Barings Asset Management, Citigroup and UBS have agreed to lead pilot trials of SSIFresh, a long-standing Isitc-backed initiative to shift the responsibility for maintaining settlement instructions from investment managers to custodians in an effort to improve straight-through processing rates.
Formerly known as STP-Lite, the SSIFresh concept has been bubbling under for more than two years. It posits a new model for settlement that calls on the custodian community to maintain trade data on local databases for download and enrichment by buy side clients. Lack of commitment by the custodian community has in the past been an obstacle to further development.
For the trials, participants are to use a centralised database containing SSIs for a number of dummy funds which will be populated and maintained by participating custodians. The suggested format for the initial SSI data input and subsequent update messages from the custodian to the database is the FIX4.4 Settlement Instruction Message.
For live use, the database could be within the investment manager’s IT architecture or be provided as a subscription service by a third party, and any form of bilateral or VMU-based messaging could be used.
The appointed overall leader of the initiative is Simon Leighton-Porter of Isitc, who has been pushing for the take-up of the concept since its inception. He says: "I am excited by the buy-side’s renewed interest in sorting this out, and would urge any securities firm who believes it is spending too much money on post-trade processing to contact me quickly, so that we can include you in our rollout plan."
If successful, the initiative could ultimately pose an alternative to Omgeo's Alert database of standing setlement instruction data - viewed with resentment by some financial market participants as an expensive, entrenched industry monopoly.