Fresh from a panel at InvestOps in Orlando, James Pike, Taskize’s CRO and Head of Strategy, surveys the latest industry trends, and continues last week’s insights into how the sector gears up “a new-look trading ecosystem.”
This week – collaboration, data standards and workflow management as enablers for success.
Industry-wide engagement and cooperation between the buy-side, sell-side and FMIs will be a good starting point for success.
Other panellists echoed this sentiment. “There is a real opportunity for buy-side and sell-side firms to partner with each other. Our industry will struggle to deal with friction from market changes unless it collaborates more,” noted one speaker.
Credit: InvestOps
In countries where T+1 preparations are in full swing, experts at InvestOps and across the course of the year-to-date advised market participants to follow the example of the DTCC and various industry associations, who between 2022-2024 executed a well-drilled education campaign on T+1, which promoted collaboration and dialogue. This strategy was instrumental in getting firms over the goal line ahead of North America’s rollout of accelerated settlements.
Finding consensus on data standards is another key criterium if firms are to flourish once market reforms bed down.
One InvestOps speaker noted that adopting the Unique Transaction Identifier (UTI), a standardised transaction reference, could make a huge difference for organisations.
By facilitating faster exception detection and resolution, improving traceability, and allowing for more seamless communications across fragmented infrastructures, the UTI will bring about a number of automation and transparency benefits, putting firms in a strong position to deal with post-trade reforms such as T+1.
The view as of Q1 was that leveraging the UTI could generate a significant return on investment (ROI) across firms. A recent paper by Swift and Accenture highlights that the UTI’s ability to streamline post-trade workflows, reduce settlement fails, and optimise liquidity and capital, could result in sell-side institutions netting a 20x ROI over a five year period.
Robust data standards will also be integral if firms are to successfully futureproof their operations for the looming digital transformation, most notably the rise of agentic Artificial Intelligence (AI).
I firmly believe that agentic AI will be an incredibly powerful, transformative tool, but it will only be useful if people have access to good data. If agentic AI is relying on bad data, then it will make bad decisions.
Automation and better cohesion across different workflows is equally important if firms are to handle market changes seamlessly.
In practice, this means financial institutions should be implementing effective workflow management solutions, which provide them with both better visibility into their operational processes and allow teams to migrate away from email and other manual workflows.
To quote a colleague at InvestOps, “a low hanging fruit would be to reduce the number of emails being sent across organisations. Imagine a world where we do not have to send 35 email chasers for, say, collateral calls on a Friday afternoon, which happens once a month.”
Consolidated, automated workflows would certainly make the transition to T+1 less painful, as it will become easier for firms to confirm that they have the correct inventory in place ahead of executing a trade, whilst also allowing them to fix any data issues before they escalate. Such measures will help reduce the risk of firms suffering from settlement fails when T+1 takes effect.
If the industry is to get on the front foot with all the changes lying in wait on the horizon, it must prioritise collaboration, data standardisation, and the adoption of automated workflow management solutions.