Euroclear offers insight into settlement fails with new data service

SettlementDrive gives a view on the number and value of transactions which settled or failed in the Euroclear central securities depositories.

Euroclear is set to launch a new data service offering in-depth insights into the level of settlement fails observed on individual instruments it processes.

SettlementDrive is set to provide insight into settlement fails at a critical juncture as Europe readies for incoming regulation which imposes cash penalties on failed trades, along with the introduction of mandatory buy-ins.

Euroclear’s new offering covers a wide array of global securities across asset classes, including 480,000 fixed income instruments, more than 50,000 equities and 5,000 funds and ETFs.

For each instrument, the data service gives a view on the number and value of transactions which actually settled or failed in the Euroclear central securities depositories. It presents both daily values and historical averages to support trend analysis, and all data is fully anonymised.

With the incoming regulations under the Settlement Discipline Regime (SDR), fails are set to come increasingly under the microscope from regulators and market participants are being forced to seek insight to help them avoid costs under the new rules.

SettlementDrive will aim to present a market-level view which helps clients navigate SDR by integrating the fails dimension even before the trade is executed.

Euroclear said in a statement that market participants increasingly see information around settlement fails as an additional indicator of trading liquidity, and one element to consider in their investment and trading decisions. In addition, there is also a material operational cost attached to following up on potential or actual fails and trying to resolve them.

Euroclear SettlementDrive is the next step in its bid to bring more transparency to market participants, following the launch of LiquidityDrive in Q1 2021, which provides in-depth liquidity analysis on all fixed income instruments settled at its central securities depositories.

Leveraging its post-trade ecosystem, LiquidityDrive combines executed trade settlement data with custody activity data, and the service is agnostic of whether the instrument is traded electronically or by voice.

“We are extremely pleased to be rolling out SettlementDrive following the success of our fixed income liquidity analysis platform LiquidityDrive earlier in the year. Both are part of our overall data strategy to address market themes that appeal to a wide range of clients including liquidity, transparency and operational efficiency,” said Andre-Marc Delhez, head of data business development at Euroclear.

“Thanks to its market-level view of observed fail ratios on a wide universe of instruments, SettlementDrive will help clients navigate the CSDR Settlement Discipline regime by integrating the fails dimension even before the trade is executed, and provide additional insights to support trade execution and post-trade cost analysis.”