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GLOBAL SECURITIES PROCESSING
"The more things change, the more they stay the same," goes the adage. That could be true elsewhere but not in the securities industry, which is in a constant state of change. Changes emanate from many sources: globalization, technological advancements, product innovation, and regulatory modifications. Each affects the processing of transactions throughout the financial industry. Each year brings new challenges and each year the industry meets those challenges.
As we approach the twenty-first century, globalization continues to offer exciting challenges to the processing areas of financial institutions. From new markets offering interesting investment alternatives to the ongoing changes in existing markets as they try to stay competitive, the scope of the effort necessary to accommodate these changes seems to grow each year. Whatever the situation is, transaction processing personnel must be ready to work through the required steps accurately and efficiently and to complete the settlement cycle.
Technological innovation continues to be a catalyst of change. Each passing day seems to bring a more error-free and cost-efficient way to process an entry. The benefits derived outweigh the cost of implementation. These advances occur both within and between financial institutional firms and industry entities. From new ways to accept a client's order to industry wide central sources for trade settlement, automation is very much a part of our lives.
As a result of competition among financial advisors and intermediaries, the industry continues to offer new products and modify existing ones. New approaches address changes in tax codes, factors of the economy, or the special needs of investors. Financial institutions are developing ways for all investors to accomplish their goals, from a parent looking for a way to secure the necessary funds for a newborn baby's college education to a major corporation looking to better match cash inflow to cash outflow.
Regulatory modifications have a huge impact on how we conduct business. Whether they are internal changes within a specific country or changes with a global impact, financial institutions must adapt. These regulatory changes range from a change in the settlement cycle of a particular product to the currency that will be used to settle all financial transactions. Doing business in different countries makes it necessary for a firm to be on top of any and all changes, both local and global.
This book was written to give the reader a snapshot of the processing side of the brokerage business. It tracks a transaction from order entry to final settlement. In addition, it describes the entities that function in many of the markets and explains the settlement processes used.
The book also includes sections on the securities we trade, what they are, and how they differ from one another. Product knowledge is important because it allows the reader to better understand why certain issues are processed one way and others are processed differently. The book also discusses how these various issues are first brought to market.
Because the security industry is constantly changing, it is a challenge to keep a book such as this completely up-to-date. Every effort has been made to provide readers with the most current information available. I trust you will find this book useful and meaningful to you as you pursue your career.
DAVID M. WEISS