The consortium and top sell-side firms will join forces to transform manual processes from the buy side into SWIFT messages.
SWIFT is paving the way for a pilot program that would allow small-to-medium sized buy-side firms to automate confirmations and allocations through their sell-side counterparties, confirm officials of the financial messaging services consortium.
Speaking at the SWIFT Operations Forum—2012 in New York, Chris Church, chief executive and global head of securities for SWIFT Americas, yesterday outlined a program, dubbed “Amigos,” whereby major broker/dealers would have their buy-side counterparties use SWIFT and Middle Office Solutions, a New York-based vendor, to transform faxes, PDFs, Excel spreadsheets and other manual processes into SWIFT messages. Jose Manso, executive vice president for sales and marketing at Middle Office Solutions, confirms that the company is working with SWIFT.
Middle Office Solutions’ offerings include the FailStation utility for aggregating failed trade and settlement pre-matching data for counterparties in real time. The company also provides STP consulting services to integrate financial information that connects those involved in the transaction process, including investment managers, custodians, and brokers.
With SWIFT and Middle Office Solutions acting as a service hub, the sell-side firms would be able to cut down on the risk, inefficiencies and high costs caused by the manual processes they encounter via small-to-medium sized buy-side firms, Church says.
Two major broker/dealers that SWIFT declines to identify have signed on to the pilot and two more will be needed for the project, expected to get underway by the end of this month, says Lou Piezzo, senior business manager, securities initiatives at SWIFT. After the pilot project, SWIFT hopes to go into production by the second quarter of this year. About 40 buy-side firms have expressed interest in the pilot.
The main driver for the sell side is a desire to do away with manual allocations and confirmations and they are hoping the set-up with SWIFT and Middle Office Solutions will be “a game changer,” says Piezzo. One sell-side firm told him that it spends approximately $60,000 per month on fax- and paper-based allocations and confirmations.
Church and Piezzo say that the broker/dealers will assume the costs for the allocation and transformation services. “We’re not looking to charge the buy side,” Piezzo says.
The SWIFT Operations Forum continues through today at the Marriott Marquis in Times Square.
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