep the settlement process on track.

For instance, the management of stock loans is typically a distinct and separate business function. The recognition that an affirmed trade will require a stock loan recall in order to deliver the stock for settlement needs to be a seamless and near-real-time part of the operational process, however. The same can be said for currency management, where one day has been removed from the process of ensuring the correct currency is available, and in the correct place, to pay for a trade. The identification of a currency requirement as a result of a trade should be an integrated component of the ‘middle office’.

As electronic workflows are increasingly introduced in the middle office, the objective must be to remove the barriers between the various parts of the operational process, and focus on providing the right information, to the right people and business functions, at the right time. Remodelling business processes and using innovative technology and services will help businesses realise the true benefits of improving operational efficiency and reducing risk and cost that changes like T+2 ought to bring.