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Handling failed trades: A case for standardization

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Brijesh Shah

Assistant Consultant, BFSI, TCS

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Industry

Addressing failed trade market risks through a buy-in solution  

A failed trade can trigger various financial risks down the ecosystem, causing potential financial losses, penalties, and credit risk downgrades for trading parties. This calls for standardization of the post-trade process with a solution that is less prone to market risks and has better liquidity management and consistent securities settlement capabilities. One of the significant solutions that accomplish these requirements is the setting up of a buy-in agent.

Some of the functional modules that an ideal buy-in solution must have are:

  • Comprehensive data management and all-rounded integration with external systems
  • Compliance validation and collateral calculation to mitigate liquidity and default risk
  • Support for auction or bidding to ensure a fair and unbiased process for all the stakeholders
  • Settlement instruction and response support to ensure speedy settlement while eliminating delays
  • Communication, reporting, and auditing with dashboard and API capabilities

 

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