A shared back office (SBO), established as an industry
owned utility can internalize and process all these activities delivering
efficiencies, reduced risk and considerable cost savings. Additional benefits
of a shared back office include;
1. Free up capital, now allocated to back office technology
projects, for client service enhancements and revenue generating products and
services
2. Improve post trade process efficiencies
3. Reduce the number of transaction processed
4. Ease the transition to a shorter time between trade and
settlement
5. Generate timely and accurate metrics for industry participants
and regulators
Though this would be a major change, the industry has
faced similar challenges with great success. This change is similar in scope to
the establishment of Central Securities Depositories (CSD). This resulted in
brokers and banks moving physical securities from their vaults to the CSD so
that the certificates could be immobilized. This was a step towards eliminating
movement of physical stock certificates between industry participants.
This change appears to be a “win, win” for the industry.
Of course we need to select the organization that would provide the service and
define responsibilities of the members and service provider.
What do you think about this - If no, why not - If yes, it should it be
provided?
provided?
What organizations should coordinate development of this
service?
What are the benefits and / or downside?