ISITC Releases Matching Best Practice to Reduce Industry-Wide Trade Exceptions

Boston, MA - 17 November 2011

Updated guidelines now include details for tax lots and derivatives

ISITC (International Securities Association for Institutional Trade Communication), the industry trade group focused on standards in transaction processing and related communications, today released a new Matching Best Practice, developed through the close collaboration of market participants, industry utilities, messaging providers, and buy- and sell-side firms. This Best Practice aims to outline the options available to financial institutions around matching in order to ultimately increase automation and efficiencies across the industry.

The development of the ISITC Matching Best Practice was driven by increased focus on pre-settlement trade matching. Several industry factors such as the growing volume of cross-border trading and shortening settlement cycles are prompting firms to identify ways in which to reduce exceptions and failed trades. As firms look at reducing the transaction costs of different parts of the trade lifecycle and mitigating penalties associated with failed trades, the ISITC Matching Best Practice outlines different ways in which market participants can approach trade matching for the betterment of the industry.

The Matching Best Practice reviews:

• Approaches to matching: local/bilateral matching and central matching
• Financial instrument types/asset classes/product types, including equities, fixed income, structured products and listed derivatives
• Process flow: the starting point, notice of execution, ending point, agreement between counterparties on trade details at the allocation level, including settlement instructions

Genevy Dimitrion, Executive Co-Sponsor of the Industry Initiatives Working Group, comments, “In our discussions with industry constituents and our member firms, it became clear that although the investment into matching has increased over the years, there were no clearly defined best practices. We’re very excited to be releasing this new Matching Best Practice as we believe it’s a huge step forward for the industry and we look forward to working with market participants to continue this initiative.”

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