Post-trade digitalisation crucial to mitigate risk

Deutsche Boerse and Celent explore the digitalisation of post-trade in a recent whitepaper.

The digitalisation of post-trade operations is crucial to achieve maximum efficiency and control costs, according to an analysis by Deutsche Boerse and consultancy firm Celent.

As the systems and environment supporting the European post-trade framework remain fragmented, 80% of OTC derivatives reconciliations are manually processed over the telephone or are Excel based.

A whitepaper authored by both Deutsche Boerse and Celent explained this trend is expected to change, with technology playing a crucial role.

“Firms relying on manual processes are finding themselves increasingly open to solutions to optimise and automate post-trade processes that were previously deemed as too sensitive to operational risk arising from change,” the whitepaper said.

Global risk management and regulatory compliance technology spend is expected to hit $72 billion by 2019, a recent analysis by Celent found.

The whitepaper referenced the role of regulation - like T2S - in aiding firms with these challenges.

T2S is “revolutionising” the European post-trade environment by creating a single settlement environment that should bring domestic market efficiency to the international securities settlement domain, the paper stated.

Deutsche Boerse and Celent concluded that although regulations like T2S have helped firms along the way, technological upgrades – despite being underinvested in historically – will ultimately reduce risk and increase efficiency.