STP/T+1 Value Proposition Survey
October 15, 2002
Canadian Capital Markets Association (CCMA)
Contents









Executive Summary
Survey Approach
Survey Results
Survey Results Are Conservative
Transaction Correction Costs
Operational Efficiency
Operational Risks and Financing Costs
Other Benefits
Survey & Extrapolation Results
– Broker/Dealers
– Investment Managers
– Custodians
– Other Participants
 Appendices
– Participants – Model Review and Summary
– Participant Assumptions and Caveats
– Benefits Canada Extract
– Assumption Validation
– Risk Definitions
– Project Process and Timelines
– Model Template by Industry Segment
– Survey Data Collection Sheets
1
Executive Summary
 CCMA’s Value Proposition Survey was commissioned by the CCMA and conducted by Cap Gemini Ernst & Young Canada Inc.
(CGEY) between April 26, 2002 and June 24, 2002, with further validation taking place during the summer. The survey
represents the first step of the Communications Workstream of the CCMA Industry Plan of February 2002. Participants surveyed
represented key stakeholders from the Canadian Securities Industry Value Web.
 The survey suggests that straight-through processing(STP)/T+1 initiatives can realize significant benefits to the Canadian capital
markets. Of the annual expected benefit conservatively estimated at CDN $190.3 million, 72% or CDN $137.3 million can be
attributable to STP. The survey focused on domestic institutional trades and excluded retail and cross-border trades where
additional benefits may be realized. Also, as the analysis is based on current trade volumes, benefits could be higher if volumes
rise. The survey focused on benefits and no analysis of related costs is provided.
– Transaction Correction Cost Reductions (surveyed) CDN $35.0 million
18%
– Operational Efficiency Gains
CDN $42.3 million
22%
– Operational Risks and Financing Cost Savings
CDN $45.0 million
24%
– Infrastructure Savings and Opportunities
CDN $5.0 million
3%
– New Revenue Sources
CDN $10.0 million
5%
– Annual Benefits from STP
CDN $137.3 million
72%
– Reduction in Default Risk from Moving to T+1
CDN $53.0 million
28%
– Total Benefits from STP and T+1
CDN $190.3 million
100%
 The survey also suggests that efficiency resulting from STP may be a better motivator to continue with current industry initiatives.
In addition, with the revision to the Basle Capital Accord, operational risk represents an area of opportunity for bank-owned
operations to reduce risk-based capital allocation requirements. In addition to participant responses, the survey collated
information from reports published by the Securities Industry Association (U.S.), The TowerGroup and The Forrester Group.
Where U.S. industry numbers were used as the basis, benefits were estimated conservatively to factor in market and data
differences.
2
Canadian Securities Industry Value Web Stakeholders
3
Participants
Surveyed
Survey Approach
 The Canadian Capital Markets Association launched a survey to quantify the benefits of STP/T+1 for the
Canadian Securities Industry. The CCMA intends to use this information as a part of its continuing
communication process to the industry and stakeholder groups.
 Custodians, Broker/Dealers, Investment Managers, Infrastructure Providers (Exchanges and Depositories), and
Transfer Agents were contacted to develop and validate the model designed to quantify benefits arising from the
lowering of transaction costs attributed to improved STP, reduced errors and manual intervention. The model was
then distributed to a number of industry participants and their Associations.
 Working with the CCMA, CGEY developed a four-step approach to collect and collate the information:
Industry segments
develop and validate
the model to quantify
benefits.
Model is
distributed to
survey
participants.
Participants
confidentially
populate model.
CGEY aggregates and
extrapolates for industry
segments; participants
and associations review
and validate the results.
 Participants used readily available data to populate the model. Survey responses were collated and extrapolated
for each industry segment where appropriate. Participants’ assumptions and caveats were also captured and
reported.
 Participants validated the extrapolated results and this report.
4
Survey Results
Based on survey feedback, there are six areas where STP/T+1 can benefit the Canadian Securities Market:
Potential Benefit
%
Reduction in Transaction Correction Cost Reductions
CDN $35.0 million
18%
Improvement in Operational Efficiency Gains
CDN $42.3 million
22%
Reduction in Operational Risks and Financing Cost Savings
CDN $45.0 million
24%
CDN $5.0 million
3%
CDN $10.0 million
5%
Annual benefit from STP
Reduction in Default Risk from Moving to T+1
CDN $137.3 million
CDN $53.0 million
72%
28%
Annual benefit from STP and T+1
CDN $190.3 million
100%
Infrastructure Savings and Opportunities
New Revenue Sources
STP
T+1
72% of the benefits identified by the participants were STP-related.
5
1
11
1
12
221
2
32
332
3
43
443
4
54
554
5
65
665
6
6
6
Survey Results Are Conservative
 The analysis of benefits in each of the areas on the preceding page is provided on the attached sheets. The
results should be read in conjunction with the assumptions and caveats identified by survey participants (see
page 18) and with regard to the following limitations (with others noted in this report) that suggest that the survey
results are conservative:
 The analysis is based on current annual trade volumes. If trade volumes increase in future years, the
benefits could potentially be much higher.
 The survey focused on domestic institutional trades. The Canadian Depository for Securities Limited (CDS)
reported the volume at 5.77 million trades annually. Cross-border trades of 12 million and retail activity of
28.1 million that settle through CDS were not included in the survey, however, they have been identified as
areas where additional benefits to the industry may be realized.
 SWIFT estimates that cross-border trade repair costs are in the region of USD $6 to $16 per trade (source:
The Forrester Group, The Real Benefits of T+1, September 2001). Considering that there are 12 million
cross-border trades a year (source: CDS), the error correction costs associated with these trades could be
significant.
 The survey did not cover other stakeholders in the Canadian Security Industry Value Web for whom STP/T+1
could realise some benefits:
–
–
–
–
–
–
Institutional Clients
High Net Worth Retail Clients
Retail Clients
Financial Planners
Retail Broker Front Office
Issuers
 Potential Basle Operational Risk capital savings are excluded as they cannot be quantified.
6
Transaction Correction Costs
 The initial focus of the CCMA survey was transaction correction costs. STP/T+1 is expected to lower the
percentage of transactions requiring correction and, hence, the transaction correction costs.
 Without considering growth in volumes, survey participants expect a reduction in transaction correction costs:
 Broker/Dealers surveyed expect the percentage of transactions that require intervention to be reduced by
84%. Applying the incremental cost per transaction requiring intervention, and extrapolating over the annual
institutional trade volumes of 5.77 million (source: CDS), this represents a benefit of $24 million. Over 85% of
the savings come from receiving trades electronically and on a timely basis in an STP environment.
 Investment Managers surveyed expect the percentage of transactions that require intervention to be
reduced by 84%. As a result, the transaction correction cost is expected to be lower, resulting in savings of
CDN $320,000. Based on data from Benefits Canada (Nov. 2001 edition) the total assets under management
for participants surveyed was CDN $144 billion, representing 12.5% of the industry. When extrapolated over
the industry of about CDN $1.15 trillion (Benefits Canada), this represents a potential savings of CDN $2.5
million for the Investment Manager industry.
 Custodians surveyed expect the percentage of transactions that require intervention to be reduced by 70%.
As a result, per-transaction correction cost is expected to be lower by CDN $ 1.47. When extrapolated over
annual institutional trade volumes of 5.77 million (source: CDS), this represents a benefit of CDN $8.5 million.
 Infrastructure Providers (Exchanges, Depositories) and Transfer Agents expect minimal reductions (if
any) in the percentage of transactions that require intervention and hence, the benefit is not expected to be
significant. However, participants identified some related benefits such as CDS’s System X/CDSX and
potential revenue opportunities that have been captured on the attached sheets.
 Taken together, the reduction in transaction correction costs can realize benefits to the industry in the region of
CDN $35 million annually.
7
Operational Efficiency
 The SIA T+1 Business Case almost entirely attributed benefits from T+1 to result from operational efficiency due to STP. While
the survey focused on transaction correction costs, participants identified other areas of operations where STP will yield benefits.
As the survey did not include all aspects of operations, participants indicated the need to highlight any related benefit.
 The SIA T+1 Business Case Study (July 2000) estimated the annual net benefits from STP/T+1 to be in the region of US $2.7
billion, mainly relating to the following participants:
 Investment Managers in the Trade Agreement Phase resulting from reduced reconciliation and resolution activities due to (i)
matching of NOEs to allocations by utilities, (ii) reduced effort to create allocation sets at the investment manager, and (iii)
improved error resolution processes for broker/dealer and investment manager;
 Broker/Dealer in the Settlement Agreement Phase resulting from reduction in time and effort associated with reconciliation
and error processing with the use of (i) match reports, (ii) automation in figuration process, and (iii) standing settlement
instructions.
 Custodians in the Settlement Phase resulting from (i) early notification of trades that will expedite credit and risk issues, (ii)
use of alternative payment systems that eliminate physical cheque processing, and (iii) immobilization of shares eliminating
physical processing of certificates.
 The SIA is updating the T+1 Business Case and is expected to provide a more current analysis of the potential impact of
STP/T+1 on operational costs. While we await the results of this update, if we conservatively expect that one-half of the net
benefits from the original study will be realized, this translates to U.S. $1.35 billion in annual cost savings to the U.S. industry.
 If we consider that the Canadian marketplace is roughly five per cent* of the size of the US, given similar assumptions,
operational efficiency that the Canadian industry can conservatively realize is CDN $ 101.3 million (computed as US $1.35 billion
* 5% *1.5). After excluding the benefit from a reduction in transaction correction costs of CDN $59 million (survey), the net
benefit could be in the region of CDN $42.3 million.
* See page 20 for assumption validation
8
Operational Risk and Financing Costs
 During the survey, participants identified Operational Risk (see definition on page 20) and Financing Costs as areas where
STP/T+1 will realize benefits to the Canadian industry. The survey had a short life cycle and did not include Operational Risk or
Financing Costs within its scope. However, participants indicated the need to highlight these areas of benefit.
 The Forrester Group, in its report The Real Benefits of T+1 (September 2001), estimated that STP/T+1 will reduce operations
risk and financing cost in the U.S. marketplace by $2.4 million daily. Assumptions include:
 Daily percentage of incorrect stock and bond trades of 1.0% and 2.5% respectively;
 Daily U.S. stock and bond market volatility of 1.0% and 0.6% respectively (based on standard deviations of actual daily
returns on the S&P 500 and 10-year Treasury from August 2000 to August 2001);
 Daily stock and bond trade volumes of 20,000 and 1,000 respectively, with average stock trade to be 5,000 shares at $25
and the average bond trade $10 million;
 Up to 0.25% of deliveries are delayed by one day and the financing rate is 4%.
 If we assume the Canadian marketplace to be five pe cent* of the size of the U.S., and with similar assumptions, one
conservative estimate of reduction in Operational Risk and Financing Cost in the Canadian industry is CDN $180,000 daily
(computed as U.S. $2.4 million * 5% * 1.5). Extrapolated over 251 trading days (source: CDS), this translates to CDN $45
million.
 Participants have indicated that Operational Risk requires attention since the Canadian market is relatively more volatile than the
U.S. due to differences in industry composition. Also, with the revised Basle II Capital Accord, bank-owned operations, such as
dealers, have an opportunity to reduce risk-based capital allocation requirements if operational risk reductions can be
demonstrated.
* See page 20 for assumption validation
9
Other Benefits
 In addition to identified savings relating to transaction correction costs, participants identified the following additional areas where
benefits may be realized:
 Infrastructure Savings and Opportunities.
– CDS expects the industry to benefit from the implementation of System X/CDSX, which will allow T+1 settlement . An
initial estimate of the annual savings is in the region of CDN $5 million. This excludes any savings that could result
within participant offices.
 New Revenue Sources.
– The Toronto Stock Exchange forecast approximately 20% of its data services growth or CDN $10 million in the next
five years to come from more real-time data demand in an STP securities processing environment.
 Generic Certificates.
– Transfer agents identified the possible move to generic certificates to be an area where some benefit may be realized.
Similarly, savings will also be realized by issuers. However, these benefits were not quantified.
 Reduction in Default Risk.
– While the survey did not include default risk (see definition on page 20) within its scope, participants indicated the need
to highlight this area. Today, only 22% of the daily institutional trades of CDN $137 billion are reported to CDS by T+1
(Source: CDS). Even though principal risk may be minimal as settlement infrastructures insulate market participants
from one another, the balance, 78% or CDN $106.9 billion, is exposed to some replacement cost risk.
– TowerGroup estimates that about 4% to 5% of trades (in the U.S.) fail to settle on time. Reasons include: (i)
Counterparty has no instructions; (ii) Counterparty has returned shares; (iii) Counterparty has not delivered shares; (iv)
Clearing/principal broker incorrect; and (v) Counterparty short of shares.
– With STP/T+1 initiatives (matching utilities, standards, etc.), the number of trades that fail due to the above reasons
should substantially reduce. Even a 0.05 percentage point reduction in fail rates can reduce the replacement cost risk
(default risk) by CDN $53 million (0.05% of CDN $106.9 billion), presenting the Canadian industry with some benefits.
10
Survey & Extrapolation Results
11
Survey & Extrapolation Results: Broker/Dealers
 Broker/dealers provided data on the following transaction correction elements:
 Trade data not received electronically;
 Trade data not received on a timely basis;
 Trade data does not match with custodian;
 Invalid trade.
 Broker/dealers surveyed reported current annual trade volumes in the region of 0.88 million. To obtain results for
the participant segment as a whole, the benefits were extrapolated using institutional trade statistics from CDS
(5.77 million annual trades). This survey did not measure the benefit from the 28.1 million retail trades processed
through CDS annually.
Expected Percentage Reduction in Transactions that Require Intervention….
60%
50%
40%
30%
Current State
STP/T+1
20%
10%
0%
Not received
electronically
Not received on
timely basis
Does not match with
custodian
12
Invalid trade
Survey & Extrapolation Results: Investment Managers
 Investment Managers provided data on the following transaction correction elements:
 Cost of faxing data to the custodian;
Expected Percentage Reduction in Transactions that Require Intervention….
 Revisions to/cancellations of trade;
 NOE/Confirms/Affirms not received electronically;
16
14
12
 Missing or late NOE from broker;
10
 Trade does not match with custodian;
8
 Allocation instruction not sent electronically;
4
6
2
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0
Current State
STP/T+1
 Investment managers surveyed had CDN $144 billion under management. This represented 12.5% of the
industry group as reported by Benefits Canada (Nov. 2001 edition).
13
Survey & Extrapolation Results: Custodians
 Custodians provided data on the following transaction correction elements:
 Trade data not received electronically
 Invalid trade
 Trade data does not match with broker
 Trade data not received on a timely basis.
 Custodians surveyed reported current annual trade volumes in the region of 4.4 million, corresponding to 77% of
the market. The results were extrapolated across 5.77 million trades (based on institutional trade statistics from
CDS). CDS settled cross-border trades of 12 million and retail activity of 28.1 million were not included in the
survey.
Expected Percentage Reduction in Transactions that Require Intervention….
30
25
20
Current State
15
STP/T+1
10
5
0
Not received
electronically
Does not match with
broker
Invalid trade
14
Not received on a
timely basis
Survey & Extrapolation Results: Other Participants
Infrastructure Providers (Exchanges and Depositories)
 The surveyed results were based on discussions held with representatives at the Toronto Stock Exchange,
Bourse de Montréal and CDS. They excluded the impact of potential savings in the offices of the
participants/clients of these organizations.
Transfer Agents
 Transfer agents provided data on the following elements:
– Storage space for blank certificate inventory;
– Cost of blank certificate inventory audit and control;
– Cost of certificate issuance;
– Participant deposits/withdrawals through System X;
– Bank note certificate printing charges.
 Infrastructure Providers and Transfer Agents expect minimal reductions (if any) in the percentage of transactions
that require intervention and hence, the benefit to Transfer Agents is not expected to be significant. As noted,
issuers are expected to benefit from the reduction in certificate holdings in favour of electronic and this
is not reflected in the survey.
15
Appendices
Participants
Participant Assumptions and Caveats
Benefits Canada Extract
Assumption Validation
Risk Definitions
Project Process and Timelines
Model Template by Industry Segment
Survey Data Collection Sheets
16
Participants – Model Review and Summary
 Custodian
 CIBC Mellon Global Securities Services Co
 RBC Global Services
 State Street Trust Company Canada
 Citibank Global Security Services
 Northern Trust Company
 Transfer Agents
 CIBC Mellon
 Computershare
 Pacific Corporate Trust
 Exchanges and Depository
 Toronto Stock Exchange
 Montreal Exchange
 CDS
 Broker/Dealers
 CIBC World Markets
 Credit Suisse First Boston
 BMO Nesbitt Burns
 RBC DS
 Others
 Investment Funds Institute of Canadfa (IFIC)
 Investment Dealers Association of Canada (IDA)
 FundSERV Inc
 Security Transfer Association of Canada (STAC)
 Investment Managers
 Elliott & Page Ltd.
 Ontario Teachers Pension Plan
 Jones Heward Investment Counsel Inc.
 AIM Funds Management Inc.
 CDP Capital
 Cundhill
 OMERS
17
Participant Assumptions and Caveats
 Survey participants and the CCMA have made the fundamental assumption that trade matching on T+1 or STP
will be mandated and certain requirements will be enforced on the industry. (Canadian Securities Administrators
to mandate STP/T+1 compliance).
 To estimate potential future benefits, participants have assumed that the industry will have key infrastructure
components in place. These include the Virtual Matching Utility, consistent reference data, the Canadian
Depository for Securities Ltd. System X/CDSX for settlement (March 2003) and accepted industry standards and
practices for securities processing.
 Virtual Matching Utility connectivity will be mandated directly or indirectly (e.g., though mandating matching on
trade date) and there will be enforced compliance.
 The survey submission by individual survey participants will be kept confidential and only summarized results will
be included in the final report.
 As estimates were done on a best-efforts basis, actual benefits may vary.
 Where no surveyed data or sufficiently strong assumptions could be made, estimates of savings should not be
developed (although the potential for savings could be mentioned) to ensure that savings identified are
conservative on an overall basis.
18
Benefits Canada Extract
19
Assumption Validation
Assumption 1:
The Canadian market is roughly five per cent of the size of the US.
 Market Capitalization. Based on 2001 statistics provided by The World Federation of Exchanges
(www.world-exchanges.org), the market capitalization of NYSE, AMEX and NASDAQ was roughly USD
13.826 trillion and of the TSX was CDN 976 billion (USD 644 billion). The Canadian market capitalization as
a percentage of the U.S. is roughly 5% (computed as USD 644 billion/USD 13,826 billion).
 Securities on Deposit. Based on 2001 statistics provided by the U.S. Depository Trust and Clearing
Corporation (DTCC) and CDS, the dollar value of securities on deposit at the depositories was USD 23.3
trillion and CDN 1.7 trillion (USD 1.1 trillion) respectively. Using this statistic, the Canadian market size as a
percentage of the U.S. is roughly 5% (computed as USD 1.1/USD 23.3 trillion).
Assumption 2:
Retail trade volumes in Canada are in the region of 28.1 million annually.
 As per statistics provided by CDS, total trading volume for 2001 was 45.8 million.
 Of these, 33.8 million represented domestic trades and the balance, 12 million international (cross-border).
 CDS also reported that domestic institutional trades were in the region of 5.77 million.
 As a result, domestic retail trades are assumed to be 28.1 million (computed as 33.8 less 5.77 million).
20
Risk Definitions
 Operational Risk: Potential loss resulting from incorrect trade entry due to inadequate or failed internal
processes, systems, or human error or from external events.
 Credit Risk: Cost of replacing trade when counterparty fails to deliver cash or securities according to the original
contract terms of the transaction.
 Principal Risk: Loss of principal when counterparty defaults after receiving irrevocable delivery of one side of the
trade.
 Default Risk: For the purposes of this document, defined as the risk of an insolvent counterparty being unable to
complete the transaction, and the related cost to replace the transaction at prevailing market price. Also know as
“replacement cost risk”.
 Settlement Risk: Principal and replacement cost risk plus liquidity risk; the risk that an obligation will not settle
when due.
21
Project Process and Timelines
Custodians
Broker/dealer
Investment Managers
April 26
April 27
May 2
Identify Value
Proposition
with
participants
Create
spreadsheet
and validate
Participants met
to revalidate
model
May 6
May 7
May 13
Identify Value
Proposition
with
participants
Create
spreadsheet
and validate
May 13
May 14
May 21
Identify Value
Proposition
with
participants
Create
spreadsheet
and validate
Participants will
meet to
revalidate
model
May 31
Exchanges
Transfer Agents
Industry Summary
Identify Value
Proposition with
participants
Participants met
to revalidate
model
May31
Create
spreadsheet and
validate
Participant’s
populate model
June 5
June 7
June14
Compile data
from
participants
Validate
completed data
with
stakeholders
Analyze and
extrapolate
June 19
June 21
June 24
Compile data
from
participants
Validate
completed data
with
stakeholders
Analyze and
extrapolate
June 14
June 18
June21
Participant’s
populate model
Compile data
from
participants
Validate
completed data
with
stakeholders
Analyze and
extrapolate
June 6
June 7
June 14
Compile data
from
participants
Validate
completed data
with
stakeholders
Analyze and
extrapolate
May 31
June 3
June 14
Participant’s
populate model
Participant’s
populate model
May 17
May 17
Identify Value
Proposition
with
participants
Create
spreadsheet
and validate
Participant’s
populate model
Compile data
from
participants
Validate
completed data
with
stakeholders
Analyze and
extrapolate
May 23
June 13
June 14
June 24
June 21
June 13
Brain storm
final deliverable
format
Interim Report
Add Custodian
Section
Add
Broker/Dealer
Section
Add Investment
Managers
Section
Add Exchanges
and Transfer
Agents
22
June 28
Present draft to
CCMA and
decide next
steps
Survey Data Collection Sheet: Broker/Dealers
CCMA T+1/STP Benefit Survey
Broker
Current State
2001 annual trade volume
1,000
A. Estimated Fail Avoidance
Fail avoidance - Deliveries (FTE)
Fail avoidance - Receives (FTE)
Incremental
Cost
B. Trade Problem
Not received electronically
Invalid trade
Does not match with custodian
Not received on timely basis
Avg incremental cost per trade
$
C. Failed Trades
Average Cost
Percentage
of Trades
Number
of Trades
If data for one of these categories is
not available, please enter $0 for the
incremental cost and 0% for the
percentage of trades
Number of Trades
Custodian no instructions
Missing or late allocation
NSF
No security
Avg of Failed Trade
T+1 Future State
Expected Trade Volume CAGR
Project 2006 Trade Volume
0%
1,000
A. Estimated Fail Avoidance
Fail avoidance - Deliveries (FTE)
Fail avoidance - Receives (FTE)
Incremental
Cost
B. Trade Problem
Not received electronically
Invalid trade
Does not match with custodian
Not received on timely basis
Avg incremental cost per trade
$
C. Failed Trades
Average Cost
Percentage
of Trades
Number
of Trades
If data for one of these categories is
not available, please enter $0 for the
incremental cost and 0% for the
percentage of trades
Number of Trades
Custodian no instructions
Missing or late allocation
NSF
No security
Avg of Failed Trade
Potential T+1 Savings
A. Reduction in Fail Avoidance
B. Reduction in Trade Problems
C. Reduction in Failed Trades
Total Reduction
23
Survey Data Collection Sheet: Investment Managers
CCMA T+1/STP Benefit Survey
Investment Managers
Current State
2001 annual trade volume
1,000
Internal Costs:
checks and avoidance
Incremental
Cost
Trade Problem
NOE/Confirms not received electronically
Missing or late NOE from broker
Does not match with custodian
Allocation instructions not sent electronically
Allocation instructions do not match with broker
Avg incremental cost per trade
Percentage
of Trades
Number
of Trades
If data for one of these categories is
not available, please enter $0 for the
incremental cost and 0% for the
percentage of trades.
$
-
T+1 Future State
Expected Trade Volume CAGR
Project 2006 Trade Volume
0%
1,000
Internal Costs:
checks and avoidance
Incremental
Cost
Trade Problem
NOE/Confirms not received electronically
Missing or late NOE from broker
Does not match with custodian
Allocation instructions not sent electronically
Allocation instructions do not match with broker
Percentage
of Trades
Number
of Trades
If data for one of these categories is
not available, please enter $0 for the
incremental cost and 0% for the
percentage of trades.
Avg incremental cost per trade
$
-
T+1 reduction per trade
Projected T+1 benefit
$
$
-
24
Survey Data Collection Sheet: Custodians
CCMA T+1/STP Benefit Survey
Custodians
Current State
2001 annual trade volume
1,000
Incremental
Cost
Trade Problem
Not received electronically
Invalid trade
Does not match with broker
Not received on timely basis
Avg incremental cost per trade
$
Percentage
of Trades
Number
of Trades
-
If data for one of these categories is
not available, please enter $0 for the
incremental cost and 0% for the
percentage of trades.
Number
of Trades
-
If data for one of these categories is
not available, please enter $0 for the
incremental cost and 0% for the
percentage of trades.
-
T+1 Future State
Expected Trade Volume CAGR
Project 2006 Trade Volume
0%
1,000
Incremental
Cost
Trade Problem
Not received electronically
Invalid trade
Does not match with broker
Not received on timely basis
Avg incremental cost per trade
T+1 reduction per trade
Projected T+1 benefit
$
$
$
Percentage
of Trades
-
25
Survey Data Collection Sheet: Transfer Agents
CCMA T+1/STP Benefit Survey
Transfer Agents
Potential Savings
Transfer Agent Savings:
Savings Area
Space for blank
*1certificate inventory
Potential Savings Indicative Savings Measurement
Cost/sq/foot
Some savings over time, say 50%
over three years
Blank Certificate
*2Inventory Audit/Control man hrs/yr
*3Certificate Issuance
Man hrs/day
10% in each of the next five years
XX % reduction
STP Participant
deposits/withdrawals
4 through System X
*1,2 & 3
Issuer Savings:
Certificate banknote
*1costs
Man hrs/day
Savings Quantified by Transfer Agents
XX % reduction
Bulk of saving due to Generic Certificates not T+1 or STP
Annual Costs
Annual Costs (before T+1 vs after T+1)
26