- STP has been embraced as a concept but actual practice shows a lack of commitment.
- Banks and Asset Management firms are not allocating sufficient time and attention to Back and Middle Office STP initiatives.
- Banks across Europe remain siloed as a result of STP projects that have failed to fully rationalise back office systems across product categories.
- Upstream systems are not adequately capturing transaction detail, and this is creating hazards for downstream processing.
The research based on interviews with senior executives from a cross section of European institutions and a formal survey of more than 80 individuals sought to identify the most common STP pain points across instrument types, including derivatives, equities, foreign exchange, cash and fixed income.
Commenting on the study, David Easthope, Analyst, Celent, said, "While problems differ by country it's clear that all geographies still have much work to do with respect to the automation of both equities and derivatives transactions. In the equity markets rising volumes and increasing complexity of cross-border trades are leading to allocation and matching problems. Whilst for derivatives, and most significantly equity OTC derivatives, confirmation and matching remain the biggest issue."
The report also claims accurate and efficient processing of Corporate Actions is a source of concern in both the fixed income and the equity markets. Firms are also dissatisfied with the current clearing and settlement systems in Europe which raise the cost of processing trades and cause disruption across the back and middle offices.
"The lack of commitment and attention to STP initiatives that address many of these issues is immediately apparent when you compare the comparatively low budgets allocated to improving Back and Middle Office processes,"
explained Easthope. "This underinvestment presents Back and Middle Office managers with major challenges as their firms seek to address structural changes in the post-trade environment around clearance and settlement in the European Union over the next several years."
Commenting on the study, Christian Schiebl, European Regional Director, SmartStream Technologies said, "This survey highlights the complex issues that we help clients tackle day in, day out with SmartStream's STP Control Architecture and our suite of Transaction Lifecycle Management applications. Our ability to help clients manage the increasing emphasis on operational risk, compliance and their drive to reduce the cost of cross-border activity is unparalleled. SmartStream's latest development, TLM ControlÂ®, delivers a ground breaking approach to the automation of STP processes across the Middle and Back Office enabling firms to rapidly construct powerful, scalable STP applications and attain sustainable RoI."
The full findings of Celentâs research are available from www-smartstream-stp.com. Alternatively delegates at Sibos can collect a copy from SmartStreamâs stand, C12.