Non-economic trade data, client onboarding and uncleared margin is where “change is particularly urgent” in post-trade, says BoE
25 April 2022 UK
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The Bank of England (BoE) has released a report which outlines that change is “particularly urgent” in the areas of non-economic trade data, client onboarding and uncleared margin when regarding better post-trade efficiency.
The findings were published in “Charting the Future of Post-Trade: Findings from the Post-Trade Task Force”, which outlined a diagnosis of the key problems in current post-trade processes.
The task force also highlighted recommendations for the next steps of market-led reform in an effort to raise awareness of post-trade issues to stimulate further innovation in this
area.
Among other proposed initiatives, the task force recommended the creation of a new post-trade industry leadership group, made up of willing participants from across the industry — including smaller market participants — to work alongside existing industry bodies where appropriate.
Concerning non-economic trade data, the task force recommended that the aforementioned leadership group should develop and promote a set of best practices around the sharing of legal entity identifiers (LEIs) early in trade life-cycles, as well as efficient, electronic processes for sharing standing settlement instructions (SSIs).
The leadership group should devise next steps to increase adoption of best practices, the task force added, which would include defining, gathering and publishing industry-wide metrics and investigating the creation of a fully digitised system.
In addition, the task force also advised that the leadership group should convene forums to discuss standardising document requirements — making existing platforms more interoperable while creating a single passporting platform.
Commenting on the suggestions from the BoE, DTCC said it “welcomes the findings” which recommends sharing LEIs earlier on in the trade lifecycle, greater automation in SSI processing and increasing the use of efficient uncleared margin processes.
DTCC added: “In research we have conducted, inaccurate SSIs have been highlighted as one of the principal reasons for trades fails, therefore ensuring that market participants are leveraging available automated solutions will increase operational efficiency and mitigate risk, particularly during times of market volatility. Sharing LEIs earlier on in the trade lifecycle will also enable easier identification of problem trades, leading to a more efficient post trade process.”
“Increasing levels of automation in the processing of uncleared margin will deliver operational efficiencies and assist in-scope firms in complying with the forthcoming Phase 6 of the Uncleared Margin Rules, while leading to the more efficient use of collateral, therefore improving overall capital and liquidity management capabilities for users of these services.”
The findings were published in “Charting the Future of Post-Trade: Findings from the Post-Trade Task Force”, which outlined a diagnosis of the key problems in current post-trade processes.
The task force also highlighted recommendations for the next steps of market-led reform in an effort to raise awareness of post-trade issues to stimulate further innovation in this
area.
Among other proposed initiatives, the task force recommended the creation of a new post-trade industry leadership group, made up of willing participants from across the industry — including smaller market participants — to work alongside existing industry bodies where appropriate.
Concerning non-economic trade data, the task force recommended that the aforementioned leadership group should develop and promote a set of best practices around the sharing of legal entity identifiers (LEIs) early in trade life-cycles, as well as efficient, electronic processes for sharing standing settlement instructions (SSIs).
The leadership group should devise next steps to increase adoption of best practices, the task force added, which would include defining, gathering and publishing industry-wide metrics and investigating the creation of a fully digitised system.
In addition, the task force also advised that the leadership group should convene forums to discuss standardising document requirements — making existing platforms more interoperable while creating a single passporting platform.
Commenting on the suggestions from the BoE, DTCC said it “welcomes the findings” which recommends sharing LEIs earlier on in the trade lifecycle, greater automation in SSI processing and increasing the use of efficient uncleared margin processes.
DTCC added: “In research we have conducted, inaccurate SSIs have been highlighted as one of the principal reasons for trades fails, therefore ensuring that market participants are leveraging available automated solutions will increase operational efficiency and mitigate risk, particularly during times of market volatility. Sharing LEIs earlier on in the trade lifecycle will also enable easier identification of problem trades, leading to a more efficient post trade process.”
“Increasing levels of automation in the processing of uncleared margin will deliver operational efficiencies and assist in-scope firms in complying with the forthcoming Phase 6 of the Uncleared Margin Rules, while leading to the more efficient use of collateral, therefore improving overall capital and liquidity management capabilities for users of these services.”
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