The “Straight Through Processing” (STP) process is an automated method for handling financial transactions from start to finish without the need for manual intervention. It was developed to increase efficiency, reduce processing time, and minimize the risk of errors. Here are some key aspects of STP:
Automated Processing: The core idea of STP is a fully automated process that allows information to flow from one stage of a transaction to another without manual reprocessing. This significantly reduces the time spent on processing.
System Integration: STP involves integrating various systems used by market participants, such as banks, brokers, custodians, and other financial institutions. This enables them to exchange data and documents efficiently.
Electronic Messaging: STP often includes the use of standardized electronic messages for data exchange between market participants. This reduces the likelihood of data entry errors and speeds up information processing.
Risk Reduction: Since STP minimizes human intervention associated with transaction processing, the risk of errors is substantially reduced. This is especially important when dealing with a large volume of transactions.
Speed and Efficiency: Thanks to automation and electronic data exchange, STP ensures speed and efficiency in executing financial transactions. This is particularly crucial in fast-paced and dynamic financial markets.
Monitoring and Reporting: STP provides the ability to monitor the status of transactions in real-time and generate corresponding reports. This offers market participants the necessary transparency and control over their operations.
Use of Blockchain Technology: Some companies and markets are experimenting with the use of blockchain technology to enhance STP processes, providing decentralized and more secure data exchange.
