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GSTPA and Thomson/DTCC Vie For the Edge in Global STP

The GSTPA and Thomson ESG/DTCC, the two main attempts in global straight through processing, struggle for supremacy.

Executives with the GSTPA AG and the yet-to-be-named combination of Thomson Financial ESG and the DTCC made their cases as to why their particular venture was the one to bet on in the race to achieve global straight through processing at a recent industry conference.

Executive Managing Director of Thomson Financial ESG Lee Cutrone says that the synergies of Thomson Financial and the DTCC make for a company with a compelling global presence uniquely positioned to provide global straight through processing. Cutrone also stresses the idea that Thomson/DTCC embraces the standards of XML and ISO 15022.

Additionally, says Cutrone, Thomson has excellent benchmarking abilities that are critical for firms looking to prepare for a T+1 trading environment, which the industry has slated for adoption in June of 2004. Detailed benchmarking, says Cutrone, will allow firms to know where they stand in terms of trade-processing efficiency. Pat Tsien, managing partner with Andersen Consulting, says that firms have to be ready for testing sooner than the deadline indicates because a deadline of June 2004 means firms must be ready to test their systems in the first quarter of 2003. "You can't manage what you can't measure," Cutrone adds.

C. Steven Crosby, acting chief executive officer of the GSTP AG, says that the support of dozens of firms who have signed on as members, concentrators, and participants in the pilot program for the GSTP AG utility indicates that axion4gstp--the company that will build their utility--is well positioned for success. He cites the facts that over 250 man-hours have been contributed to the utility by member firms and over 90,000,000 euros raised in a funding effort that only hoped to reach 50,000,000. "I think the industry has already voted with its feet and its purse," says Crosby.

Part of the appeal of the GSTP AG venture, he says, is that it brings investment managers, broker/dealers, and global custodians into one information loop. "It means the custodian comes out of the back of the bus," says Crosby. That and the shortened settlement cycle of T+1 should reduce the risk of trade failures thus providing firms with huge savings, he adds.

The GSTP AG, Crosby says, also endorses using ISO 15022 for its data dictionary and XML, which he calls the "Rosetta Stone" of protocols, for its utility which features a transaction flow manager that functions as a matching engine. "Creating new standards is the kiss of death," says Crosby.

The GSTP AG had originally asked Thomson to be part of its project to build a global transaction utility for cross border post-trade, pre-settlement information but would have basically required Thomson to turn over its commercial business to the venture. Thomson decided that such an arrangement was not to their advantage and chose to go it alone. Thomson's recent merger with the DTCC, which is awaiting approval by the SEC, makes the competing venture all the more formidable. Cutrone says he hopes to hear of a decision from the SEC by mid-November.

Cutrone adds that he is often asked by people in the industry whether Thomson/DTCC and the GSTP AG are going to inter-operate or if firms will have to make a choice and pick one of the systems. He says it is clear to him that the systems need to be linked in some fashion. "It's not a question of will it happen, it's just a question of working out the details," says Cutrone. "We recognize that any talks that start have to reach a satisfactory conclusion."

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