The blog highlights the potential benefits, such as reduced counterparty risks and increased market liquidity. It also addresses the challenges of implementing the reform, including operational adjustments and cost considerations for market participants. It emphasizes the importance of preparedness and collaboration among financial institutions to successfully embrace this transformative change in the securities industry. Read More at https://www.magicfinserv.com/are-you-ready-for-sec-t1-settlement-reforms/.
Keeping up with Sec T+1 Settlement Cycle!Emily Jones
Magic FinServ delves into the transition from the previous SEC T+2 Settlement Cycle to the current SEC T+1 Settlement Cycle and discusses its implications for investors and market participants. It highlights the advantages of the shorter settlement period, such as reduced risk and improved operational efficiency.
Trading has changed from local to global and so have the processes from paper to Online. The result is change in process from T+3 to T+1 and real time trading and settlement of a trade.
Capital market firms are making decisions on which business lines, asset classes and services to keep and operate and which ones to exit. Regulatory reform and the
clearing mandate are driving the firms to consolidate their traditional exchangetraded derivatives (Futures and Options) and OTC derivatives into a single clearing
business, even while bi-lateral, uncleared derivatives will continue to co-exist with cleared products.
The document describes Mindtree's Trade Reporting Control Framework, which provides a single solution for complying with all trade reporting regulations across all asset classes and geographies. It aggregates data from multiple sources, validates trades before submission, submits them to the necessary trade repositories, and provides dashboards and reports for oversight. The framework helps banks avoid expensive fines from non-compliance by gaining control over their trade reporting operations.
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The document discusses the challenges facing banks in modernizing their technology systems. It notes that banks have historically focused on rapid growth and innovation over efficiency, resulting in thousands of fragmented systems. It proposes that banks undergo an "industrialization" process to simplify their technology and business processes. This involves defining core capabilities, processes, and data assets and organizing people and technology to better support standardized processes. The document provides several recommendations for how banks can initiate this change, such as prioritizing data management, adopting service-oriented architectures, and leveraging cloud computing technologies to reduce costs. The goal is for banks to develop a "solid technical core" that is lean, integrated and operates with predictability and efficiency.
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Keeping up with Sec T+1 Settlement Cycle!Emily Jones
Magic FinServ delves into the transition from the previous SEC T+2 Settlement Cycle to the current SEC T+1 Settlement Cycle and discusses its implications for investors and market participants. It highlights the advantages of the shorter settlement period, such as reduced risk and improved operational efficiency.
Trading has changed from local to global and so have the processes from paper to Online. The result is change in process from T+3 to T+1 and real time trading and settlement of a trade.
Capital market firms are making decisions on which business lines, asset classes and services to keep and operate and which ones to exit. Regulatory reform and the
clearing mandate are driving the firms to consolidate their traditional exchangetraded derivatives (Futures and Options) and OTC derivatives into a single clearing
business, even while bi-lateral, uncleared derivatives will continue to co-exist with cleared products.
The document describes Mindtree's Trade Reporting Control Framework, which provides a single solution for complying with all trade reporting regulations across all asset classes and geographies. It aggregates data from multiple sources, validates trades before submission, submits them to the necessary trade repositories, and provides dashboards and reports for oversight. The framework helps banks avoid expensive fines from non-compliance by gaining control over their trade reporting operations.
This document provides an overview of a project to implement a Customer Relationship Management (CRM) system for Planet Technology Group (Planet Tel) to automate business processes. It outlines the objectives, scope, requirements, deliverables, and risks of the project. Key aspects included a Microsoft Dynamics CRM prototype configuration, sample test data, user manuals, and email marketing integration. The goal of the CRM system was to improve inefficient manual processes around sales, marketing, support, and communication to better manage the large volume of corporate customers.
The document discusses the challenges facing banks in modernizing their technology systems. It notes that banks have historically focused on rapid growth and innovation over efficiency, resulting in thousands of fragmented systems. It proposes that banks undergo an "industrialization" process to simplify their technology and business processes. This involves defining core capabilities, processes, and data assets and organizing people and technology to better support standardized processes. The document provides several recommendations for how banks can initiate this change, such as prioritizing data management, adopting service-oriented architectures, and leveraging cloud computing technologies to reduce costs. The goal is for banks to develop a "solid technical core" that is lean, integrated and operates with predictability and efficiency.
This document summarizes an article from the DITY Newsletter about overcoming isolation in IT financial management. The newsletter is published by itSM Solutions and provides practical guidance on implementing ITIL best practices. The article discusses how IT finance is often isolated in a "stovepipe" and must work with other IT processes to develop alignment with business strategy. It emphasizes that no single IT process is strategic on its own. The article also examines how understanding service costs through activities like service level agreements can help IT communicate better with customers and optimize operations.
Is your business poised for long-term growth?
Which engineers are under-performing?
Are you meeting all of your SLA commitments?
How do you know if your services are priced correctly?
Who is your most profitable client?
Understand your business.
=====================================================
For more information about Autotask:
Integrated Computer Systems, Inc.
3/F Limketkai Bldg., ortigas Ave., Greenhills, San Juan City 1502 Philippines
Tel: (+63 2) 744 3000 • 727 3801
Fax: (+63 2) 721 4502 • 621 9464
Email: info@ics.com.ph
Website: http://www.ics.com.ph
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Commodity trade is essential for the excellent health of the economy at large. However, Commodity trading is the most complex business with high variables from the Demand and supply side, exerting cost pressures and thinning margins; therefore, it becomes essential to have efficient processes that are flexible to accommodate last-minute changes.
BaffleSol DCMS to manage trade and risk, with its tight integration with ERP, makes it a perfect tool to bring the entire commodity functions to one platform and communicate seamlessly throughout the supply chain, with role-based real-time visibility.
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The document discusses implementing an IT financial management (ITFM) tool. It outlines the benefits of implementing an ITFM tool, such as increased cost transparency, improved efficiency, and better decision making. It then describes the key steps in the ITFM tool implementation journey, including assessing the current state, defining services, identifying data requirements, establishing governance, designing the cost model, evaluating tools, and implementing the tool and roadmap. Some challenges of implementation are also reviewed, such as data quality issues, lack of governance, and lack of education on ITFM methodology.
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Focus Point Technology (FPT) has created a consortium of technology management vendors to address the fragmented nature of enterprise technology management. The consortium brings together vendors with expertise in areas like telecom expense management, cloud management, and IT asset management. FPT's goals are to provide clients flexibility in choosing best-of-breed solutions, consolidate billing through their One Pay system, and give clients visibility into their technology footprint through the FPT360 platform. By aggregating vendors with proven records but potentially overlooked by clients, FPT aims to fill gaps in enterprise technology management capabilities.
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For more information about Autotask:
Integrated Computer Systems, Inc.
3/F Limketkai Bldg., ortigas Ave., Greenhills, San Juan City 1502 Philippines
Tel: (+63 2) 744 3000 • 727 3801
Fax: (+63 2) 721 4502 • 621 9464
Email: info@ics.com.ph
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Commodity trade is essential for the excellent health of the economy at large. However, Commodity trading is the most complex business with high variables from the Demand and supply side, exerting cost pressures and thinning margins; therefore, it becomes essential to have efficient processes that are flexible to accommodate last-minute changes.
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Straight-through processing (STP) is important for financial institutions to improve efficiency and reduce costs and risks. The document discusses SunGard's Transaction Network (STN), which connects different financial parties to achieve STP for various asset classes. STN allows full automation of the transaction lifecycle across borders and integrates with existing applications. The document provides examples of how STN has helped firms like Navellier, Wasatch Advisors, and CMC Interactive automate processes to reduce costs and improve efficiency.
The document discusses implementing an "end to end" transfer pricing strategy that draws together all activities related to transfer pricing into clearly defined processes across the entire organization. It urges multinational companies to move their transfer pricing strategy through financial and operational systems all the way to local financial statements and tax returns. It identifies common challenges with the current approach, such as overreliance on individuals and spreadsheets. It provides recommendations to establish clear roles and responsibilities, improve communication, define processes, and automate where possible to ensure an effective and consistent execution of the transfer pricing strategy across the organization.
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How Does Brokerage Payout Reconciliation Work_.pdfwinsofttech
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This document discusses implementing advanced terminals in bank branches to improve efficiencies and customer experience. It describes a two-pronged "Logical and Physical Long Game Transformation" involving both intangible changes like employee training and tangible changes like branch renovations. A strategic "Game Model" is proposed involving understanding current branch activities, setting goals to shift transactions to terminals, training employees in new roles, educating customers, and tracking metrics to ensure goals are met. Both logical changes like processes and job roles as well as physical changes like branch layouts and technology are needed for successful transformation.
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Are you ready for Sec T+1 Settlement reforms?
1. Are you ready for Sec T+1 Settlement reforms?
Enhancing Broker and Dealer Transition to new Sec T+1 Settlement with AI/ML Intelligent Data
Automation Solution
In trading, time is of the essence, as every moment wasted in settling or reconciling a trade
incurs higher costs and greater risks. Today, as the US proposes a shift to the T+1 settlement
cycle, the primary objective is reducing the time it takes to settle a trade. And in the process,
decrease the risks. That seems justified as the markets have experienced severe shockwaves in
the last two years, due to market volatility, pandemic, fall of meme stocks, etc.
The T+1 settlement cycle essentially means that all settlements relative to trade must be carried
out the next day and is expected to yield benefits like reduced costs, increased market efficiency,
and reduced settlement risks.
So, while earlier, the settlement cycle (t+2) looked like this:
2. Source: PWC's T2 Settlement Information Report
Now we have a settlement cycle (T+1) that looks like the one below:
3. Source: State Street
Implications of Transition T+1: Unveiling the Key Challenges in Broker-Broker (Executive and
Clearing Brokers) Communication
Though the transition to T+1 provides multiple benefits, the shift from T+2 to T+1 is not easy.
We elucidate this using the example of brokers/dealers, who are a vital part of the trading chain.
T+1 settlement of institutional trades lowers margins for broker/dealers. Brokers are required to
pledge cash and securities to a clearing house, benefit enormously from the lower margin
requirements (difference between the current value of the security offered the collateral and the
value of loan granted). But it is not a win-win situation for them yet.
One of the biggest challenges in transitioning to the T+ 1 settlement cycle is the lack of
automation in any communication emanating between broker-broker or the Executing Broker
and the Clearing Broker when it comes to Trade File Processing. This broker-broker
communication is centrally a part of the back-and-forth information processed by the middle
4. office (MO) and settlement information/status received from the Clearing House or Back Office
(BO)system.
Another significant challenge is the reconciliation of trade files and other reports. Without
automation, manually updating these details, typically in Excel or spreadsheet format, can be
quite cumbersome. The executing broker shares trade details with the clearing broker, usually in
the form of spreadsheets, which are then processed and imported by the analyst team into the
clearing system.
When investment manager, broker-dealer, clearing dealer rely more on manual processes than
automated, time lags and delays are bound to happen as everything happens sequentially instead
of bi- directionally. With automated processes, the majority of trades can be processed on the
same day without requiring manual intervention.
Markets and prices are in a state of flux when it comes to trading. Hence, broker dealer, clearing
broker must always be in a state of alert. Even remote chances of error or trade fails must be
rooted out, unfortunately with manual mistakes that can have major consequences are higher.
Additionally, there are other unresolved issues such as:
● Manual entry of data from documents received via email or fax from the investment
manager when a trade is blocked. There is also a substantial amount of manual effort
involved in the reconciliation and communication between the executing broker, the
clearing broker, and other parties, for final clearing and settlement that must be
automated for ensuring SDA(Same Day Affirmation).
● There is still a substantial amount of paper involved
● Sliced, dicing, and digesting the unstructured data in emails and faxes in time for T+1
● Most firms are burdened by a crumbling legacy architecture that cannot scale up fast
enough. If that were not concern enough, building a new one that could ensure adherence
to t+1 from scratch would be time-taking and excessively expensive.
5. ● For (T+1), broker/dealers and clearing broker must speed up affirmations, confirmations,
and allocations processes. But how do they do that when they have not yet automated
their processes and there is no STP.
So better late than never! We are here to help firms navigate the transition to T+1, by redefining
and re- strategizing the options and integrating our magical solution DeepSightTM that leverages
the power of AI and ML to ensure a win-win. But first here's a brief on T+1:
Automation is pivotal for T+1: How AI/ML and RPA helps reach the magical Same Day
Affirmation (SDA)
The biggest challenge for T+1 transition is the lack of automation in institutional “allocations
and affirmations.” This is one area that requires massive transformation to achieve the proposed
settlement cycle timeframe. An automated solution can play a crucial role in facilitating same-
day affirmation (SDA) processes for broker-dealers and clearinghouses.
With automation, broker-dealers and clearing houses can also:
● Reduce the risk: As the volume of unsettled trades over a single trading day and the time
between trade and settlement are reduced, counterparty, system-related, and operational
risk is reduced.
● Trade capture and validation: Perform real-time validations, ensuring that trades meet
pre- defined criteria and are eligible for SDA.
● Enables seamless transition: By automating various aspects of the settlement workflow,
broker- dealers and custodians can minimize manual intervention, reduce operational
risks, and enhance overall operational efficiency.
● Eliminates the need for manual intervention and errors: Eliminating the need for manual
intervention and reducing the risk of trade discrepancies.
● Exception handling made easier: Automatically identify and flagging trades that require
manual intervention. focuses on the resolution of exceptional cases promptly, paving the
way for smoother SDA processes.
● Seamless data validation and reconciliation: Validate trade data and reconcile it with
external sources, such as market data providers or reference databases.
● Prompter resolution of errors: Potential discrepancies or errors can be identified and
resolved promptly, reducing risks associated with inaccurate or incomplete data.
6. ● Enables straight-through processing: Eliminates the need for manual rekeying or
intervention at different stages.
Revolutionizing T+1 Settlement: Empowering Broker-Dealers and Clearing Houses with
DeepSightTM
Now is the time for broker dealers and clearing houses that have not yet implemented automation
to take to aggressively pursue automation if they are to abide with the proposed new rules. For
broker dealers and clearing houses, the focus would be on ensuring SDA.
Here's how Magic FinServ's AI Optimization framework – DeepSightTM that has at its core
AI/ML and Data builds tailored solutions that reduce the need for human intervention stoking up
processes and ensuring optimal levels of efficiency for processes related to confirmation,
allocation and affirmation and trade matching.
7. Magic FinServ's innovative digital solution leverages the power of data and AI/ML technology
to standardize business processes related to trade file processing by automating the broker-broker
communication. Our highly intelligent and scalable solution shifts through data sources in
different formats: Excel/spreadsheet/CSV files/Email body/Email attachment/API integration
from multiple systems/ and other unstructured formats with ease and creates the "Reconcile
Report" for other market player. It also supports the setup of the Golden Copy Data Management
for multiple other sub activities related to the trade lifecycle. Other aspects of our solution
include - Exporting the reconciled trade file, configuring any Business Rule/Mathematical rule
which is required for generation of trade file, and generating reports based on customer need, i.e.,
in JSON, API, excel or any standard template.
While DeepSightTM can help automate processes, the move to T+1 settlement will still require
fundamental changes throughout the trade processing lifecycle.
● Consolidation of data feeds between new and legacy systems to centralize data
management.
● It is necessary to adopt technology (e.g., DTCC’s ITP CTM) and/or messaging protocols
(e.g., FIX) to automate the communication of allocations and CTM’s Match to Instruct to
facilitate more timely trade affirmations.
● As firms move to T+1 settlement, they must adopt technology (e.g., DTCC’s ITP
CTM/M2i) and/or messaging protocols (e.g., FIX) to automate the communication of
allocations.
The Incredible Benefits of DeepSightTM
When broker-dealers, whether they are small boutique firms or subsidiaries of investment banks,
consider their options, they can reap several benefits.
8. Eliminate the friction: Firms can eliminate the friction that exists at multiple touchpoints when
data is entered manually. They can leverage the AI/ML capabilities to extract relevant data from
documents, pdfs, mails/faxes, etc.
Fasten the post-trade agreement and affirmation by almost 50%: A solution like DeepSightTM
can scale quickly and is ideal for periods when trade volumes are high or market volatility is
high or both, as it trained to extract the appropriate data from the swathes of information
available infinitely faster than humans.
Benefit from data-driven approach: Trade is ultimately about data. As the data experts, we can
quickly identify which are the processes that would require automation. So, whether investment
managers/portfolio managers who need help analyzing their performance or peers and
counterparties/broker-dealers, custodians, our solutions can ensure that the transition to T+1 is
smoother.
Reduce operational risk: With standardization and STP, operational risks are reduced
considerably. When organizations opt for a solution like Magic Deep Sight, that leverages the
power of AI and ML, and that can be easily integrated with existing systems, allocation,
conformation, and central matching is given a boost. With SDA, firms can easily ensure the next
day's settlement.
Reference data management: Reference data management is a critical part of data management.
To ensure transparency and efficiency, firms must update their reference data (e.g., the asset type,
counterparty information), security pricing data, and standardized settlement instructions (SSIs).
With DeepSightTM , the processes are streamlined and there is no chaos.
9. Easy and seamless integration with legacy architecture and workflows: No need to replace
legacy: DeepSightTM biggest advantage is the heuristic approach wherein firms do not have to
replace the existing workflows, as our solution can be integrated with traditional workflows and
legacy architecture.
Exception Management: This metric assesses the ability to identify and resolve exceptions or
discrepancies promptly during the settlement process. Efficient exception management helps
streamline operations, reduces manual intervention, and enhances overall settlement efficiency.
Conclusion: A Shorter Settlement Cycle Benefits All!
Shorter settlement cycles benefit all. Some of the benefits are:
Shorter settlement cycles benefit all. Some of the benefits are:
● Improved straight-through-processing (STP)
● Quicker settlement
● Less margin required
● Reduction of operational and systemic risk
● Decrease in costs and resources from reduced number of unsettled positions
Irrespective whether it is an investment manager, broker dealer, clearing dealer or clearing house,
custodian, or settlement agent, T+1 is good for all. Ideally, T+0 settlement cycle offers the best
deal; however, it would require a massive overhaul of the existing architecture, hence the SEC
and other regulatory bodies have opted for transition to T+1 for the time being. Though some
amount of re- strategizing is required to get in sync.
By embracing automation and STP, broker-dealers and custodians can enhance their operational
resilience, reduce settlement risks, and improve client experience. They can focus on
10. value-added activities and provide faster and more efficient services to market participants. If
there is more that you would like to know as a broker dealer or clearing house, you can drop a
mail at mail@magicfinserv.com.