The need to transform post-trade operations in capital markets

Need for better post-trade infrastructure

The global capital markets sector needs better post-trade infrastructure for the future. The pandemic-driven volatility has demonstrated that post-trade systems need to be updated to ensure the capital markets ecosystem remains functional and risk-free.

Leveraging modern technology

To solve the post-trade problem, capital markets technology providers are offering solutions to digitalise the infrastructure, such as by using distributed ledger technology (DLT). DLT can enable execution of distributed workflow so transacting parties could share a real-time view of the same data because it is stored on a shared digital ledger. The technology enables parties to take control, collaborate and agree on how to execute the distributed workflow.

Examples of developments on the technology front:

  • In November 2021, the Swiss stock exchange (SIX) launched the SIX Digital Exchange, a fully integrated trading, settlement and custody infrastructure based on blockchain technology
  • Baton Systems has created a network using DLT to automate end-to-end collateral workflow for derivatives. It is already processing an average of USD15–20bn in transactions for traditional finance on a daily basis
  • In October 2021, HSBC launched HSBC MarketSpace, a platform that enables clients to access post-trade services and solutions from HSBC and other third-party service providers
  • Capital markets firms should collaborate and discuss with regulators the need to create global standards that could make post-trade processing easier and risk-free across regions and asset classes. If this happens, the resulting interoperability would drive digital transformation across markets, increasing demand for technology providers

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Acuity Knowledge Partners

Acuity Knowledge Partners

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We write about financial industry trends, the impact of regulatory changes and opinions on industry inflection points. https://www.acuitykp.com/