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T+1: The Imperative of Trade Capture for Global Asset Managers

With the move to T+1 for U.S securities under six months away, institutional asset managers should be dotting the I’s and crossing the T’s on their operational preparations.

As these final stage checks take place, the significance of accurate and timely trade capture cannot be overstated, particularly for those managing multiple funds beyond U.S borders. As firms gear up for the switch, the spotlight intensifies on the processes that underpin this transition, with trade capture emerging as a pivotal area demanding meticulous attention.

The journey from trade initiation to settlement is a complex one, fraught with esoteric challenges ranging from manual inefficiencies, to the risk of errors in recording critical investor information. It is fair to say the current approach of relying on spreadsheets has not really cut the mustard. The common requirement lies in the need for a trade capture process that facilitates the efficient preparation for settlement the following day. Let’s face facts, manual spreadsheet entry is not conducive to speedy and accurate outcomes.

With this compressed settlement window, the ability to swiftly identify and rectify errors becomes paramount. Control checks play a pivotal role in this quest for accuracy. The immediate escalation of trades recorded incorrectly, coupled with accurate validation of specific trade metrics such as character length on International Securities Identification Numbering system (ISIN codes), acts as a proactive safeguard against potential errors.

These checks allow asset managers to catch discrepancies early in the process and rectify them before they snowball into costly settlement delays. Moreover, a comprehensive review of the entire trade journey, from initial capture to execution in the market or with counterparties, is essential. Identifying and addressing manual inefficiencies along this trajectory is crucial for optimising the trade capture process. Whether trades are exported from one system to be uploaded into another or transmitted directly to the market, pinpointing and rectifying inefficiencies ensures a streamlined and error-resistant workflow.

For asset managers with global funds, the challenge is further magnified. Diverse regulatory environments, currency considerations, and varied market practices demand a nuanced approach to trade capture. The need for a harmonised and standardised process becomes imperative to navigate the intricacies of international markets efficiently.

As asset managers gear up for the seismic shift next year, a laser focus on trade capture is not just imperative for greater efficiency. Timeliness is also a strategic advantage in an investment landscape where agility and efficiency are the cornerstones of success.

Beyond T+1, a solid trade capture approach also enhances operational efficiency, and positions asset managers for success in a world where the search for alpha (delivering returns above the benchmark index) has never been more competitive. Investment in refining trade capture processes will undoubtedly yield dividends, ensuring that asset managers can navigate the challenges and, hopefully, take advantage of the investment opportunities that lie ahead.

By Steve Carlin, VP Product Management, AutoRek

Originally published on Traders Magazine