With T+1 testing now underway in the US, the pressure is on for Europe to follow the lead. Fintech software provider Alveo suggests that the data-as-a-service approach may be a viable solution for industry players in the EU, especially since the bloc’s market comes with a unique set of challenges brought about by its fragmentation.
Compared to the North American market, the European securities market is a lot more complex. Unlike the situation in the US, which the article describes as “centralised”, there are multiple CSDs operating in the EU across different member states, leading to a much more fragmented market. The fragmentation is likely to become a bigger issue with T+1, when “business processes and integration between different systems and counterparties need to become much tighter as there won’t be much of a time buffer for any manual intervention, reconciliation or rework”.
The article proposes data-as-a-service as a “halfway house” solution that allows firms to keep their technology fully in-house while completely outsourcing their back-office operations. Firms will thus be able to benefit from the service of proven technology platforms for data collection and validation. Some examples of services include the “foundational layers that provide security master, legal entity information, and standing settlement instructions (SSI)”.