How have buy-side firms adapted to the Settlement Discipline Regime?

Penalty spot kick

How have buy-side firms adapted to the Settlement Discipline Regime and what are the operational challenges that remain? By David Veal, Senior Executive: Client Solutions, corfinancial®

The Settlement Discipline Regime is a new obligation stemming from the European Commission’s review of the Central Securities Depositories Regulation (CSDR), which came into force on 1 February 2022. These additional regulatory processes supplement the existing CSDR protocols and focus on enhanced controls and governance around trade settlement.

In this article we highlight anecdotal thoughts and feedback received from market participants and corfinancial clients who have been working with the proposed changes. Full details of this feedback can be found in this Discussion Paper.

Failed Trade Management and T+1 Lifecycle

Buy-side firms in Europe that trade in US instruments will soon have less time in which to allocate and fund stocks, resolve any settlement issues and comply with the CSDR’s new penalties regime.

Having access to a central source of executed trade data and being able to track transactions throughout the entire securities lifecycle is vital to facilitating settlement efficiencies. Clients want robust governance with which to minimise trade settlement failure. However, there are changes to operational processes and potentially regional coverage that need to be considered in future   environments that support global trading from Asia to Europe and the US, especially when a single middle office team manages this. Firms must work towards avoiding trade failure rather than managing this after the event. Having the right tools to achieve this in a near real-time environment is essential.

Cash Penalty Fees Management

 The provision of prime broker or custodian statements to support the reconciliation of cash penalty fees is improving, but there is still a way to go. The sentiment we received was that some parties still lack the full infrastructure to manage the timely provision of cash penalty fee data, so some may be choosing to absorb cash penalty fee debits rather than passing them on (although penalty fee credits are being sent). The argument is that penalty fee amounts are often too small, and net/net are not worth passing on. However, this approach certainly goes against the essence of the SDR cash penalty objective.

Automating The Processes

 Some feedback focused on the most effective trade records on which to base best practice controls and governance. It was suggested that some solutions base their primary trade position records on the market side of trades, whereas solutions like SureVu® centre on the buy-side view of executed trades. There are clear differences with how solutions in the space have been designed. It is uncertain how these different models will evolve in the lead up to T+1 and beyond.

The SureVu SDR solution from corfinancial was designed differently.

SureVu clients believe it is essential to manage post execution trade settlement positions from their own record of executed trades, not data assimilated by third parties.  

For a more detailed assessment of our investigations, please download our free Discussion Paper or contact us at and we will be happy to share our thoughts and details of how we help address the SDR challenges.

TCFD: helping the wealth industry make its mark on climate change


TCFD (Task Force on Climate-Related Financial Disclosures) reporting will be a challenge for many firms. While the initial requirements relate to larger institutions and certain client portfolios, firms with GB£5 billion-plus Assets Under Management (AUM) will also have to report with comparisons to data collected in 2023, meaning careful planning is needed now. This historic comparison data will add further to the complexity of the 100-plus data points in the Investment Association TCFD report template. In addition, this data will need to be aggregated across client portfolios for entity reporting. Lastly, there is clear direction from the regulator that on-demand reporting is expected to be made available to all clients in due course. So, there are significant challenges in TCFD reporting.

The UK’s Financial Conduct Authority helped set the pace for the global adoption of Environmental, Social and Governance standards in financial services when at the end of 2021 it became the first securities regulator to introduce mandatory TCFD-aligned disclosure requirements for asset managers and asset owners. This is already having a huge impact which will only grow.

The report content, in line with other sustainability-related regulatory required reports, has been proscriptive, which removes ambiguity, but does not necessarily make it easy. The Investment Association has published helpful templates for segregated and pooled fund portfolios. The first set of reports for institutions with over GB£50 billion in AUM will need to be submitted by the end of June 2023, to cover the 2022 calendar year; those with GB£5 billion-plus in AUM will be subject to the rules from 1 January 2023, with their first reports due end-June 2024. By that point, a full 98% of the UK’s asset management industry will need to comply with the Task Force on Climate-Related Financial Disclosures’ rules. Part of the challenge will be the requirement to provide a year-on-year comparison of the portfolio metrics reported.

A good deal of voluntary reporting has also been taking place, and pressure both top-down from regulators and bottom-up from investors will likely mean that most firms will want to get their TCFD house in order well ahead of the second-tier deadlines kicking in. This yoking together of compliance and client demands is a very welcome development for those who care about environmental action as we all should.

The TCFD report focuses on the investment organisation’s governance-related arrangements through a climate change lens and provides a consistent way of reporting the risks and opportunities faced in a portfolio as a result of it. It is safe to assume that most end-investors do very much want to be apprised of the climate impact of their financial holdings today, and it is certain that providing such insights will be a hygiene factor for tomorrow’s core client base. Research recently conducted by Compeer found that 80% of clients want access to ESG-compliant investments in their portfolio, with this figure rising to 94% for clients under the age of 40. With wildfires and floods making the impacts of climate change clear for all to see, the “E” reigns supreme among the Environmental, Social and Governance concerns investors want to see reflected in their portfolios now.

Thought leadership through technology
Whether a firm provides a sustainable investment offering – and an expanded TCFD report offers an opportunity to demonstrate this to clients – or not, the key to efficient reporting and avoiding issues will be a systematic approach. This brings the benefit of information and analysis across the client base, uncovering risks, providing calls to action, and giving insight to the investment manager and central investment teams alike.

At BITA Risk, we have always prided ourselves on having a finger on the pulse of both domestic and global regulatory change and cultivating a deep understanding of where the rule books might be heading – in light of both the spirit and the letter of the law. This has served us extremely well in developing our products to help keep institutions ahead of compliance changes, rather than just reacting to them. The range of institutions we work with has also enabled us to become something of a thought-leader and conduit for conveying best practices as the industry grapples with ever-changing regulatory regimes. As such, more and more we have a highly consultative role.

No doubt conscious that the UK’s institutions are having to cope with a barrage of new rules, not least its sweeping new Consumer Duty regime, the FCA is currently asking only for fairly limited TCFD reporting to clients. However, the expectation is clearly that all investors will have climate impact information at their fingertips in short order. Clients’ expectations for ever more personalisation being as they are, we can further predict that firms will need to be able to drill into these metrics in any number of ways too.

Having considered the requirements to provide year-on-year metrics at a portfolio level and to be able to aggregate metrics across client segments, we have suggested using this data to identify stranded assets, portfolios with climate risk exposure and to demonstrate a firm’s changing exposure through time.

With a structured data approach, communicating to clients the investment firm’s stewardship activity and mitigating reasons for holding carbon-heavy stocks, not only becomes easy, but drives a demonstration of the firm’s worth to the client.

How to make climate impact information relevant and readily comprehensible is not just a matter of client satisfaction, although it certainly is that; helping people to make investment decisions which reflect their priorities in the widest sense is what the disclosure rules are all about.

The TCFD rules aim to serve the most high-minded of principles, but as we help to steer capital to more sustainable deployment, the industry must stay firmly in the realm of their practical application too. We have been delighted to offer institutions guidance on firm, product and ad-hoc reporting requirements, metrics definitions, reporting templates and more. Personally, my work has never been more interesting, or more valuable in a societal sense.

Another portfolio monitoring lens
While climate impact disclosures are important from humanitarian and environmental perspectives, there is a regulatory drive to report soon. We like to emphasise to firms which may feel daunted, that this is just another lens through which to view portfolios – and therein arguably lies our particular strength. We have spent decades now enabling firms to master their metrics on performance, risk, suitability, and costs, meaning that we have abundant transferable insights on how to make TCFD reporting work optimally in everyday operations too.

Firms’ first concern will undoubtedly be how to avoid manual processes and being dragged back to “Excel hell”; then, relatedly, they will want to know which processes need to be in place to facilitate portfolio analysis and change. With profitability remaining under pressure, adviser productivity has to remain a top concern. Running analysis for individual portfolios and collating historic data will take time, as will aggregating across groups of clients for entity reporting. Creating structured data and an automated framework will alleviate pressure on the adviser and give the client a better experience.

These are undeniably challenging times for business leaders, but we see a gratifying proportion keeping the competitive advantages available from these pioneering reporting requirements front of mind. Here, we have been assisting institutions to develop trend reports to demonstrate progress on positive investment practices at both the client and entity levels to great effect. Helping the individual know the impact they are making will be a very powerful thing for both client satisfaction and retention. Being able to demonstrate the difference the firm as a whole is contributing is, in my view, a ready-made marketing campaign. I know that many Chief Marketing Officers agree.

In all, the TCFD requirements represent a particularly novel kind of compliance challenge, but one which we are seen leading firms rapidly embrace as an important differentiating factor. Sophisticated clients can already see that espousing ESG credentials is one thing, but that evidencing them robustly and acting on them is quite another. We look forward to working with even more firms in the latter camp as the industry moves to make its mark on climate change.

As leaders in portfolio monitoring and governance, BITA Risk analyses circa GB£180 billion of wealth management assets every night for a range of Wealth management firms. At our core is the quick, efficient analysis and aggregation of data, with seamless and efficient workflows for governance and client managers alike. We have extended our solutions to deliver what firms need now for TCFD, together with significant added benefits for the firm, following the IA (Investment Association) template as a base and then adding analysis and client-facing interpretations.

By Daryl Roxburgh, President and Global Head BITA Risk® part of the corfinancial® Group

If you would like to discuss the points raised, please email me at

In the next two reviews, we will look at the monitoring of ESG and Ethical Restrictions and then Consumer Duty. Sign-up here to receive these directly.

For more information please visit or contact us at

Time is money: the hidden challenges of T+1

Man squeezed

Man squeezedThe Securities Industry and Financial Markets Association (SIFMA), the Investment Company Institute (ICI), and The Depository Trust & Clearing Corporation (DTCC) last year published a report targeting the first half of 2024 to shorten the US securities settlement cycle from trade date plus 2 days (T+2) to trade date plus one day (T+1).

Perhaps this will be a first step toward broader coverage in other currencies, regions and exchanges. Proponents suggest that the immediate benefits of moving to a T+1 settlement cycle include reduced market risk and lower margin requirements, as well as significant cost savings.

A move to T+1 will certainly have its challenges: industry participants will have to align and implement the necessary operational and business changes. T+1 will pressurise the industry to get things right on trade date, which means more straight-through processing and less cumbersome or customised processes. In a T+1 settlement cycle, if a trade is executed today, the confirmation or affirmation process should occur on trade date – mostly at the close of business in the region – for the trade to settle the following day. There’s very little time for the firm to identify a mistake that could lead to failed trade settlement.

When industry executives consider T+1, a natural starting point for the conversation is from the US perspective. Most firms perceive the main challenges impacting asset managers based in the US, who are dealing directly with the DTCC locally. The truth is that the impacts of this truncation of the settlement cycle are actually far greater due to multiple factors stemming from the differences in time-zones for participants trading outside of the US. This article looks at some the operational problems of T+1 from outside of the US footprint.


Across the time zones
For a firm located outside the US, T+1 automatically becomes extremely difficult. For example, currently with a typical UK investment management firm its staff have ended their working day well before the markets close in the US. In a T+2 environment, many traders don’t complete the deal records until the morning of T+1. Occasionally they might log in at around 11pm to sweep up any unbooked trades, but if they don’t match perfectly with a broker the trade will remain unmatched until the operational team returns the following morning.

Under T+2 that firm would have an entire day to correct and instruct the settlement of the trade, so there would be little or no issue, although if the counterparty is a US broker, it will be early afternoon in the UK before they can fix it. If we put this scenario into a T+1 context, the firm has effectively lost a day. While a trade is in an unmatched status, the parties can’t confirm the net settlement amount for the cash component of the trade, impacting funding processes.


Stock lending, custodians and FX
There are additional complications if a party is participating in stock lending. A custodian, for example, will not know about a requirement to recall stock until an asset manager sends the trade instruction to sell. If an asset manager sends an instruction after markets close, there is little or no chance to recall stock on the same day.

This scenario will have an impact on the number of failed trades because there’s not enough time to facilitate settlement. The net result when the settlement cycle decreases will be that custodians may impose earlier instruction receipt deadlines. Furthermore, if stock is not readily available, then trades are going to fail. Service level agreements may also have to be revisited, as each party wants to protect their position and not be responsible for failed trade fees.

Many custodians allow UK-based asset managers to instruct on settlement day for US equities, but that’s because the US market is still open when the UK market has closed. Deadlines for asset managers in Asia may become even tighter as their day is ending before the US market opens.

In India, T+1 has already been introduced and many UK firms already feel the pinch because the market there closes around 11am GMT and some custodians are looking for instructions by or before 9:30am. As this new trading lifecycle is established, many UK asset managers may struggle to meet these deadlines, resulting in pre-funding issues and foreign exchange challenges.

Similarly, there have been discussions on the impacts in the broader Euro markets of moving to T+1. From experience we often see that if the US markets introduce change, the tendency is that other regions follow suit. With new Central Securities Depository Regulation (CSDR) impacting processes, there are potentially going to be more failing trades, therefore more penalties incurred. All creating additional headaches for asset management firms.


Changing working practices
At this stage, many asset managers will be establishing forums or working groups to understand their custodians’ requirements under T+1, to then formulate internal procedures to support T+1 when it does go live in the US markets. This might involve testing their operational team presence in the local market time for executed trades, so perhaps trialling support in US market hours to see how that might work in practice. Team shift-work, accommodating a much longer working day may well be the necessary endgame.

Indeed, the imperative to adapt operating models is an interesting yet challenging area for discussion. Changing local working hours is an easy statement to make, but every firm has a finite number of resources in their operational teams. Getting an even split between staff members would be key so that the workload naturally flows, requiring careful analysis and staff commitment to change. For example, if US hours are typically 2pm to 11pm GMT, then there is likely to be a trade processing bottleneck around 4pm when all euro and UK trades are often still being booked. However, UK based asset managers are anticipating very low volume activities between 6pm and 10pm, adding to the challenges of balanced resourcing in a lengthy window of inactivity.


When firms look at a move to T+1, it is essential that they fully comprehend required changes to the post-trade environment. This is even more crucial for firms that have not re-engineered legacy systems.

As operational efficiency and regulations bring technology to the fore, now is the time to overhaul dated technology and systems and move away from practices like batch processing, which is still common in a great number of companies around the world.

The many operational problems associated with T+1 can be alleviated by corfinancial’s Salerio® software. Salerio deals with confirmation, matching and settlement instructions management, helping the middle office deal with high volumes of trades that must be processed on trade date. Salerio achieves this through complex matching automation leaving users to only deal with exceptions, thus enabling firms to process high volumes of transactions in the most time-efficient manner. Our software takes control, because as soon as the firm can send an instruction to a custodian, the custodian can issue notifications on the matching and settlement status of trades that Salerio centrally manages.

Archer turns to Salerio to add retail trade processing

Archer logo

Boston, May 3, 2022 – corfinancial®, a leading provider of specialist software and services to the financial services sector, announces that Archer, a leading technology enabled service provider for investment managers, has extended their use of corfinancial’s  Salerio® Post-Trade Execution solution to commence trade processing for their retail services.

Headquartered in the Philadelphia region, Archer provides a robust ecosystem of technology and services to the asset management industry. An early adopter of Robotic Processing Automation, Archer continues to deploy advanced technology like Salerio to streamline processes for investment manager clients and their brokers.

“As more investment managers launch new products specifically for retail investors, we’re continuing to invest in technology that creates powerful operational efficiencies for our clients,” said Bob Lage, EVP, Global Head of Product and Technology at Archer. “At Archer, we’re always looking to upgrade our tools in ways that allow our clients to grow their businesses. By integrating Salerio into our trade settlement process, we are adding automation that creates significant efficiencies in matching trades across our clients’ counterparties.”

Archer used Salerio to migrate its institutional clients away from DTCC’s OASYSTM utility in December 2021 and began moving its retail clients in March 2022. This latest move with the retail application of the technology enables asset managers to match trades more rapidly through a centralized service. Specifically, Salerio facilitates enhanced connectivity to banks and brokers via DTCC’s CTMTM utility, including SWIFT messaging – all highly automated and fully integrated into the Archer IBOR, dashboards and reporting.

David Veal, Senior Executive for Client Solutions at corfinancial added: “Archer’s confidence in our Salerio solution is well-received and this recent change reflects the flexibility of our product to adapt to different operational processes, creating a comprehensive, centralized solution that can scale as our clients’ businesses grow.”

BITA Risk wins innovation award for its ‘ESG Manager’ private client solution

Wealth Briefing - Award-2022-Winner

London, 31st March 2022 – BITA Risk® (part of the corfinancial® group) announces that it won the coveted ‘Best Innovative WealthTech Solution B2B’ award at the Tenth Annual WealthBriefing European Awards 2022 for its BITA Wealth® ESG Manager private client solution.

Showcasing ‘best of breed’ services and solutions in the European region, the awards were designed to recognise outstanding organisations grouped by specialism and geography which the prestigious panel of independent judges deemed to have ‘demonstrated innovation and excellence during the last year’.

ClearView Financial Media’s CEO, and Publisher of WealthBriefing, Stephen Harris said: “The organisations and individuals who triumphed in these awards are all worthy winners, and I would like to extend my heartiest congratulations to the winners.”

BITA Wealth ESG Manager supports evolving ESG strategies by helping firms to understand, manage and monitor portfolio ESG exposures, enabling the integration of ESG analysis and reporting within a firm’s investment proposition.  Climate, impact, and ethical restrictions dovetail with investment policies to deliver analysis and governance to compliance teams and the wealth managers. This key differentiator enables client managers to deliver a better service to clients in the world of sustainable investing.

Commenting on the firm’s triumph, Daryl Roxburgh, President and Global Head of BITA Risk, said: “We are delighted to have won this award in recognition of our innovative approach to managing the complexities of ESG investments for private clients. While many firms have built sustainability into their central process, only a few can embody it in day-to-day portfolio management and demonstrate this clearly to a client while monitoring that they are in line with the client’s preferences and restrictions. This is what our innovation delivers.”

Wealth Briefing - Award-2022-Winner

corfinancial launches penalty fee management for failing trades under CSDR

SureVu helps buy-side firms manage failed trades under forthcoming changes to the Central Securities Depositories Regulation (CSDR)

London, January 19, 2022 – corfinancial®, a leading provider of specialist software and services to the financial services sector, announces the launch of SureVu® Penalty Fees Processing and Management. 

SureVu® helps buy-side firms manage failed trades under forthcoming changes to the Central Securities Depositories Regulation (CSDR), which requires trading venues and investment firms established in the EU to improve settlement discipline by 1 February 2022. These enhancements, known as the Settlement Discipline Regime (SDR), state that where a settlement failure occurs, depositories must impose cash penalties on failing participants.

SureVu supports complex processes associated with penalty fees management, with a set of management information dashboards that summarise data and priorities. SureVu reflects accumulating net fees, in multiple currencies throughout the penalty fee lifecycle. Furthermore, users can lodge and manage appeals against fees that are in dispute. Firms are adopting these new features to ensure they have a comprehensive solution and are ready to go live on 1 February 2022.

“Now that the European Commission has postponed the implementation of the Central Securities Depositories Regulation mandatory buy-in provisions following months of speculation, there are no further reasons to delay the deployment of a solution that supports failing trades. The postponement has created an opportunity for the industry to move forward and the time for action has come,” says Bruce Hobson, CEO at corfinancial. “A comprehensive solution like SureVu will ease the many additional operational burdens that are causing such industry-wide consternation. We suspect that these concerns essentially stem from the fact that many firms are still a long way away from having a tried and tested solution that is simple and quick to deploy.”

BITA Risk selected by Department for International Trade for virtual trade delegation to climate week New York City

New York Climate Week 2021

New York City, September 21, 2021 – corfinancial®, a leading provider of specialist software and services to the financial services sector, announces today that after a highly competitive evaluation process the Department for International Trade (DIT), alongside the City of London CorporationThe Investment Association, and the Green Finance Institute, has selected BITA Risk® (part of the corfinancial group), and ten other UK-headquartered FinTech companies specializing in ESG and #sustainability to join a virtual trade delegation to an international climate summit in New York during September 2021. 

The UK Department for International Trade is partnering with Climate Week NYC for a series of events concerning climate change from September 20th to 30th. The DIT will be showcasing BITA Risk’s award winning BITA WEALTH® software during the trade mission. BITA Wealth delivers a full spectrum of ESG Management capabilities to the advisor and investment manager.

A DIT spokesperson said: “These FinTechs have developed ground-breaking products and services that are already helping companies, investors, consumers, and regulators around the world overcome key challenges in ESG adoption.” Additionally, Daryl Roxburgh, President and Global Head of BITA Risk will be taking part in a roundtable discussion hosted by Rt Hon William Russell, Lord Mayor of London, on the future of financial services innovation as it applies to ESG. This roundtable will bring together FinTech experts from the UK and the US as well as ESG leaders in banking and asset management.

“ESG data, including carbon emissions, is key to investment management, whether viewed from client preference or investment risk and opportunity perspectives. Managing the complexities of this data and delivering bespoke, mass-customized solutions requires good FinTech. We are proud to be helping the transformation in investment transparency and are delighted that BITA Risk has been selected by the DIT for this historic event,” says Daryl Roxburgh.

For more information on Climate Week NYC, please click here

corfinancial’s Salerio selected by Man Group to migrate OASYS trade processing

System migration
London, 28 June 2021 – Salerio, the post-execution trade processing solution from corfinancial, has been selected by Man Group, the global active investment management firm, to assist in their migration from the OASYS™ US securities trade processing flows to the DTCC’s Institutional Trade Processing (ITP) CTM™ (Central Trade Manager) platform.

Last year, DTCC announced that it would decommission OASYS™ on 31 October 2021.

Man Group has been automating key post-trade processes, including trade confirmation and settlement for international securities, for many years using Salerio. It was, therefore, the natural solution to manage the migrating US trade confirmation workflow.

Salerio provides seamless connectivity to DTCC’s CTM platform and Man Group was able to manage the transition of US equity trades processing via OASYS to the CTM utility without the need for vendor support.

Antonio Dos Santos, Head of London Investment Operations at Man Group, said: “We wanted to ensure the continuity of our centralised post-trade processing in light of the changes soon being introduced by the DTCC. With Salerio’s rich workflow capabilities, the transition was a simple one and we moved most of our US equity traffic over to the Salerio CTM module with ease.”

David Veal, Senior Executive – Client Solutions at corfinancial, said: “Our post-trade processing solution is intuitive, making it easy for clients like Man Group to manage their operations with confidence. During 2020, we enhanced Salerio to ensure that it fully encompasses the changes being introduced by the DTCC that allows the processing of both US and international post-trade securities through the CTM service.”