How gpi can cut post-trade costs in capital markets
Juliette Kennel, Head of Securities and FX at SWIFT, recently spoke to Asset Servicing Times about how capital markets firms can utilise gpi to help solve one of their biggest challenges: excessive post-trade costs.
Pressure on capital markets
Capital markets are under pressure. Institutions are faced with challenges including regulatory compliance, the higher cost of capital, the tightening squeeze on fees and margins, in tandem with
demands from customers for greater transparency and real-time data.
Kennel commented that a major issue for firms is excessive post-trade costs and that pre-gpi, there was no way of knowing whether it had reached the beneficiary, what fees and charges were deducted, or whether the payment was altered along the way, until it arrived – or failed to arrive.
With this in mind, capital markets firms have been increasingly looking to new technology and services to help improve transparency, cut costs and boost profits.
Shifting the focus to the back office
Historically, firms have focused on investing in the fastest technology to improve execution and customer-facing activities. This has improved productivity, reduced costs and transformed the
speed and efficiency at which trades can be executed between participants all over the world.
Kennel argues the next logical step is to look at improving back-office processes, which can be costly and opaque. Getting complete visibility allows potential problems to be detected and resolved earlier in the process while pre-validation also minimises the risks of inbound and outbound payments containing inaccurate information.
“Tools such as gpi also reduce the time spent investigating and reconciling unmatched payments and gpi case resolution helps resolve client queries faster.”
Helping intermediaries adapt
SWIFT gpi is live and being used around the world. Every day, payment transactions with a total daily average value of $300 billion are sent via gpi. More than 3,500 financial institutions are signed up for gpi, including all of the largest global custodian banks and investment banks.
Kennel said, “They and their customers are already able to track and trace payments made in the capital markets, and network effects are accelerating the rate of adoption.”