STP-Straight Through Processing

STP, short form of Straight Through Processing, means an efficient use of computers and technology for end-to-end processing of financial transactions. It includes different stages like Trading, Clearing and Settlement of instruments in capital markets without human intervention. 

With the introduction of STP 

• Processing cycles were reduced (in India it has come down to T +2 days from T +15 days). Still there is a chance to reduce the time of settlements. But some constraints, for example, inter bank money transfers taking more than a day are pulling back this. In coming days we can see T+1 or same day settlement cycles. 
• Systematic and operational risks have come down, if not eliminated. 
• Operating costs were reduced. 
• Errors were greatly reduced 
• Transparency was increased 
• Some pre-trade activities like availability of analytics to brokers and investors became so easy. 

STP was launched in India on November 30^th 2002. Global Straight Through Processing Association (GSTPA) was launched in September 1998 as an initiative to build a new model for handling information flow in securities trades. The aims of GSTPA are to streamline cross-border information flows to facilitate the settlement of cross border trades in a T+1 environment. At the core of the project is a transaction flow monitor, which is responsible for passing information to all relevant parties at each stage of the transaction process.

 

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