Advent Software Outlines Key Issues the Buyside Needs to Address Before Making STP a Reality
LONDON – April 14, 2005 – Taking the pulse of the global securities industry's evolution toward straight-through processing (STP), Advent Software (NASDAQ: ADVS) released what it has identified as the top issues facing the buyside today as it moves towards achieving greater operational accuracy, efficiency and cost savings. While many STP improvements have been seen in the broker/dealer and custody areas of the securities industry, the buyside has not yet achieved STP to the fullest extent.
Advent's analysis outlines issues that are currently top-of-mind among buyside asset managers:
- Corporate Actions Processing - Corporate Actions processing is one of the least automated areas in the securities industry, and is characterised by excessive error, delays and repetitive work. This translates into increased operational and compliance risks as firms attempt to reconcile and accurately value their assets when market-moving news becomes available. Although progress has been made, with raw data being made available in real time, buyside managers still struggle to integrate this data into their systems and to collect all of the data elements they need to run their business. In many cases, buyside managers are still dependent on receiving faxes for notifications and on ad hoc manual research to collect critical information such as cost basis changes and taxability status.
- Algorithmic Trading - The buyside is adopting algorithmic and other alternative trading methods to reduce trading costs, assist in implementing specific trading strategies, and allow traders to focus their time on the most difficult orders. Automation and integration is critical to accommodating the high transaction and rapid execution requirements of algorithmic trading. Buyside managers are seeking turnkey solutions and industry standards that enable them to connect with the full spectrum of traditional sellside and alternative trading systems, so that they have the greatest choice of strategies and execution destinations.
- Electronic Fixed Income Trading - Order handling and execution options in fixed income markets are immature relative to the efficiencies and liquidity already available in the equity markets. In many cases, buyside fixed income traders still create paper trade tickets and phone in orders to individual brokers, thereby perpetuating manual processes, human error, and market inefficiency. However, larger buyside fixed income managers are increasingly seeking electronic order management, integration with their brokers, and more options for liquidity. In addition, firms are seeking to manage their fixed income instruments with the same systems and processes they use for equities.
"STP has been the industry's goal for a long time. We wanted to share the status of STP from the perspective of the buyside, and raise awareness about the work that still needs to be done to get us there," said Will Clemens, vice president of Advent's Straight Through Processing product line. "We've seen great progress in manager-to-custodian reconciliation, so there is precedent for the industry attaining straight-through-processing for discrete functions. With increased attention from the buyside, sellside, custody and vendor communities, we will attain greater operating efficiency, lower costs, and reduce compliance and trade settlement risk."
Advent Software, Inc., a multi-national company, has been providing trusted solutions to the world's leading financial professionals since 1983. Firms in 50 countries using Advent technology manage investments totaling more than US $8 trillion. Advent's quality software, data and services enable financial professionals to improve service and communication to their clients, allowing them to grow their business while controlling costs.
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