The US securities market continues to lead Europe in straight-through processing, but exceptions are costing all players up to a quarter of transaction profits, according to a survey of top capital markets firms conducted by SunGard EPI.
The research, conducted among the top 500 US and European securities markets firms between June and August 2000, found that average STP rates across Europe (41%) are now only fourteen points behind those achieved in the US (55%).
According to the survey, European countries’ understanding of true STP (which according to SunGard embraces "no or virtually no manual intervention") is now broadly similar to the US, compared with a distinct US lead two to three years ago. In both areas of the world, the level of understanding is now very close to those usually associated with FX operations - considered the most developed application area for STP in the financial markets.
SunGard, which markets real-time excpetion processing software, reports that most survey respondents agreed that automated exception processing provides a key element of competitive edge. However, European nations are more focused on using the technology to achieve cost savings, while in the US operations risk is the top priority. SunGard reports that US firms appear more aware of the financial loss caused by exceptions and of the importance of item level position reporting for reducing operations risk.
Brian Twibell, SunGard ePI President comments: "It is quite possible that European countries underestimate their potential financial loss precisely because the risk is not yet being accurately measured across the industry."