Steve Grob – Fidessa
There’s no doubt that T+2 has put a huge strain on the industry as it is cutting the effective time to clear and settle by a third. That said, it’s simply too important a process to let it fail and so I doubt that we will hear any immediate horror stories. What we will see is a lot of late nights as operations departments struggle with the extra workload.
Some buy-sides are actually abrogating their T+2 responsibilities to their broker who, for a fee, will wear the extra day.
In the longer term what we will see is much greater automation of process as firms recognise that simply throwing people at the problem is not tenable for reasons of cost and risk. This is where the buy-side, especially the smaller firms, will need to step up and take more responsibility.
Of course greater standardisation will help, too, and it will be those standards that emanate from the front office that will come to dominate. This is because they follow the natural direction of the workflow – from order to trade to allocation, etc., and so the same message can be enriched along the way. At the moment much of post-trade tries to do the same jigsaw again once the trade is confirmed.