Most sell-side firms have a huge opportunity to transform their post-trade technology and operations to a more streamlined processing model, according to a newly released white paper sponsored by global Fintech leader Broadridge Financial Solutions, Inc. (NYSE:BR).
The white paper, The Case for a Multi-Asset Post-Trade Approach, published by Firebrand Research, highlights the findings of a new global survey that finds sell-side firms have an average of 9.1 post-trade processing solutions due to legacy infrastructures which are fragmented by either geography, asset class or both. Many sell-side firms continue to maintain separate middle and back-office operations and technologies for dealing with various asset classes. Regional regulatory and market practice divergence at the global level has accentuated the issue by adding regional silos into the mix, which has further increased duplication of effort and cost.
The study analyzes the current pain points and pressures in post-trade operations and the drivers of future innovation.
Key findings include:
- Mixed capabilities across asset classes – Most sell-side firm respondents felt that their post-trade infrastructures have relatively good coverage of asset classes such as fixed income, but little or no coverage of newer or more esoteric asset classes.
- Streamlining – Survey interviewees note that there is a significant pressure for their firm to move away from manual processes and silos to a more integrated solution with a single, streamlined workflow and centralised set of records across all asset classes.
- How to digitally transform – The more “harmonised” the post-trade environment, the easier it is to apply technologies such as artificial intelligence (AI) to speed up exception resolution and deliver workflow efficiencies, both of which are currently problematic in the post-trade environments of many sell-side firms.
The white paper concludes that sell-side firms need to become more joined up across asset classes to meet these challenges and digitally transform their post-trade operations for the future.
“To meet the increasing regulatory and market challenges of today and tomorrow, sell-side firms need to regularly review their post-trade technology,” said Danny Green, General Manager of Post-trade Processing Solutions at Broadridge International. “A range of advanced solutions are available to solve operational issues that firms are facing with their post-trade technology and Broadridge’s continual investment in its next-gen technology stack enables us to help firms achieve transformational levels of efficiency and adapt to the rapidly modernizing post-trade landscape.”
“The fewer silo-based systems that a sell-side firm has to manage, the better from the operational oversight and risk mitigation perspective,” said Virginie O’Shea, founder and CEO of Firebrand Research. “By adopting a unified, multi-asset solution on an agile, mutualised service basis, firms can position themselves for improved cost/income ratios, enhanced levels of efficiency and responsiveness to service change, a more robust risk and control framework, and the ability to provide a better client experience.”