Settlement fails: A buy-side and sell-side perspective on how to minimise them

Christopher Marzullo, Peter W. Kelly and Frederick Lipinski

Journal of Securities Operations & Custody, 2008, vol. 1, issue 2, 170-183

Abstract: The following paper is written by representatives from the buy and sell sides of the US fixed income securities industry. Its focus is on fail issues that are pertinent to the US markets. The authors are members of the Securities Industry and Financial Markets Association (SIFMA), an industry group that focuses on the needs and problems of the US fixed income markets. In the course of this paper, the authors will show the reasons why fails occur, as well as some of the reactive and preventative actions that may be taken to minimise the number of fails. The paper will also touch on some of the initiatives that have commenced within the industry towards managing fail risk and minimising the number of fails, as well as the number of actual trades that get settled during the course of an average business day. By providing a point of view from both sides of the market, the paper aims to offer a fuller understanding of the practices and procedures in addressing fail issues that vary on each side of the business. The reader will also take away knowledge of the industry's ongoing projects to reduce further the number of fails and the associated risk.

Keywords: fails; Depository Trust and Clearing Corporation (DTCC); asset manager; broker; round robin; netting (search for similar items in EconPapers)
JEL-codes: E5 G2 K22 (search for similar items in EconPapers)
Date: 2008
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