Talk of e-trading in OTC Derivatives taking off (I’ve been quite guilty of this myself) isn’t without administration issues that limit trading in general, phone or electronic.

This was mentioned at SIFMA by both sides of the market and certainly most Fund Managers are hampered in their efforts to expand their use of OTC derivatives (when mandated) by post-trade issues such as their OMS can’t handle these products to not enough “bums on seats” to process the paperwork. This is a priority for the buyside, at the expense of STP projects in more established securities such as bonds. However it is very chicken or egg; “can’t justify the spend on systems given the volumes but can’t increase the volumes without better systems”.

Take a look at this piece on OTC Derivative Challanges in the post-trade arena.

Amazingly 3 in 10 trade confos contain an error! Surely a great enough reason for the use of a far more low-touch workflow….including execution electronically. Get the information in electronic form from step 1 and you’ve got to decrease those numbers substantially…..unless you have nowhere for that e-flow to go…..