System Adequacy Identified as Major OTC Operational Issue

65 per cent of firms reference adequacy of existing system as major OTC operational issue

As the dust settles on the central counterparty debate the spotlight returns to the internal issue of operational readiness of the middle and back office to process the continued increase in OTC volumes.

In research published this week by CityIQ a survey of largely buy-side institutions highlighted that over 65 per cent of respondents quoted a lack of systems capabilities as the reason for risk within their business.

Whilst the focus has been on the macro economic picture of market stability, the issue of post-trade event manage faded into the background.  The focus has now shifted back to how organisations deliver required scale to support the front office's investment strategies and multi-asset class requirements.

Although vanilla OTC structures may now be passing over electronic platforms and the brokers are resisting communicating via fax, the industry has barely broken the gain line in terms of automation.

Specialised systems that provide post trade event management do exist and they form an important aspect of the operational jigsaw to enhance operational capabilities, which support what is now an established mainstream asset class within the buy-side.