The UK’s Financial Markets Standards Board (FMSB) FMSB published a draft for Standard Settlement Instructions (SSIs) sharing. It applies to firms sharing their own SSIs, or where they manage their clients’ SSIs as part of their commercial relationship, for example where they perform custodial or prime brokerage services.
The proposal is structured in two main parts: a standard that proposes core principles for the channels, processes, and governance around sharing of SSIs; and proposed standardized templates, based on industry-standard taxonomy, for use in residual cases where SSI instructions are sent manually.
FMSB recommends that “SSIs should be entered and managed using electronic solutions that allow for standardisation and pre-authentication of settlement instructions, and which facilitate Straight-Through-Processing”. SSImple’s Bill Meenaghan, founder and chief executive officer, said in emailed commentary that this “represents a crucial advancement we’ve long advocated for”.
“SSImple urges custodians, prime brokers, buy-side and outsourcer firms, broker-dealers, and third parties to take advantage of this opportunity now. “Adopting this draft FMSB standard will significantly mitigate risks, streamline operations, and reduce costs. “Let’s come together to resolve the SSI issue once and for all via automation,” he said.
In April 2022, FMSB was approached by the Bank of England and Financial Conduct Authority to continue the work begun by the Post-Trade Task Force they established to remedy procedural inefficiencies. Amongst others, it recommended “Standardisation of data models and message formats for the automated settlement process”. Standardisation could also pave the way for future digitalisation and automation.