The Global Straight Through Processing Association (GSTP) and vendor coalition partners axion4gstp are to begin pilot testing their solution for streamlining post-trade processing, following successful completion of user acceptance testing.
The pilot is the next crucial stage in the GSTP's objective for delivering a global straight-through processing solution for securities industry participants and slated for live production by year-end. GSTP is competing with a number of third party providers, inlcuding Omgeo and SunGard, to deliver a working solution for processing domestic and cross-border trades. Omgeo, a combined effort from Thomson Financial and the Depository Trust and Clearing Corporation, is set to begin beta-testing in August.
Pilot institutions drawn from the three constituencies of the securities industry (investment managers, broker/dealers and global custodians) are to begin passing trades through the GSTP's central Transaction Flow Manager (TFM) utility this month, says Art Thomas, chairman of GSTPA, chairman of the securities industry association steering committee and chief operating officer, Merrill Lynch Securities. He adds: "The GSTP solution is now a reality and will be critical in helping the industry (US and global) move towards the goal of T+1."
The first phase of the pilot is the 'Pilot Integration Testing', where participants test against the TFM system using a test engine, which emulates counterparties. This will ensure that the participant's applications can send and receive messages in the proper format, correct sequence and content, and that the pilot participants are able to process all business scenarios, relevant to their business.
The second phase involves scripted pilot testing against live counterparties. The pre-defined scripts represent a wide selection of securities instruments and address a broad range of different scenarios and are designed to demonstrate that pilot organisations are capable of effectively interoperating with counterparties to match trade and settlement details, using the TFM. During this period, operations at the pilot institutions will be set up. This will include systems, staffing and work procedures.
A parallel run of transaction processing against the TFM and conventional channels will conclude the pilot programme and ensure the operational readiness of participants as they prepare for live production year-end.
Steven Crosby, acting chief executive officer of GSTP, says the association has had tremendous support from the industry and its partners at axion4gstp to create a new industry-owned and industry-governed utility.
"It is an impressive achievement to have developed such a sophisticated system in this short amount of time and at such high standards. In total, it has taken only 18 months from selecting axion4gstp to delivering on our promise to begin piloting in July 2001," says Crosby.
Karen Moynihan, co-chair of the User Acceptance Group and vice president at JP Morgan Chase, adds: "Representatives from the securities industry have rigorously tested the utility and have been justifiably impressed. Considering the tremendous functionality and flexibility which the whole system offers, very few major errors have occurred and the results have been extremely encouraging."