Industry Increases Automation in Taiwan, Reduces Operational Risk

Taipei, Hong Kong, London, New York and Boston; MA - 22 May 2012

As market grows and attracts additional foreign investment, local market participants place greater emphasis on automating trade processes to reduce failed trades and increase competitiveness

Omgeo, the global standard for post-trade efficiency, today announced that it is working with investment managers across Taiwan to significantly improve trade processing efficiency among the local Taiwanese broker/dealer community. BlackRock, one of the world’s leading providers of investment, advisory and risk management solutions, is playing a key role in automating the Taiwanese market with Omgeo.

Today in Taiwan, the need to minimize the inefficiencies and risks of trade failure associated with manual post-trade processing – such as phone, emails and fax - has been a key driver for change among the local Taiwanese financial markets community. An emerging market, Taiwan operates on a T+2 settlement cycle. Research demonstrates that Taiwanese users that have automated their post-trade processes have achieved higher levels of same day affirmation of trades (average of 97 per cent[1]). Same day affirmation, or SDA, is the agreement of all trade details on trade date (T+0) and has been linked to improved settlement efficiency in markets around the world. With the general push towards increased foreign investment in Taiwan and cross-border trading rising across Asia, an efficient post-trade processing environment will continue to be an important differentiator for Taiwan’s regional and global competitiveness as firms focus on the timely confirmation and reconciliation of trades. In addition, it will help firms to minimize the risks and penalties associated with failed trades.

Centrally matching trades with Omgeo Central Trade ManagerSM (Omgeo CTM) helps users to achieve an SDA rate that is higher than those rates achieved with local matching. BlackRock’s adoption of Omgeo CTM has helped to drive the automation of trade confirmation processes with their Taiwan-based broker/dealer counterparties across equities and fixed income transactions, to the benefit of both counterparties.

Since BlackRock adopted Omgeo CTM in Taiwan in April 2011, the firm has made great traction with several broker/dealers, successfully transitioning from manual to automated processing. This demonstrates a clear indication that the local broker/dealer community is focused on addressing the inefficiencies in post-trade processing practices by embracing automation.

"Automating trade processing across all asset classes with our counterparties continues to be a key focus area at BlackRock”, said Jeffrey Plein, Managing Director at BlackRock. “Investment managers and broker/dealers are better equipped to mitigate operational risk, reduce costs and grow their business when they are not limited by manual processes. Omgeo CTM plays a vital role in enabling Taiwanese firms to achieve this.”

“It is great to see the Taiwanese market further explore automation”, said Julie Feaunati, Director of Relationship Management, Asia Pacific at Omgeo. “Our global community of investment managers and broker/dealers has demonstrated that automating trades across asset classes is vital to creating an efficient front-to-back trade process. The move from manual trade processing to automation will not only improve the overall efficiency of the local Taiwanese market by minimizing the risk of trade failures, but also reduce the overall operational and post-trade risk which is a key focus for local and international investors.”

Today, over 950 clients are using Omgeo CTM globally, representing 38% growth in the community year over year.

[1] Omgeo Discussion Paper: Mitigating Operational Risk and Increasing Settlement Efficiency through Same Day Affirmation (SDA), October 2010

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