Breaking the settlement failure chain
One of the recurring topics at post-trade industry events is the thorny problem of settlement fails. These create burdensome additional costs and risks for financial institutions – and ultimately their clients. It is a deficiency that the industry – together with regulators – is trying valiantly to solve
Risks and solutions
Should firms fail to improve their settlement discipline it could result in the industry facing even higher outgoings, especially as regulators in the European Union (EU) and in other geographies, such as North America start taking more punitive measures against financial institutions for trade fails.
There are several solutions available that could potentially reduce the regularity of trade settlement fails. They include a combination of adopting techniques and services to improve transparency of both sides of a securities settlement, embracing auto-partialling, and leveraging new technologies to drive posttrade efficiencies. New technology such as blockchain can facilitate the multiparty transparency needed.
This white paper, Breaking the Settlement Failure Chain, explores the next steps in the settlement failure journey – providing insights into the status of trade settlement fails, the causes behind the industry’s poor track record, and the ways in which market participants are cooperating to tackle these shortcomings.