Lack of Industry Standard ‘Pushes up ETC Costs’

The lack of an industry standard solution for electronic trade confirmation (ETC) is driving up industry costs, as buy side firms on the financial markets deliberate about which technology platform best suits their business, according to analyst firm Aite.

The Aite results are among the key findings of the latest in a series of reports from the consultancy firm into the challenges of and solutions for trade verification in today’s market.

The report examines a number of ETC solutions. Among the identified benefits of financial messaging provider SWIFT’s Global Electronic Trade Confirmation (GETC) solution are affordability and resilience. The report also shows local matching, an option favoured by many buy sides, is supported by SWIFT’s GETC solution.

“Buy side clients are keen to see their brokers taking steps to invest in more automated processes and connectivity to electronic trade confirmation platforms and technologies in order to provide a higher level of service and reliability,” said the Aite report author, Virginie O’Shea.

Until a standard solution emerges, however, brokers have to contend with the prospect of connecting to multiple platforms, with the associated costs. In what is already an extremely tough economic environment, 73% of brokers participating in Aite’s research report a reduction in trade support headcount. This increases the emphasis on brokers to utilise technology to automate trade processing. But while the buy side deliberates, brokers are unsure which way to go with their technology decisions. Investment is required but budgets remain tight.

The report finds that the SWIFT GETC solution has been successfully rolled out by a Tier 1 broker for US$300,000, and by a Tier 2 broker for US$150,000.

Paul Taylor, director, global matching, SWIFT, said: “The Aite report highlights some very real challenges for the broker and asset management communities in these difficult economic times. The buy side holds the key to enabling industry harmonisation and ultimately efficient and cost-effective trade processing. We have seen our GETC solution winning favour in the market as a viable option and we are very pleased to continue to bring innovation and cost savings to our extensive global user community.”

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