Post-Trade Processing in Japan: Back and Middle Office STP at Brokerages, Banks, and Asset Managers

by Neil Katkov, PhD, March 18, 2009
Product Trends/ Reviews
Asia-Pacific

Abstract

Tokyo, Japan 18 March 2009

Post-Trade Processing in Japan: Back and Middle Office STP at Brokerages, Banks, and Asset Managers

Middle and back office costs in Japan remain high, and firms are missing opportunities to increase efficiencies through greater automation, according to a Celent survey of major Japanese financial institutions.

The Japanese capital markets are in the midst of change. Growth in derivatives and other new products, increased cross-border trading, and the adoption of advanced execution technologies are putting pressure on financial firms to improve operations in the middle and back offices. In a new report, Post-Trade Processing in Japan: Back and Middle Office STP at Brokerages, Banks, and Asset Managers, Celent  explains that while transaction flow between systems has been largely STP-enabled, little progress has been made in automating workflow for exceptions handling or corporate actions. Fragmented systems and the lack of cross-asset rationalization are other barriers to STP and limit the potential IT cost savings. Of the three financial sectors surveyed, asset managers in Japan are placing the most emphasis on improving levels of STP, while banks are placing the least emphasis on this area.

"STP is especially lacking in over-the-counter derivatives," says Neil Katkov, senior vice president of Celent’s Asia Research group and author of the report. "OTC derivatives have seen increasing volumes in Japan, including among traditional buy side investors such as pension funds, challenging firms to develop methods for processing them efficiently."

This report is based on a survey of leading Japanese banks, brokerages, and asset managers conducted by Celent in conjunction with SmartStream Technologies. The report examines the state of straight-through processing in Japan across asset classes, including derivatives, equities, foreign exchange, cash, and fixed income. The analysis presents common barriers to STP by asset class and by stage in the post-trade cycle, from notice of execution to clearing, settlement, and payment. Celent also identifies the priority areas for STP projects at Japanese firms as well as overall budget levels directed towards STP.

This 44-page report contains 34 figures and 11 tables. A table of contents is available online.

For more information from SmartStream, please click here.

Members of Celent's Capital Markets research service can download the report electronically by clicking on the icon to the left.  Non-members should contact info@celent.com for more information.  

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Tokyo, Japan 18 March 2009

Post-Trade Processing in Japan: Back and Middle Office STP at Brokerages, Banks, and Asset Managers

 

Executive Summary 3
Survey Process 5
Introduction 6
STP Drivers in Japan 8
  10
STP Implementation by Instrument 14
  14
  17
  20
  22
  24
  26
  28
Trends at Brokerages, Banks, and Asset Management Firms 30
  30
  36
Conclusion 39
Background 40

 

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