It is well known that Asia is leading the world in the proportion of trades achieving same-day affirmation (SDA); most Asian trading venues comfortably exceed SDA rates of 90%, whereas the U.S. trading venues currently achieve 70%, on average. The automation of middle-office processes in Asia’s securities markets continues to be implemented with great vigor. This trend is undoubtedly being propelled by forthcoming regulatory requirements; yet there are other factors also driving the development.
Clients are demanding ever greater efficiency, with SDA being seen as not only best practice but an essential requirement of broker-dealer service level commitments. It is evident that error rates and the operational costs associated with them could be radically reduced, and general settlement efficiency could be significantly improved, if all details of a trade are agreed to on the day it is executed.
Of course, automation gives other benefits to broker-dealers besides merely reducing trade failure. Other examples include more reliable trade allocation, the ability to accurately monitor one’s securities lending, and the automatic alerting of corporate actions.
[Related: "Reducing Risk by Strengthening Settlement"]