Northern Trust is one of 41 GSTPA member firms which collectively invested EUR90 million in the creation of a virtual trade matching system for connecting brokers, fund managers and global custodians. The GSTP's Transaction Flow Manager eventually went live in September after a prolonged build phase.

While the technology worked, volumes passed through the utility were low as the venture failed to attract a critical mass of fund management participants. With start-up funds exhausted, shareholders voted to dissolve the company rather than invest more cash in keeping it afloat.

Announcing the $4.8 million write-off on its investment, Teresa Parker, Northern Trust senior vice president of worldwide operations and GSTPA board member, says the failure of the initiative should be kept in perspective.

"The industry has made significant progress in recent years in the area of straight-through processing," she says. "As a leading global custodian, Northern Trust has made it a policy to support and promote viable STP initiatives. Northern Trust continues to support a variety of initiatives that promote straight through processing and other trading efficiencies, such as Omgeo, Continuous Linked Settlement (CLS), FXall, Equilend Holdings LLC, ISITC and Swift."

It remains uncertain whether GSTP participants will see any return on their investment. SunGard, the company brought in by GSTP head Jurgen Marziniak to provide facilities management services to the venture, has applied to the Securities and Exchange Commission for permission to establish its own VMU and may yet be interested in acquiring some of the GSTP's technological assets. Other possible buyers include IBM and rival scheme Omgeo.

Industry insiders are not holding their breaths. The failure of GSTP to rack up volumes implies a gloomy outlook for the central matching concept, with fund managers and others more concerned with tightening up their core internal operations than investing in overblown market-wide initiatives.