SSImple announced the launch of a post-trade offering with an industry rule engine to ensure multi-asset class standing settlement instructions (SSIs) are entered correctly, thereby mitigating risk, creating efficiencies, and reducing costs for custodians/prime brokers, buy-side/outsourcer firms, broker-dealers, and third parties.
In terms of other immediate benefits:
- Custodians/prime brokers can automate their SSI delivery process to their buy-side clients
- Buy-side/outsourcer firms can receive automated SSIs as well as permission broker-dealers and third parties access to their SSIs
- Broker-dealers can receive automated SSIs from their buy-side clients via Excel or an easy-to-use Application Programming Interface (API), and
- Third parties can connect and enrich SSIs from their buy-side and sell-side clients.
It is estimated that €300 million ($329.5mn) of buy-in penalties, which have been live under the Central Securities Depositories Regulation (CSDR)’s Settlement Discipline Regime (SDR) since February 2022, may have been levied in the first 12 months alone.
According to AccessFintech, SSIs cause 30% of settlement failings, meaning that approximately €90 million in SDR penalties for TARGET2-Securities depositories are directly linked to incorrect SSI data or the incorrect SSI being used. With rising interest rates, staff resolution costs and the move to T+1 confirmed for the US and Canada in May 2024, fixing this problem will bring about significant cost savings.
Logical enrichment at the point of electronic trade confirmation, where SSIs are verified as a logical pair, will also ensure that the correct SSIs are selected, and, as systems develop, SSImple can interact with distributed ledger technology (DLT) databases to select the correct SSI based on DLT position keeping records. SSImple aims to ensure all entities who need SSIs can have access to them.
SSImple was founded by Bill Meenaghan, a member of the UK’s Accelerated Settlement Taskforce, who has over 20 years of experience having worked at State Street Global Advisors, The Depository Trust & Clearing Corporation and Omgeo, as well as IHS Markit (now merged with S&P Global).
“Poor SSI data quality is not a new problem; it has been around for many years. But it is unlikely to be solved if we stick with the process that is in place today,” said Meenaghan in a statement. “I’m passionate about simplifying the complexities of the trade lifecycle and that has led me to explore innovative technologies to improve the efficiency and automation of SSIs. SSImple uses immutable DLT processes to enable real-time updates and greater transparency in the SSI process.”
While SSImple has been built using R3’s Corda, it is also capable of interacting with traditional finance systems (TradFi compatible). Users can login into a graphical user interface (GUI) and upload/download SSIs using Excel or they can connect via a state-of-the-art open-source API. Any firm who wants to take a SSImple node and store it in their systems will be able to do so. SSIs will be stored in DLT nodes and when an SSI change occurs, each permissioned entity will get instant access to the updated SSI ensuring that all entities are using the latest verified SSI.
Meenaghan said in a statement: “I have listened to my peers and the aim must be to further enhance the accuracy, speed, and security of the settlement process, especially with T+1 on the horizon, benefitting all the parties involved. Most custodians still share SSIs using PDFs, Excel, or Word over email. Automating this outdated process is an absolute must for shorter settlement cycles. That is my focus and I look forward to helping reimagine the way SSIs are stored, shared, and enriched across the industry.”