Post-Trade Integration: Shifting the Landscape

It is fair to say that many Settlement Agents and Custodians are still operating on legacy technologies, that were developed for local models versus the global markets we operate in today.

Despite this, the infrastructures that the industry are operating on continue to demonstrate resiliency to geopolitical events and other market disruptions.

However, this shouldn’t stop Settlement Agents and Custodians transforming their operating models. Innovative technologies are helping to drive this change and in turn clients are ensuring they have post-trade partners to support and enhance their business.

It is vital that Settlement Agents and Custodians alike, are being driven by ensuring that they are not only foreseeing the challenges but crafting solutions that build upon legacy post-trade processes to ensure uninterrupted flow and increasing efficiencies for clients.

We are often asked – what is the future of post trade?

No doubt we will see more harmonisation between financial intermediaries and settlement agents, making use of technology enhancements such as cloud-based systems.

In addition, as digital assets become more materially important to investors, this will have an impact on how such associated digital frameworks are structured and regulated. We may see Central Clearing Counterparties clearing digital assets alongside traditional asset classes.

Furthermore, continued usage of data will allow firms across the value chain to recognise operational efficiencies and optimise margin and collateral requirements. The use of Artificial Intelligence will be a key driver here to automate processes and reduce operational risks. Machine learning algorithms will also allow for more accurate risk assessment and collateral optimization. Moreover, Distributed Ledger Technology may play a significant role for greater efficiency and transparency. Besides, risk management and collaboration with regulators to ensure compliance with evolving regulations are key parameters which should not be underestimated.

While technology will play a significant role, relying on human expertise will remain essential, especially for complex decision-making and risk management tasks. 

Market industry will continue to leverage the experience of skilled professionals to ensure the integrity of post-trade processes. Collaboration with key business providers - custodians, settlement agents and regulators - will be crucial for developing comprehensive solutions that address the diverse needs of market participants and remain relevant to answer clients’ needs. This partnership-based approach will be instrumental in driving innovation and resilience.

Recent expansion of post-trade solutions, and lately with the introduction of a new ‘Clearing to Custody’ platform, allowing firms to benefit from an end-to-end solution across the value chain, through a single legal entity, leveraging on a best-in-class client support model, is one of the concrete answers Societe Generale Securities Services brought to the industry to address part of the aforementioned challenges.  

By combining Clearing services alongside our Custody business, access to highly efficient clearing, settlement and custody services in more than 85 markets, allowing for optimized liquidity and margin requirements are delivered in a fully integrated model.

Overall, it’s about leading to develop industry-wide standards and interoperable systems for a more seamless and cost-effective post-trade environment.

Societe Generale Securities Services stands poised to navigate the ever-evolving landscape with resilience, innovation and proximity spirit.

Discover our Clearing to Custody services.

Article published in The Network Forum Magazine.

Alessandro Cavallari, Head of international sales, and Steve Gutowski, Head of financial intermediaries and banks coverage, Societe Generale Securities Services.