Deutsche Bank is set to launch early next year an enhanced securities settlement service that proactively identifies in-flight security transactions at risk of settlement delay.
The new service will enable Deutsche Bank’s clients to avoid financial penalties under the upcoming implementation of the new Central Securities Depositories Regulation (CSDR), which is due to go live in February 2022 after being pushed back due to Covid-19.
The regulation will require European central security depositories (CSDs) to automatically apply penalties to market participants who fail to complete transactions on the contractual settlement date, with the aim to harmonise aspects of the settlement cycle and settlement discipline.
The new service, which will be powered by Elastic, will use machine learning to consider seasonality, market variation and other changing dynamics, to detect the in-flight transactions that require actions and alert the bank’s teams before the transactions encounter issues.
Earlier this year, Deutsche launched its current real-time settlement service in Euronext, Germany and the UK, using the Elastic platform. This provides operations staff with a real-time view of the issues that can delay a transaction settlement, a stark contrast to traditional platforms which only provide a retrospective view of what has caused settlement delays.
Deutsche Bank’s director, data products, securities services Christopher Daniels, says: “Our aim is to deliver a real shift in how markets view exception processing and to bring pre-trade performance to our post-trade operations.”
“We can now detect transactions in real-time that previously would not be flagged as at risk, and divert our attention from the transactions that ostensibly appear to be at risk, but upon historical analysis have always matched in time to settle,” he adds,
Dan Broom, area vice president, Northern Europe, Middle East and Africa at Elastic, adds: “Deutsche Bank’s partnership with Elastic showcases the innovation that is achieved when deep domain expertise is paired with the Elastic Stack. Our machine learning and anomaly detection technologies are helping to fuel Deutsche Bank’s innovation and delivering a real game-change in settlement processing.”