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New Approach in STP: Inching Closer to Reality?

New Approach in STP: Inching Closer to Reality?

Despite relatively flat spending on operational improvements and lack of industry focus on STP, financial institutions are improving operational efficiency with four key initiatives that are bringing them closer to an STP environment. In this report, we h
By Adam Honoré

Boston, MA, June 7, 2006 – According to a new report by Aite Group, LLC, the industry will spend about US$15 billion on brokerage, clearing, and exchange fees in 2006. In reviewing recent trends, the Aite Group expects the financial services industry will sustain a Compound Annual Growth Rate (CAGR) of 18.95% over the next four years. The estimate is based on increased trading activities and expansion into global markets and alternative investments. This growth indicates a willingness by financial institutions to inflate operational initiatives in lieu of larger technology spends to more effectively manage increasing trade volumes. Moreover, while there are many small efforts underway, the Aite Group has discovered a few consistent initiatives back office personnel are making to improve their ability to clear and settle transactions.

In this report, Aite Group provides insight into trends in operational improvements based on trade pressures, industry focus, and priority setting. Several vendors are highlighted where they contribute to specific initiatives.

According to Adam Honoré, author of the report, "STP has transformed into quiet, sequential initiatives solving immediate pain points. While financial services firms still have a very long way to go, the market is driving renewed efforts in STP. As trade volumes continue to rise, cost will also climb. Further, expansion in product lines and global opportunities create new challenges for existing operations personnel. If you compound that with new market and compliance regulations, dealing with trade exceptions and general customer inquiries, firms are clearly experiencing some growing pains in their operations groups."

This is a 31-page Impact Report. Clients of Aite Group's Wholesale Banking, and Institutional Securities and Investments services can download the report.