The Bank of England (BoE) has called for a new industry leadership group to improve innovation and efficiency in the UK’s post-trade processes.

This was the main recommendation to come from the newly published report, 'Charting the future of Post-Trade’, that details the findings of the industry-led Post-Trade Task Force (PTTF).

The task force was set up back in June 2019 by the BoE governor following the recommendations of the Future of Finance Review which noted that the post-trade sector needed to be more innovative and resilient.

The report focused on three areas – non-economic trade data; client onboarding and uncleared margin – where the BoE said change was both “pressing and feasible”.

Firstly, the use of manual processes was creating extra cost, duplicating effort and increasing settlement failures.

The report also found that in many cases, solutions already existed but a lack of standardisation and agreed best practices meant that the solutions were not widely adopted.

The PTFF highlighted the example of legal entity identifiers (LEIs) which it said are used to little and too late, as well as standard settlement instructions (SSIs) that were too often exchanged manually.

The PTTF’s work will now be taken on by a new post-trade committee to be formed by the FICC Markets Standard Board.

Among the recommendations are the development of best practices for the use of LEIs and SSIs; an investigation into the creation of a fully digitised post-trade system; and discussion of the work needed to make existing platforms more interoperable, or else the creation of a single KYC passporting platform.

“Post-trade systems and processes are the lifeblood of the financial system but these are also areas where innovation has lagged,” said David Hudson, PTTF chair and co-head of digital and platform services, JP Morgan. “Failure to innovate will inevitably raise the cost of financial services and pose risks to operational resilience.”

The report and its recommendations were also welcomed by the UK’s Financial Conduct Authority.

“This work is important to help support the efficient, effective functioning of wholesale markets,” said Edwin Schooling Latter, director of markets and wholesale policy and wholesale supervision. “We are pleased that the FMSB will be taking forward the work on the Task Force’s recommendations.”

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