The next step in developing a worldwide system for cross border securities transaction processing has been taken by the Global Straight Through Processing Association (GSTPA). It has commissioned the Alliance grouping , led by Swiss depository body SIS SegaIntersettle, to handle the development of the system. Also, the Depository Trust and Clearing Coroportation (DTCC) and IBM are to work with the group.
The Alliance‘s project will include developing and running the transaction flow manager (TFM) system and messaging network. The TFM system will facilitate and control the information flows from post-trade to pre-settlement, and will interconnect investment managers, broker dealers and clobal custodians early in the trade processing cycle.
In addition to SIS, Alliance includes SWIFT, which will provide the SWIFTNet messaging services; TKS Teknosoft, a Swiss systems software group and Tata Consultancy Services (TCS). TKS and TCS will work together c to supply the central application TFM and the partiipant access module. The service management components, such as helpdesks, implementation and support, will be provided jointly by SIS and SWIFT,with all three partners looking after global sales, education and marketing support.
According to Ronny Vogt of SIS SegaIntersettle in Zurich, the project should take a year and by next February a pilot scheme to test the systems should be in place in a number of markets. “The cost is still open, but a figure for the whole operation is put at $100m.” The contracts and setting up of the companies to implement the development have yet to be finalised, but the costs will be funded 51% by the industry and 49% by the consortium members.
The US Depository Trust and Clearing Corporation, the US depository organisation, has been invited to work with the consortium, as it is interested in introducing a TFM -type system into the US. IBM has also been included as the system will be running on IBM hardware, Vogt points out.
The objective of the association is to cut the complexity, cost and risk associated with cross border securities processing. Its members are banks, investment managers, global custodians and broker dealers.