Japan Pushing True STP
The Japan Securities Depository Center (JASDEC) announced June 30 that their Pre-Settlement Matching System (PSMS) was now connected to Omgeo’s Central Trade Manager (Omgeo CTM) and OASYS Global affording users straight through processing of the post-trade lifecycle from confirmation to settlement matching.
This is great news for the Japanese financial industry. While Japan has always been the number 2 economy in the world its financial infrastructure has notoriously been behind the curve. For example, the 2006 overhaul at the Osaka Securities Exchange didn’t even come with a FIX gateway. JASDEC’s push to implement this relationship will allow them to automatically send trade data matched and confirmed in what has traditionally has been a very manual process.
If you’ve ever worked in the front office on the sell side you’ll know that your clients like confirmations as soon as the execution is complete. You either have to send them a Bloomberg or an email taking away time that could be spent looking for more trades. If there is a discrepancy from the actual confirmation received from the back office and what you sent to your client 99 times out of 100 the irritated buy-side will contact you to resolve the matter eating up more of your sales trading time.
What JASDEC offers is post-trade pre-settlement confirmation by email or through the PSMS web terminal allowing your clients to receive their actual price far quicker than any confirmation sent by your back office. They will still need to send the confirmation as mandated by the regulator but it’s likely JASDEC will send it faster than the front office sales trader too. Also, along with the trade reports, custodians will receive investment instructions too.
Embracing this and other STP solutions will diminish time to complete settlement, reducing costs by eliminating repeated tasks and head count, mitigate risk and generally improve operational efficiency.
Commissions are being compressed more and more in Asia so it would behoove any MD to seek cost savings in their Straight Through Process (STP) and back office vendors to help them find it.