Boston, MA, USA
September 26, 2005STP and the
Broker-Dealer
Report Published by Celent
Celent estimates that broker-dealers will spend a
total of $3.3 billion on Straight-Through Processing (STP) by 2008 to
implement operational risk and cost reduction initiatives.
Celent believes that broker-dealers are ideally
situated to benefit from a renewed commitment to STP. While a rebirth of
the T+1 initiative is unlikely, a re-commitment to STP will help brokers
curb operational risks and cut costs. And while some past STP initiatives
were unsuccessful, the primary drivers of STP adoption in 2005 are more
fundamentally sound. Today STP spending and adoption is based on
cost/benefit analysis and business model evolution, rather than top-down
regulatory fiat.
In a new report, "STP and the
Broker-Dealer," Celent describes the evolution of STP, its
current status, and its likely future direction, all from the perspective
of a sell side firm.
David
Easthope, author of the report
and analyst in the Securities and Investments group at Celent, said,
"The sell side can respond to its challenges and requirement of
change through the back office. Automation of these functions is crucial
to lowering costs, speeding up execution, and not only satiating current
clients but also bringing in repeat clients. While the case for STP may be
changing, the goals remain the same: to reduce the number of exceptions
and to allow as many trades as possible to be executed, settled, and
cleared without manual intervention. Brokerage firms are faced with
numerous imperatives including offering new services, attracting and
retaining customers, and reducing costs. STP can be a vehicle to help
companies achieve these goals. Firms need to invest in IT to drive STP."
The report examines the evolution and challenges
faced by the sell side and the role of STP in providing a competitive
advantage. The report also highlights an implementation of a cross-border
STP solution at a leading broker-dealer.
The 27-page report includes 9 figures and
tables. A table of contents
is available online.
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