Settlement fail has impact on a range of activities within financial institutions:
- Deal economics – can be materially damaged by buy-ins, penalties and the operational workload attached to fails, a situation that can be aggravated with the arrival of CSDR
- Trade execution – a higher risk of settlement fail may lead to negotiating a price premium
- Investment strategy – identifying higher fail risk may incite to avoid shorts on a given instrument or to look for substitutes
- Back-office – settlement activity data can be used to benchmark fail levels vs. the ‘market’, and to have supporting data to evidence back-office costs towards the front
From liquidity, transaction cost to risk, insight into settlement fails is a new instrument in your toolkit to aid in all these areas.