The Move To T+1 – A Business Case For Automating The Middle Office

There is no doubt that a shortening of the settlement cycle will place significant pressure on any manual or semi-manual processes across the middle and back office. The previous move from T+3 to T+2 meant the time in which key processes had to be carried out reduced by a third, this move entails a halving of the time and will therefore have a much greater impact on inefficient processes. If these are not addressed, settlement failures and related client disputes will increase and greater costs will be incurred, as well as the negative impact on client relationships.

The benefits of investing in a platform to automate key post-trade processes go well beyond preparing for T+1, however, and encompass the following:

• Coping with market changes without increasing the number of operations staff: The market can expect that T+1 isn’t the end goal, given the SEC’s discussion of T+0 and key developments at the DTCC such as Project Ion. This means that even if firms don’t immediately invest in automation, they’ll be compelled down this road soon enough. Operations staff are already thin on the ground and the Great Resignation of the last couple of years hasn’t helped >matters. There are therefore very few staff to deal with post-trade processes to support the full spectrum of assets a client may wish to trade.

• Focusing operations staff on more value additive, client-facing tasks: Process efficiency is of paramount importance with the industry’s focus on shortening the settlement cycle, reducing operational risk and improving resilience. Exception-based processing is foundational for this effort alongside reducing the number of manual tasks that can be easily automated and centralised across the full spectrum of asset classes. Staff can then be redeployed to focus on tasks related to improving client service and supporting new product development efforts.

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