SunGard is in the process of registering as a S.W.I.F.T. Electronic Trade Confirmation (ETC) Service Provider, which will instantly provide SunGard customers with access to S.W.I.F.T. messaging to facilitate the communication of post-trade confirmation and allocation data.
According to SunGard, the new service will be highly advantageous to clients of the SunGard Transaction Network (STN)--which is a business-to-business network comprising SunGard customers and other market participants--as they attempt tomove in the direction of straight-through processing (STP) and a T+1 settlement cycle.
By becoming an ETC service provider and leveraging its MINT Knowledge Broker, which will provide connectivity between SunGard's network and S.W.I.F.T., SunGard customers will be able to communicate settlement instruction messages over S.W.I.F.T. without having to build expensive S.W.I.F.T. capabilities in-house.
SunGard acquired the MINT Knowledge Broker--which Chris Conde, president and chief operating officer of SunGard, calls "a technology for linking incompatible systems"--when it bought an Israeli company, Oshap Technologies, which, in turn, owned two companies: MINT and Decalog. Till Guldimann, senior vice president of strategy for SunGard, says the acquisition was made with a definite strategic eye on the MINT technologies--some technologists that developed the original product are still with SunGard.
According to Conde, having S.W.I.F.T. connectivity will enhance the value that customers already see in the SunGard network--a value that, in part, arises from attention to contingencies such as trade failure and how it can be resolved in an automatic fashion. He adds that SunGard is also one of the few companies to automate the repair process of failed trades, thus truly reducing the amount of manpower required to monitor the trade cycle.
"There are banks that say they have automated but they have the same amount of people working there," adds Guldimann. "That is because they have not automated the repair process for failed trades." He says that the reason companies like SunGard have so much integration work on their hands is because of the tendency over the last few decades for companies to specialize in one technological area of the trade lifecycle, leaving many points in the chain isolated. SunGard, he says, connects the dots with an eye on STP.
The SunGard network links asset managers with broker dealers, brokers with exchanges, exchanges with banks, and banks with settlement agents and custodians. Often in those relationships, people tend to concentrate on the entry and exit points of a trade in terms of straight-through-processing (STP) efficiency, according to Conde. He says that a trade usually needs to pass through many systems between those two points, such as during the post-trade confirmation and allocation process, when failures can just as easily occur. Automated repair capabilities, he says, are essential in achieving T+1.
Connectivity to S.W.I.F.T. messaging will also be offered to new SunGard clients on an application service provider (ASP) basis. Conde says that until SunGard is approved by S.W.I.F.T. as an ETC, they cannot sign on clients for the service, but he adds that testing, which is being conducted with S.W.I.F.T., should be completed some time in the fourth quarter.