Speedier systems will help fund managers
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Your support makes all the difference.THREE electronic systems designed to allow large investors to confirm details of share deals on the day they trade are being launched this month.
The International Securities Market Association, which regulates bond traders, is in the final stages of testing Trax-Etc, which is an adaptation of its existing system for checking bond deals.
Thomson Financial Services will launch a rival service, Oasys, this week. And the London Stock Exchange plans to launch a new version of Sequel after testing is completed later this month.
All three systems, which were developed in response to an initiative by Fidelity, the international fund management group, are designed to make confirmation of deals quicker and easier.
Under the current system, after a fund manager buys shares, the broker through whom he has dealt has to send the purchaser a telex setting out details of the deal and arrangements for payment. This usually happens the next day.
The overnight delay is giving rise to growing problems as the time allowed to pay for shares is falling.
Under current arrangements in the UK, investors have up to four weeks to pay for shares they have bought but this delay is set to fall to 10 days soon after the launch of Taurus, an electronic system for replacing share certificates with electronic records, and then to three days.
The payment period is already down to three days in a number of overseas markets, making same-day confirmation especially useful for international share traders.
The three systems will compete for business but backers have agreed the specification for a link between them. This would allow brokers and investors to use different systems.
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