FMSB Publishes Final SSI Standard
Posted by Colin Lambert. Last updated: January 28, 2025
The Financial Markets Standards Board (FMSB) has published its latest Standard, this time establishing best practice for the sharing of standard settlement instructions (SSIs).
FMSB says 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.
It adds that the most significant cause of fails at the settlement stage, after lack of inventory, is incorrect or missing SSIs, explaining that 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,” FMSB states.
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 (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.
It focuses on two areas, core principles for the channels, processes, and governance around sharing of SSIs; and 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.
“Failing settlement instructions are ultimately expensive for all market participants as well as the broader economy,” observes 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. “The further standardisation 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.”
David Hudson, who chairs FMSB’s post-trade committee, under which the Working Group, operates, adds, “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.”
In April 2022, FMSB was approached by the Bank of England and FCA to continue the work begun by the Post-Trade Task Force those two entities established and Victoria Saporta, executive director of the markets directorate at the Bank of England, says, “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.”
With a European move to T+1 emerging on the industry’s horizon, Andrew Douglas, chair of the UK Accelerated Settlement Taskforce Technical Group, says, “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.”