STO STP Updated 18Dec2013

8/12/2019 STO STP Updated 18Dec2013

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1 COPYRIGHT 2011 SAPIENT CORPORATION | CONFIDENTIAL

STP Implementation in STOA case study

How IT services in STO reduces risk, cost & provide better client experience by automation?

How STP manage trade throughout its lifecycle?

Akshaya PandeyRajeev KumarJaideep Datta

STO : Securities Trading Organisation STP : Straight Through Processing


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What we will do during this Presentation?

Setting Expectation of Presentation

Understand Trading

Brief introduction of STO and its Department.

Understanding of STP (Straight Through Processing)

Benefit of STP

How an individual could fit into System?

Real implementation of STP

Technologies used to implement STP

Question Answers


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Security TradingWhat is Security?Securities are equities or debt (debentures)

of publicly traded companies that are bought

and sold through brokerage firms.

What is Trading?Trading securities is the act of buying and

selling securities with the intention of making

profit. Brokerage firms and investment

advisers recommend buying securities for

the anticipated long-term appreciation of the

company. Trading securities involve the

same stocks and bonds available to all

investors on public exchanges.

How trading happens in past?Trading happens in past using Open outcry. This was a

method of communication between professionals on a

stock exchange. It involves shouting and the use of

hand signals to transfer information primarily about buy

and sell orders. The part of the trading floor where this

takes place is called a pit.

How Trading Happens Today?Trading happens today using ECN(Electronic

Communication Network),an automated system that

matches buy and sell orders for securities.

display the best available bid and ask quotes frommultiple market participants, then automatically match

and execute orders. They not only facilitate trading on

major exchanges during market hours, they are also used

for after-hours trading and foreign currency trading


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STOSecurities Trading Organisation

Departments in STO

Static Data

Reconciliation

Compliance

Treasury

Accounting

Research

Risk Management

Internal Audit

Information Technology

Challenges Faced by Industry Operational Risks

- Scalability- Manual Errors- Non Standard Techniques- Data Mismatch

Settlement Risk- Delays in Delivery/Non Delivery

Competitive Pressures- Uneven Trade Volumes- Cost- Time Consuming

IT Supported business area in STO

Static Data Order Management

Trading

Settlement

Risk Management

Reconciliation


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STPStraight Through Processing

STP can be seen as a way of security transactionprocessing system characterized by seamlessautomated communication among parties (as against

sequential, manual exchange of information), realtime processing (as against batch processing), andvirtual processing(as against physical processing).

The key to STP is that a single system is used for theentire processing. Global experience shows that amajor disadvantage of using multiple systems is non-synchronization of data between different links in the

processing chain.

Internal STP relates to the trade and settlementprocesses that are internal to an industry participant.On the other hand, the external STP is aboutconnecting seamlessly to all external partners in thetrading and settlement process including theindustry-matching utilities.

Many companies are able to appreciate that STPwould lead to high operational efficiency andincreased trade volumes arising out of reduced risk

andfewer trade failures. It is strongly recommend that the companies should

also look at standardizingSTP to achieve the ancillarygrowth parameters. The benefits associated with STPstandardizing could lead to increased cross-bordertrading and greater transparency with clear audittrail.

THE TRADE LIFECYCLE

Trade Execution

Trade Capture (Front Office)

Trade Capture (Back Office)

Trade Enrichment

Trade Validation

Trade Agreement

Transection Reporting

Settlement Instruction

The Role of Custodian

Settlement Instruction Status

Settlement Failure

Trade Settlement

Reflecting Records Internally

Trading

Activities

Operational

Activities


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Straight Through Processing

STP is an objective to manage the trade throughout its

entire lifecycle with minimal human intervention.

How STP helps? Minimize Human Intervention

Lower operational risk.

Lower business dependency on human resource.

Trade validation done efficiently reduces irregularity in P/L of STO

Scalable

Lowers Costs once system is in Place

Reduces Time to Process

Ability to Handle Variable Volumes Ability to generate Reports/Messages in Different Format

Settlement done in less time and high accuracy.

All above is required for better client Experience.

Skills Required to create a IT solution

Understand Business Need (Business Analyst) Interpret business need to fit into IT solution (Solution Architect)

Plan & Manage the project within agreed time & budget (Program

Manager)

Develop or adapt the software to meet business need (Developer & QA)

Support / Resolve on-going project (Support Analyst)


7/97 COPYRIGHT 2011 SAPIENT CORPORATION | CONFIDENTIAL

Solution-Implementations



Solution-Implementations-Technologies Used

Technologies/Methodology Used

Environment Windows, Unix/Linux, As400

TechnologiesLanguage Java, Oracle/Sybase, Sell Scripts, .Net, XML, C++, CORBA

Tools Development

Messaging Queue/WebSphere Message Broker (MQ/ESB),

Informatica, Control-M/Auto-Sys, Apache Camel, Crystal Report,

Golden Gate

Management

Subversion, JIRA, Share Point, Confluence, Crucible, Team City,

Urban Deployment

Supporting Eclipse, Altova Xml-Spy, TOAD

Servers Apache Tomcat, WebSphere, Weblogic, As400

Communication

Style Synchronous, Asynchronous, Batch

Protocol MQ, File, Socket, http (SOAP, Servlet, etc)

End Point Point-to-Point, Publish Subscribe

Markup FPML,FIX,SWIFT, etc

Methodology Development Agile, Waterfall, Scrum,Extreme Programing(XP),TDD,etc

Estimation Functional Point, Wideband Delphi,etc



!Thank You!

Question Answers

STO STP Updated 18Dec2013

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