DTCC Connection

May 23, 2014 • DTCC Connection

Study Finds Varying Levels of Automation of Post-Trade Processing in Asia Pacific

by Joseph King

Despite growing awareness on the benefits of automation for post-trade processes in Asia Pacific, there remain major disparities in the levels of adoption and sophistication between asset classes and firm types, according to findings published in the white paper “The Asia Pacific Post Trade 100: Automation of Post Trade Processing in Asia Pacific.”

The results of the study are based on interviews with 100 senior operations executives from domestic broker/dealers, investment managers, custodian banks and other financial services firms across the Asia Pacific region.

The study, published by InsightAsia Banking & Finance Consulting and commissioned by Omgeo, identified three drivers for raising automation levels:

  1. Reputational risk – respondents are mindful of the financial and non-financial costs of trade failure, with the greatest number (31%) saying their biggest concern was reputational risk.
  2. The need to comply with increasing regulation – respondents referred to the impact Dodd Frank and Basel III requirements is having on risk management practices across financial markets globally and in the Asia Pacific region.
  3. Cost reductions – eliminating manual processes will lower operating costs.

Levels of adoption vary by country with Australia exhibiting the highest automation levels at 88% for equities and 69% for fixed income trades. India, Hong Kong, Singapore, Japan, Korea and mainland China score around a tight 70-80% band for equities and 50-70% for fixed income. Markets with the lowest level of automation are Taiwan, the Philippines and Vietnam.

“Operations managers face a number of challenges as they embrace automation in their middle and back office,” said Matthew Chan, Regional Director of Strategy, Omgeo. “Yet, as Asia Pacific cements itself as an important economic hub, automating, standardizing and harmonizing the post-trade process is essential to ensuring the safety and integrity of the financial markets.”

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