The demise of the not-for-profit Global Straight-Through Processing Association, leaves City firms with only one STP system standard, OMGEO, for cross-border trades in the securities industry.
STP - the automation of the trade and clearing process for financial transactions - is one of the biggest challenges facing global financial markets. Currently much of the cross-border process is still done manually.
Industry experts said that market consolidation could be good news for users who would only have to connect to one STP standard. "I always felt OMGEO's offering was more comprehensive than the association's," said Mike Jones, chief executive of consultancy City Compass and chairman of MBA Systems. "There are some cases where a monopoly works better than a duopoly as long as the monopoly position is not abused."
Jones predicted a surge of investment in STP technology and a return in demand for IT staff with the network skills to connect different packages in the trading chain.
The association was created by 15 member firms in the global securities industry in 1998. Its main product, Transaction Flow Manager, was released in September.
By automating the trading process the association aimed to reduce the risk and cost of cross-border trades in addition to speeding up the process. STP negates the effects of time zone and trading hours differences which can lead to cash-flow uncertainties for banks.
Financial firms are also under political pressure to simplify cross-border transactions.
From July 2003, banks in the EU will no longer be able to charge more for low-value cross-border EU transfers than they do for domestic transfers.