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ISITC Working Group Releases Reference Data Best Practices for SSIs

The International Securities Association for Institutional Trade Communication (ISITC) market practice group on reference data has released a set of new market practices, which it says will be up for discussion at its next industry forum in March. The focus of the new recommendations is on custodian and broker standing settlement instructions (SSI) data and they are aimed at maintaining the consistency and efficiency of data management in this area.

The trade body periodically releases market practice recommendations such as these, which are tested within the industry and vetted by interested constituents before they are formally released. Genevy Dimitrion, chair of ISITC, explains that these latest recommendations are aimed at helping market participants to improve their operations and reduce risks.

The reference data working group’s “Market Practice Recommendation for the Communication of SSIs” creates a new template in order to establish uniformity in the communication of SSI data across counterparties. It is also aimed at reducing the amount of manual intervention required to process such data and covers all global markets, says ISITC. It is therefore designed to enhance SSI processing, irrespective of whether an investment manager uses an industry utility or an in-house database for SSI data.

“Increasingly, incorrect SSI data has created greater risk within the settlement process and this new market practice is designed to address this issue,” the working group says in its report.

The group is seeking to introduce minimum standards for the content of SSI messages between industry participants and proposes sample formats to be used by institutions using manual processes. It addresses the communication of these messages from the point of view of the investment manager so SSI data from brokers and custodians to the investment manager.

The settlement instruction types included in the document are delivery versus payment, free delivery and free receipt. The transaction types are for normal security trade settlement of equity and fixed income instruments, although the group indicates that cash and FX instructions will be dealt with in a later release, which is scheduled for the second quarter of this year. 

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