Five years ago conditions s nearly ideal to make straight-through processing of equity trades a reality. Key securities industry constituents had a shared objective; to automate every step of trading, from initial order to ultimate settlement. The benefits were so clear ― huge cost savings and reduced risk of settlement failures ― that more than 100 major brokerages, custodians and investment managers joined to form the Global Straight Through Processing Association, which aimed to ensure that several thousand frequently traded stocks could be processed without human intervention. And yet today no more than a quarter of U.S. equity trades are sufficiently automated to be settled within 24 hours a goal associated with STP that few people are even focused on anymore. Needham, Massachusetts-based consulting firm TowerGroup has gone so far as to declare that STP is dead ― the GSTPA closed up shop in 2002 ― and suggests that the industry redefine the mission.
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