New research from post-trade processing utility Omgeo shows the Asian financial community making progress in STP, although many firms remain uncertain about the potential benefits and operational impact of central matching.
The survey examined trade processing behavior and attitudes of 40 investment managers across Australia, Hong Kong, Japan and Singapore. The report examined STP factors, such as same day affirmation (SDA) rates, trade exceptions and trade failure levels.
It shows that Australia leads the region in terms of automation, followed by Hong Kong, Singapore and then Japan, while Hong Kong stands out as a leader in fixed income trade automation. Hong Kong also has relatively high levels of same day affirmation (SDA) rates (51%), but Singapore's SDA rates remain the highest in the region at 80%.
Japan differs significantly from the rest of the region in terms of STP readiness, notes Darryl Mueller, Omgeo's newly-appointed managing director of Asia. Japanese investment managers still process the majority of trades manually and seem to be reluctant to embrace STP.
"Our discussions with Japanese investment managers suggest that the lack of a global industry standard has resulted in their hesitation to fully embrace automation," says Mueller. "However, the sheer size of the market, the number of trades processed on average by investment managers (average of 7000 per month) and increasing competition show that Japan would benefit hugely from investing in STP."
Across the region as a whole, 89% of the investment manager respondents operating in a manual environment are considering adressing STP readiness in the near future, with a reduction in operational risk cited as the main motivation for the investment.
Just over half of the investment manager repondents with straight-through processing solutions in place cite central matching as the next step up the STP ladder. However, the research finds that few have a clear understanding of the benefits of central matching and most find it difficult to define the impact it would have on their operations.
Speaking today at Sibos, Adam Bryan, Omgeo CEO defended the central matching concept - which he accepted had been tainted by the demise of rival industry-led GSTPA. "Reports of the death of central matching are premature," he told a packed STP conference session, pointing to steady build-up in the CTM user base and a quadrupling of volumes over the Oasys Global Bridge.