Global institutions have to process vast numbers of settlement fails across the many regions in which they operate. They have no way of knowing what those volumes will look like in a year. After CSDR, these firms will have to aggregate fails across numerous settlement platforms and different asset classes. With the need to update operational processes and procedures in order to comply with CSDR, it makes sense to address settlement fails as a whole.
Market participants are increasingly focused on finding strategic solutions and leveraging new technologies, as the given sheer number of trades fail to settle globally in systemically important asset classes. Artificial intelligence (AI) plays an important part in helping to reduce and improve the settlement fails process. The role of AI and other technologies, such as machine learning, will be key in addressing CSDR requirements. Financial institutions should also consider the computing power and flexibility of the cloud.
Cloud can be key to minimizing costs when scaling solutions across markets and regions. Many firms have been focused on preparing their operations for compliance with the new rules. For those prepared to look at the bigger picture, CSDR is a wake-up call. By this they can address the broader, longstanding issues around global settlement fails, which have become more acute in the months following the pandemic-induced volatility.
So, for global houses, what more can be done on top of simply complying with the regulation when it comes into force, the cloud should be in the picture as an integral part of the solution.