Affiliate Matching-Settlement: Control cross-border trading

As cross-border processing volumes for securities and other asset classes continue to increase, companies are looking to rationalise trade flows to reduce costs and boost efficiencies. With many firms looking to expand their global reach and match their clients’ aspirations, lower-cost entry options into growth markets such as Asia are essential.

For multi-entity organisations trading internationally, removing the need for each entity to have their own settlement mechanisms in every market can reduce counterparty, custodial and operational risk, and the costs associated with cross-border flows.

Affiliate Matching and Settlement is a new model which uses the infrastructure and clearing relationship of a local entity to settle and clear trades in that market for all global entities. Centralising clearing and settlement in this way enables businesses to settle trades in a timely and cost efficient manner.

Firms can consolidate their agent bank or central securities depositories (CSD) relationships. A reduction in custodial relationships helps to minimise risk exposure and users can reduce their settlement and messaging costs per trade too.

As demand for international portfolios continues to grow, banks need to consider how they support international settlement and clearing. A move away from the traditional multi-entity clearing approach towards Affiliate Matching and Settlement offers a cost-effective solution which is ready to meet future challenges such as continuous volume growth and expansion into new markets.

It is time to take control over cross-border processing, looking towards centralising solutions to increase efficiencies and help firms compete effectively in this complex market.