As the industry closes in on three months since the US’ shift to T+1, it is more apparent than ever that the effects of the significant market structure shifts are not solely limited to the realm of post-trade but are instead affecting the entire workflow.
The front-office is experiencing the knock-on impacts of the shortened settlement cycle and central securities depositories regulations, among other regulatory changes, exacerbating the need for truly integrated solutions.
Trading desks, usually happy to get their job done while typically ignoring post-trade processes, are more cognisant than ever of the importance of front-to-back solutions – it is (literally) not worth overlooking.
Investing in integration
Allesandro Cavallari
Client demand for streamlined solutions is continually picking up pace as firms increasingly seek to reduce costs, eliminate dated legacy systems and ultimately seek a reliable one-stop-shop, single provider approach.
As fees are demonstrably being passed back along the value chain, threatening to eat into profits and loss on the desks, the front-office has firmly turned its head in the direction of what’s going on in the back.
Historically, the front-office may have empowered operational teams and network managers to appoint a settlement agent. Therefore, through continued innovation, settlement agents are in a prime position to effectively provide highly operationally resilient solutions.
These industry-wide investments show that back office is at the forefront of value creation, and no longer considered only as expenses to manage.
With this in mind, SGSS has honed its approach over the last 12 months in the pursuit of definitive efficiency. Earlier this year, Societe Generale combined its Clearing and Custody into a single service, as it restructured to deliver clearing, settlement and custody through an integrated model for financial intermediaries.
Bringing together nearly 30 years of clearing experience onto a robust and industry leading custody platform, has allowed for streamlined end-to-end processes including instruction processing and reporting. In turn this one-stop shop allows clients to maximise settlement efficiency and focus on their core activities.
This move is a key strategic pillar for the SGSS global transformation, spurred by the key market structure changes affecting trading processes, CSDR, Mifir and Mifid II, and most particularly T+1.
SGSS plays a vital role in enhancing T+1 operational and settlement cycle efficiencies, which helps to reduce trading impacts, risk, and liquidity constraints. By providing cutting edge technology and sophisticated integrated post-trade platform solutions, notably straight-through processing (STP), SGSS ensures faster and more accurate trade matching and settlement processes. This reduces the operational risk associated with delayed settlements and minimises the potential for settlement failures.
This client-centric approach is one which is being embraced across the market, wherein the benefits of an integrated approach are demonstrably speaking for themselves.
Proximity with trading desks
Steve Gutowski
Indisputably, the absolute dream when it comes to the best set up for these processes is real-time visibility on everything. However, back in reality, we’re not quite there yet. Even so, trading desks’ expectations are climbing.
As technology continues to improve, providers steadily up their game, and risk assessment tools are increasingly enhanced, there is real capacity to have the more granular approach as firms expect their middle- and back-office providers to be very much an extension of their own teams.
Through close contact with clients in order to deeply understand business’ thoughts and priorities and their ways of working, providers are investing more time than ever in understanding the impact of changes at any stage of the workflow.
SSGS’ fully integrated end-to-end streamlined solution has numerous key tangible benefits. However, alongside effectiveness, desks’ main focus when it comes to any relationship is trust – which is where expertise and client service support can make all the difference.
When it comes to any industry-leading technology solutions, especially those which have been heavily invested in, the value of human touch should not be underestimated.
It is vitally important not just to have technology in place, but to back this up with a strong team who are knowledgeable and proactive. This is of course particularly true when things are running less smoothly. With market volatility more unpredictable than ever clients not only need this support, they expect it.
In addition, with every aspect of the workflow under scrutiny, having flexibility and different tools to allow clients to optimise and use various risk mechanisms – and thus compute associated risk profiles – is paramount.
Providers must recognise the bottom line – that their clients are looking to do business in the most efficient way possible. Whether that be streamlined communication flows to make sure they know if the trade status is feeding back in an automated fashion, giving clients stats and real time data, or even just making sure that accessing the information is efficient and user friendly.
The optimum set-up today is for strong technology in the front, backed by an integrated back-office platform, allowing firms to focus on their investment activities and client satisfaction.
In that light, SGSS’s expertise in real-time data management and reporting facilitates transparency and informed decision-making, helping clients optimise their investment decision duties and manage risk effectively. Specifically, a more efficient settlement cycle is enabled through streamlined workflows and automated systems, along with the support of SGSS’ expert teams, thus supporting market participants in meeting their T+1 obligations with reduced risk exposure and enhanced liquidity management.
In short, it’s about promoting the development of industry standards and interoperable systems to create a more seamless and cost-effective post-trade environment.
