The ongoing revolution in the post-trade processing present an array of challenges for capital markets. Rising costs, tightening squeeze on fees, and complying with regulatory, in tandem with customer demanding for greater transparency and real-time data, are making capital market intermediaries to embrace advance technology solutions.
Given the growing industry emphasis on systemic resilience, the absence of transparency in the confirmation process is disconcerting. When an intermediary encounters operational challenge that potentially could lead to a bottleneck, it's crucial for companies to have real-time visibility into such occurrences, enabling them to manage the situation proactively.
While it's not common for securities to end up in the wrong places, when it does happen, it results in significant financial costs and operational risks. These challenges will become even more pronounced in Europe once the financial penalties associated with CSDR's settlement discipline regime are enforced. This concern is especially relevant if the industry seeks to reduce settlement failures overall and update its market practices, a critical step in adapting to T+1 environments.
While capital market firms or intermediaries can monitor trades once they've settled, their ability to gather information during the in-flight post-trade process is quite limited. As a result, attaining end-to-end visibility throughout the entire lifecycle is a formidable task, and effectively managing operational risks in potential trouble spots becomes quite challenging.
