Choice & Competition in Post-Trade
Matching The Case for Cost Reduction
This discussion paper commissioned by Salerio has been produced to investigate the pros and cons of bilateral matching within financial institutions (FIs) against central
matching by organisations supplying third party services.
Financial Services firms are facing increased transaction
costs and volatile volumes that are currently at a decade low. To date, the matching of transactions has mainly been a dual
operation, with internal matches covering both front and middle offices to produce a transaction record, which is then matched
externally. This is essentially a doubling up of costs, but is only part of the overall transaction cost chain. This discussion
paper will examine how matching has evolved and look at the reasons why financial institutions should be looking to acquire
or develop their own internal matching to potentially downgrade reliance on third party matching suppliers and the benefits
this will bring.
Areas covered in this discussion document include:
History of matching Matching
today Omgeo SWIFT Transaction volumes Market complexity Reconciliation Market challenges Legal Entity Identifiers (LEIs) T+2 Is trade date settlement possible? Outsourcing Central matching Bilateral matching Transaction costs increasing Reducing overheads
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