STP-Straight Through Processing
ADVERTISEMENTS 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 30th 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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Sathish Emmadi is a co-founder & editor at Lastbull.com. He is presently working in IT for one of the world’s top mutual fund companies. Handled multiple projects in BFSI (Banking,Financial Services and Insurance) domain. An Engineering Graduate from NITW.
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