Straight From SIBOS: GSTPA Goes Live To Few Problems, But Few Trades

The Global Straight Through Processing Association successfully went live at the beginning of September, but cautions that asset managers who have yet to embrace the system are keeping volumes to a minimum, say industry executives speaking at Sibos.

The GSTPA is an industry association that was formed to design, build and operate a utility (the Transaction-Flow Manager) to facilitate the post-trade, pre-settlement-information matching of institutional trades. Such trades involve investment managers, broker/dealers and global custodians.

According to GSTPA Chief Executive Officer Jurgen Marziniak, firms that have participated in the launch include: Merrill Lynch, JPMorgan Chase, Morgan Stanley, Northern Trust and The Bank of New York.

Marziniak says that it's critical his utility embarks on a concerted sales and marketing campaign to get buy-in from investment managers, whose order flow holds the key to GSTPA's success. "We are live. We do not have great numbers of transactions going through, but we do have transactions," he says.

"The trade numbers are substantial but not vast," says Jeff Gooch, executive director, Morgan Stanley, who adds that most of the trades his firm has put through GSTPA are matched in less than 30 minutes. "That should be the standard," he says. "Especially if the industry ever plans to go through with T+1."

"There has been limited traffic to date," comments Karen Moynihan, vice president, JPMorgan Chase Investor Services. Moynihan says that her part of the firm, which functions as a global custodian, has been in talks with JPMorgan Fleming Asset Management (the firm's investment-management arm) about using Investor Services to link up with the TFM.

Arthur Barton, chief administrative officer, Clay Finley, says that using the GSTPA, instead of Omgeo's Oasys Global, will give the firm substantial savings. Clay Finley, which sends information to the TFM at five-minute intervals in what Barton calls "almost real time," expects to reduce its costs per trade from 2.09 euros to .3 euros.

Barton says his goal, as an asset manager, is to remove Clay Finley from as much of the post-trade process as possible -- to let the global custodian and broker/dealer work out settlement between them. "We don't want to be the middleman in the settlement process," says Barton.

Options for connecting to the TFM, via SwiftNet, include a single-user workstation -- for lower volume shops -- a multiple-user workstation, and a Gateway option for high-volume firms. Clay Finley has employed the single-user workstation option while JPMorgan Investor Services and Morgan Stanley are using the Gateway.

Though it has gone live and is processing cross-border trades overseas, the GSTPA has yet to receive regulatory approval from the Securities and Exchange Commission to operate in the United States without registering as a clearing agency. Marziniak says he is confident the SEC will grant that approval before the end of the year.

A panel focused on the progress of Omgeo, a competing effort that has been granted such approval, is scheduled for later in the week.