Correlation Between Same Day Affirmation (SDA) and Settlement Efficiency Revealed in New Omgeo Study
Omgeo released an industry discussion paper detailing a direct correlation between same day affirmation (SDA) and settlement efficiency. The correlation between high SDA and settlement rates was confirmed by comparing SDA scores from several Omgeo services (Omgeo Central Trade Manager (Omgeo CTM), Omgeo OASYS Global and Omgeo TradeSuite), representing 46 countries and averaging 24 million trades/month, with perceptions of settlement efficiency as measured by the Global Custodian surveys of agent banks in the major and emerging markets. Settlement efficiency in countries with SDA rates of over 90% – India, Taiwan, Hong Kong, Japan, Singapore and Korea – is 26% higher than in countries with SDA scores of less than 70% – Brazil, Italy, South Africa and the United States.
Marianne C. Brown, CEO of Omgeo, commented, “By demonstrating a direct correlation between SDA rates and settlement efficiency, this study has confirmed key factors that lead to greater operational efficiency and reduced risk in the financial marketplace. To date, global policymakers have focused on the downstream processes of clearing and settlement in their quest to improve the safety of the financial markets. However, this research demonstrates that the accuracy and timeliness of middle office functions should not be overlooked as a key enabler of settlement efficiency. In a T+2 environment, SDA is critical because it accelerates the post-trade process and leaves enough time to identify and address any errors and mismatches before trades are due to settle.”
John Gubert, Senior Advisor Unicredit GSS and Chairman of ISMAG, added: “"This is a sound empirical analysis which confirms to us, beyond all doubt, that same day affirmation improves settlement efficiency. The market needs to focus on higher take up of same day affirmation as a key tool in operational risk management. Unless we set our house in order, we may find that regulators, quite rightly, add our failings in this area to the list of their concerns."
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Fleming Group Collateral Management Conference
19-20 February, 2015
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Featuring Rick Enfield, Executive Director, Product - Collateral Management
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9th Clearing, Settlement & Custody Asia Forum 2015
11-12 March, 2015
Featuring Paula Arthus, Chief Executive Officer, Omgeo
Featuring Nellie Dagdag, Executive Director Sales and Solution Delivery, APAC, Omgeo
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