The Clearing Management Insight Report is free to read for qualified financial professionals, to request your copy visit https://www.acuiti.io/sell-side-clearing-management-insight-report
London – 30 November 2023: Sell-side clearing firms have made significant progress in automating and increasing the efficiency of post-trade reconciliations since 2021, the latest Acuiti Sell-Side Clearing Management Insight Report has found.
The Q4 Acuiti Sell-Side Clearing Management Insight Report, which is published today, is based on a survey of the Acuiti Clearing Expert Network, a group of over 100 senior executives from across the global market. Each quarter, members of the network give their views on a range of topics suggested by Acuiti and other members of the network.
This quarter’s report, which was produced in partnership with HelloZero included a deep-dive on investment in reconciliation software and processes. In Q4 2021, Acuiti conducted a study of the state of reconciliations following the volatility of Spring 2020 and the failings it exposed in sell-side post-trade processing.
In 2021, Acuiti found a market in the process of investment to address inefficiencies and reliance on manual processes. The latest study indicates that that investment has had a significant impact on post-trade operations.
Over two thirds of firms had investment in reconciliation software over the past three years with a majority using third-party software.
As a result, 39% had fully automated their reconciliations processes, including 44% of Tier 1 banks, a significant increase on 2021.
Despite the progress there is still some way to go to fully optimise the reconciliation process across the sell-side. One persistent area of inefficiency is the continued use of spreadsheets in the reconciliation process.
While 36% of firms no longer used spreadsheets at any stage of reconciliations, a third still used them as part of the core process and 18% for external analysis of the data. In addition, firms are looking to run more reconciliation processes per day and over 20% experience difficulties when onboarding new clients or processes.
“Firms across the sell-side have made significant progress since 2020 when it comes to increasing the efficiency of the reconciliation process,” says Ross Lancaster, head of research at Acuiti.
“This is reducing overall operational risk across the market and providing a competitive edge for firms that invest. However, there is still some way to go for many firms to fully optimise the reconciliations process.”
Matt Dolton, CEO, Kynetix said: “Kynetix is proud to be playing a part in the reduction of overall risk across the market. Firms that invest in HelloZero have an agile platform to reconcile high volumes of complex trading data as well as a secure backup that provides validation of trades in the event of other system failure or attack.”
In addition to the deep-dive on reconciliations, this quarter’s Sell-Side Clearing Management Insight Report explored a range of topics including attitudes to the full range of Emir 3.0 proposals.
While the focus of Emir 3.0 has been on the active account proposals and industry concern over how they will be implemented, other areas of the reformed regulation, such as a reduction in the bureaucracy for CCPs to enable them to launch new services and products more efficiently, were broadly welcome by the market.
Also in this report:
- How are FCMs thinking about CCP default risk?
- How do FCMs view the move by exchanges to establish greater visibility of their client base?
- Are FCMs investing in back-up clearing systems after the cyber attack in February 2023?
The Sell-Side Clearing Management Insight Report is available to read for free to senior derivatives executives at sell-side firms. It is also available to subscribers to Acuiti’s Expert Networks.
Acuiti’s Expert Networks cover six verticals: Sell-Side Clearing, Sell-Side Execution, Asset Management, Hedge Funds, Proprietary Trading Firms and Crypto Derivatives. Each quarter Acuiti produces reports based on a survey of each network.
Download the full report here: https://www.acuiti.io/sell-side-clearing-management-insight-report
For more information, contact Nastja Konic at Acuiti
Tel.: +44 (0) 203 998 9190
Acuiti is a management intelligence platform designed to provide Senior Industry Professionals in the Derivatives Industry with high-value insight into industry-wide performance and business operations. Acuiti provides a platform through which our exclusive network of Senior Industry Executives can share and source information on day-to-day operational challenges, providing them and their management teams with increased transparency and in-depth analysis to make more informed decisions and benchmark company performance. Financial Institutions benefiting from our services include Banks, Non-bank FCMs, Brokers, Proprietary Trading Firms, Hedge Funds and Asset Managers.
HelloZero has been built by Kynetix who have been helping exchanges, banks, brokers and asset managers streamline their back-office processes for the past 25 years. HelloZero, an
award-winning data platform, has been designed to improve the processing of futures and options data. Secure, automated and cloud based, it ingests and standardises high volumes of trading data from multiple counterparties to create one single source of truth.