STP and the Broker-Dealer

by David Easthope, September 26, 2005

Abstract

Boston, MA, USA September 26, 2005

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, " ," 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.

All Members of Celent's Retail Securities & Investments  and Institutional Securities & Investments research services can download the report electronically by clicking on the icon to the left.  Non-members should contact info@celent.com for more information.

        

Send mail to info@celent.com with questions or comments about this Web site.

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

 

Boston, MA, USA September 26,  2005

Return to report Abstract

Executive Summary 3
Introduction 4
STP For The Sell Side 6
The Sell Side Response: The Back Office 10
STP Spending Estimates 18
Case Study 20
STP - Where From Here? 23
Objectivity & Methodology 26

Sign in to download reports and access personalized information