Automation could reduce certain post trade processing costs for cash securities by 20% to 25% for large broker-dealer firms, according to a survey by Depository Trust & Clearing Corporation (DTCC).
The survey. which identified seven areas of savings. found that by leveraging post-trade automation, firms can eliminate redundancies and manual processes, reduce associated costs, and mitigate operational risks.
DTCC polled nine global broker-dealers to assess their operating costs and estimate efficiency as well as cost savings potential by using the range of institutional trade processing (ITP). solutions.
The survey revealed that large global broker-dealers that typically spend around $150m to $175m globally on post-trade services related to cash securities, can reduce headcount by implementing a no-touch processing workflow.
In addition, automation can significantly lower repair charges, technology expenses as well as claims and fees.
Drilling down to the operational areas, adoption of ITP solutions could per firm, save large broker dealers $10.8m in settlements, $7m in trade support, $5-$10m in financing and $2m in asset servicing. Other savings per firm include $5.4m in technology and $1.5m in Standard Settlement Instructions (SSI’s) reference data.
For mid-sized and smaller broker-dealers, the use of a no-touch workflow could enable higher levels of automation and increased scalability. This would help them more efficiently and cost effectively handle volume spikes.
“The findings of our survey highlight the benefits of leveraging automated post-trade solutions to reduce the costs of operational functions and the risk inherent in manual processes,” said Matthew Stauffer, managing director of international trade processing at DTCC. “The adoption of a no-touch workflow allows firms to focus their resources on the parts of their business that create true value.”
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