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June 30, 2002

Progress on Efficient Settlement Plan

By Gregory Bresiger

Has the SIA found the Holy Grail of straight-through trade processing? Maybe. Maybe not.

The trade group's Institutional Transaction Processing Committee (ITPC) has released its model, which will be submitted to the organization's board of directors. The SIA hopes that the model will be accepted as the method for a T+1 standard.

"We received many comments on the February 2002 version of the model," according to Peter Johnston, managing director of Goldman Sachs as well as chairman of the ITPC. "These provided input that was invaluable in creating a model that the entire industry can adopt." The process described in the model is designed to provide for the timely receipt of electronic allocations and notifications by counterparties.

Today, affirmation and confirmation of trades are often done by telephone or fax. This process would be replaced by electronic matching.

Errors and Omissions

"By matching trades as soon as possible, errors will be identified and resolved earlier in the cycle," said Donald Kittell, executive vice president of the SIA.

The model will not be submitted to any regulator or be binding on the industry. Instead, said a spokesman for the SIA, it is designed to be a best practice standard that firms will voluntarily use.