A recent study conducted by Omgeo revealed a direct correlation between the percentages of Same Day Affirmation (SDA) scores with settlement efficiency. The data for the study came from SDA scores of firms using Omgeo services representing 46 countries and averaging 24 million trades/month and settlement efficiency rates as measured by Global Custodian surveys of agent banks and emerging markets. It was found that countries with SDA rates over 90% resulted in settlement efficiency rates 26% higher than that of countries with SDA scores of less than 70%. While I found this and other key findings of the study to be useful (see full results), what I found most interesting is that those countries with SDA scores over 90% include India, Hong Kong, Japan, Singapore and Korea. And, according to the other key findings of the survey, this means Asia has greater operational efficiency and lower operational risk. Curious now who had the lowest SDA score? That’s right, the US with a 53.8% average. According to the survey, the reason behind Asia’s high score has to do with regulation. Asian countries apparently have certain regulations in place that require timely trade matching or affirmation on T+0. So what gives? What’s holding the US back from putting these same regulations in place? Maybe too much attention on OTC regulation and not enough on other areas of the business? Whatever the reason, I would think the positive factors behind improving SDA and settlement rates would lead to higher profits. Isn’t that motivation enough for a recovering US economy?
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