While Northern Trust is certainly disappointed to see the GSTPA Utility coming to a halt, it also makes us take stock in what has been achieved and to look forward to where the industry is going.
It is easy to be the "Monday morning quarterback" and point out the potential reasons for GSTPA's bankruptcy filing, but more importantly, we should focus on the positives this venture brought about in the industry.
The GSTPA effort created a focused effort to build an industry owned utility, which met the very need it was intended for. The transaction processing Northern Trust experienced was high quality in terms of STP and timing efficiency. So it is true that the vision of GSTPA was correct, it is just unfortunate that other factors distracted participants from utilizing the potential.
Looking forward, we are now back to one matching utility, with talk of others to come. The environment is very different now given the unique ownership of Omgeo and the value of competition is removed for the time being. This situation will need to be closely monitored to ensure the price of services does not exceed the value.
Northern is hopeful that the external factors affecting the participation in the GSTPA do not jade the industry on the concept of matching. There is value in the efficient communication and matching of trade and settlement information as early in the trade process as possible. It is up to the industry to work in a concerted effort to ensure all parties see the value in electronic communications and to assist all levels of brokers, investment managers, and custodians to be able to realize the efficiencies.
These new industry efforts must include all interested parties, including the vendor community, and need to be made up from the standardized uses of communication formats, low-cost solutions from all service providers, and a continuation of the collaborative effort started by GSTPA.
Vice President, worldwide products group
Northern Trust Company
>>> To read the newsletter story to which this letter is responding, go to: https://www.wallstreetandtech.com/gstpastory