Chapter 9
Straight-Through-Processing
9.1 INTRODUCTION
Straight-through-processing (STP) is a set of working practices and systems that enable transactions to move seamlessly through the processing cycle, without manual intervention or redundant handling. Transactions in this context include not only orders and trades, but also the position-related activities such as corporate actions, accruals and mark-to-market processes, which are described in Chapter 23.
The key principles of STP are the following:
1. The transaction is entered into the firm’s systems only once – it should never have to be rekeyed into another of the firm’s systems.
2. As most investment firms need to record the transaction into more than one system, there need to be automated interfaces between all systems that need to store records of the order or trade.
3. Transaction processing should consist of a set of logical stages, each one being dependent on the satisfactory conclusion of the previous stage. No stage should commence until the previous stage has completed successfully.
4. Clerical intervention should be avoided as far as possible, but clerical staff should be enabled to manage by exception – that is to say that if one of the processing stages fails to complete satisfactorily, the fact that this has happened should be presented to skilled staff in a form in which they can deal with the exception in the most efficient manner.
5. Principles 1 to 4 above apply not just within the firm but also between ...
