Straight-through processing: Difference between revisions

Revision as of 19:27, 28 October 2023

Revision as of 20:10, 29 February 2024

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Industry practitioners, particularly in the United States, viewed STP as meaning "same-day" settlement or faster, ideally minutes or even seconds. The goal was to minimise [[settlement risk]] for the execution of a trade and its settlement and clearing to occur simultaneously. However, for this to be achieved, multiple market participants must realize high levels of STP. In particular, transaction data would need to be made available on a just-in-time basis, which is a considerably harder goal to achieve for the financial services community than the application of STP alone. After all, STP itself is merely an efficient use of computers for [[transaction processing]].

In the past, STP methods were used to help [[financial market]] firms move to one-day [[settlement (finance)|trade settlement]] of equity [[Financial transaction|transactions]], as well as to meet the global demand resulting from the rapid growth of online trading. Now the concepts of STP are applied to reduce systemic and [[operational risk]] and to improve certainty of settlement and minimize operational [[cost]]s.

=== Common misconceptions ===