Re: FYI: STP and T+1

Thanks for sending me your thoughts from the meeting you attended. These are
interesting, and definitely can relate to some of the things that we
discussed in Dallas. Please continue to send me any thoughts you have on the
subject. I will organize a recap of the recent work we have done in trying
to "size" the market for our services and get that out to all attendees
within the next week or so. --Sally

Richard Sage
03/07/2001 07:24 AM
To: Sally Beck/HOU/ECT@ECT
cc:
Subject: FYI: STP and T+1

Sally,
I went to a seminar on Monday evening organised by a consultancy called The
Capital Markets Company, who did the market analysis on the T+1 idea for the
Global STP association.
Attendees were UBS Warburg, Goldman Sachs, Morgan Stanley, Depository Trust
Company etc
The subject was nominally how moving to T+1 settlement in the financial
markets would affect STP, but it ended up going rather wider than that.
There were distinct echoes of some of the discussions at the ASE in Dallas,
so I thought you might be interested to see some of the thoughts expressed:

It seemed that every bank was hoping to be able to sell the back-office
services, but no-one seemed to be willing to buy!
Some people would only ever buy if there was more than one supplier, so that
there was a competitive market.
Somebody will eventually break through to be able to offer the services.
One cannot avoid having to understand processes by outsourcing - one needs to
understand the process in order to police the SLA.
Support personnel perceive that it will probably be 5 years before it becomes
so difficult to make more more in the front office that there will be serious
focus on saving money in the back office.
Nobody's compensation is realistically tied to achieving operational metrics.
Nothing will change until there is a crisis.
T+1 would just increase the number of fails. (this might be the crisis which
would drive out the weaker players which would mean that the remaining
players would be only dealing with better--organised counterparties which
would decrease the number of fails)
This last point prompts the thought that the quickest way to generate lots of
demand for EEO services from outside would be to have the standard cycle
times reduced (have FERC insist?). But we would have to make sure we could
cope to!