Starting situation – putting post-trading activities to the test
In post-trading operations, a European financial institution was displaying inefficiencies in transactions between investment managers and brokers/dealers. At the same time, it wanted to systematically minimize inherent operational risks. In this project, the brief was to develop improvement potential in the transaction checking process. Assessing operational risks and employing innovative transaction checking methods played an important role.
Project approach – economic analysis of innovations in the transaction checking process
As part of the economic analysis, the benefits of automating the transaction checking process were investigated. In particular, establishing a same-day affirmation (SDA) process reflected the operational best practice approach in the European share markets. As well as other insights, the report showed that companies with SDA in place can expect advantages in the form of operational cost efficiency, reduced operational risk, and better transaction processing.
Finding – automation reduces operational risk
Transaction checking and the possibilities for improving this process (by means of an automated SDA process) should be considered as part of the broader policy debate concerning the efficiency of the European share market and post-trading market.
- Risk reduced by automating post-trading activities.
- Analysis performed for automating the transaction checking process.
- Operational risk of automated transaction checking assessed.