Written on: 27 January 2025

Financial Markets Standards Board (“FMSB”) has today published its Standard for Sharing of Standard Settlement Instructions (SSIs) as final. 

The Standard aims to increase the adoption of electronic solutions that allow for standardisation and pre-authentication of settlement instructions, and which facilitate Straight-Through-Processing, to improve the efficiency of SSI management by recipient counterparties and reduce settlement fails through incorrect SSIs.  

Where such electronic solutions are not legally or operationally feasible, the Standard includes templates for the manual sharing of SSIs. The templates have been designed in conjunction with ISITC (headquartered in North America and formerly known as the International Securities Association for Institutional Trade Communication) and incorporate an industry-standard taxonomy based on ISO 20022. They aim to minimise ambiguity around SSI data fields and allow for recipient counterparties to automate their ingestion. 

The Standard is structured in two main parts: 

  • Core Principles: core principles for the channels, processes, and governance around sharing of SSIs, and 
  • Templates: standardised templates, based on industry-standard taxonomy, for use in residual cases where SSI instructions are sent manually. 

The Standard is applicable to FMSB Member firms when sharing their own SSIs, or where they manage their clients’ SSIs as part of their commercial relationship (for example where they perform custodial or prime brokerage services), in relation to their clients’ SSIs. The Standard does not apply to firms’ management of their counterparties’ SSIs. Any firms who may not be FMSB Members are welcome to apply the Standard as well. 

Tim McLeod, Global Head of Securities Lending Operations and Head of International Investment Operations at Blackrock, who chaired the FMSB Working Group which developed the Standard, said: 

“Failing settlement instructions are ultimately expensive for all market participants as well as the broader economy. The further standardization of data fields, and automation of the sharing process has been critical for some time and has been made even more urgent as we approach T+1. We as a Working Group are proud to have produced a Standard that commits our Members to furthering the automation of SSIs wherever possible, while improving the process for manual sharing in these residual cases. FMSB as a forum has been invaluable for bringing together diverse market participants to get a solution to this longstanding issue and I would like to thank them for steering us throughout and getting to this stage.” 

David Hudson, who Chairs FMSB’s Post-Trade Committee, under which the Working Group, operates, said:  

“This Standard is the culmination of years of collaboration on the part of the Members of FMSB’s Non-Economic Trade Data Working Group as well as other industry participants. It represents a significant step forward in terms of the automation of post-trade processes which will reduce risk and cost for all participants in the market. Now it’s up to the industry collectively to bring this standard into generally accepted practice. FMSB Members are all committed to implementing this Standard, and I would encourage any firms, who are not yet FMSB Members, to invest in adopting it as well, or risk being left behind in terms of market evolution.” 

Victoria Saporta, Executive Director of the Markets Directorate at the Bank of England, said: 

“We value the work FMSB Members do, and I am particularly pleased to see the range of FMSB Standards expanding to cover post-trade efficiencies with the publication of this Standard for sharing SSIs, as well as the recent Standard on Client Onboarding. These Standards will allow many of the recommendations set out by the Post-Trade Task Force initiated by the Bank, to improve efficiency across post-trade and client onboarding processes including by establishing standardised document requirements and data definitions, to be operationalised across the market. We look forward to seeing the improvements these Standards can enable as they are adopted going forward.”  

Andrew Douglas, Chair of the UK Accelerated Settlement Taskforce Technical Group, said: 

“The Accelerated Settlement Taskforce (AST) is grateful to FMSB and all those who have contributed to develop this Standard. Timely investment in automation is critical to a smooth transition to T+1 and SSIs in particular have been one of the biggest causes of historical settlement fails. This Standard is a key part of our recommended ‘critical actions’ for firms preparing for accelerated settlement in the UK. Early adoption and implementation of the Standard will clearly contribute to increasing efficiency in the UK market which, in addition to saving adopters and their clients time and money, will make UK markets more attractive to overseas investors which benefits all participants.”  

Rich Robinson, Chair of ISITC, added:  

This effort highlights how global organizations such as the FMSB successfully collaborate with and leverage the work of ISITC to benefit the industry.  ISITC has multiple working groups and forums that develop market practices to increase operational efficiency on a global level. Our Reference Data Working Group has been active with SSIs work since the 90s, which it has continually updated through the years to meet the changing needs of the global marketplace. ISITC looks forward to continued work with the FMSB for the betterment and advancement of the industry.”   

Background 

Standard Settlement Instructions (SSIs) specify the “where” of delivery/settlement after the execution of any financial transaction. The most significant cause of fails at the settlement stage, after lack of inventory, is incorrect or missing SSIs.* Human intervention is necessary to resolve exceptions prior to settlement, especially to remediate incorrect SSIs. This inefficiency is likely to become a greater risk with more jurisdictions moving towards accelerated settlement, including the UK and EU’s planned move to T+1 in 2027, leaving less time to input or amend the correct settlement details. 

 A significant factor is the continued use of manual SSI exchanges, which are prone to errors from transposition, and due to a lack of standardisation in taxonomy and format, are difficult to automate for ingestion by the receiving counterparty. However, errors may also occur even with the use of industry-wide automated SSI sharing solutions, due to insufficient discipline around their usage.  

In April 2022, FMSB was approached by the Bank of England and FCA to continue the work begun by the Post-Trade Task Force they established. In Charting the Future of Post Trade the Task Force proposed recommendations to remedy these procedural inefficiencies. Amongst others, it recommended “Standardisation of data models and message formats for the automated settlement process”. Standardisation could also pave the way for future digitalisation and automation.  

FMSB creates all of its content by consensus with Members and consults on any proposed Standards via a Transparency Draft period. The manual templates included in the Standard were designed in conjunction with ISITC, in collaboration with their Reference Data Working Group, and we are grateful to them for their help.   

*Charting the Future of Post-Trade – Report of Bank of England Post-Trade Task Force, April 2022

About FMSB:  

  • Financial Markets Standards Board (FMSB) is an industry-led, member-funded global standards body for the wholesale financial markets.
  • Created out of the Fair and Effective Markets Review (FEMR) in 2015, FMSB brings together its Members from banks, investment institutions, infrastructure and information providers, corporates, pension funds and interdealer brokers, to develop Standards, Statements of Good Practice and Spotlight Reviews that raise standards of behaviour, competence and awareness – to promote the fairness and effectiveness of global wholesale financial markets.
  • As well as standard setting, subject matter experts from member firms debate issues in working groups and are able to benchmark their approaches against industry peers, thus helping to lift standards of conduct.
  • FMSB’s full membership list is here 

 For more information / media inquiries: 

Laura Conaghan
+44 (0)7929 72669
Laura.conaghan@fmsb.com

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