Northern Trust has become one of the first asset services to adopt the financial product mark-up language—FpML—messaging format to conduct straight-through processing (STP) of over-the-counter derivatives trades. FpML automates data flow information between asset servicers and clients, negating the need for any additional underlying software or hardware infrastructure. “The format enables us to accept and deliver new trade messages electronically and in a standard, replicated way,” explains Stephen Andress, global head of derivatives processing at Northern Trust.

The extensible format is seen as a potential breakthrough for STP in derivatives and is supported by the International Swaps and Derivatives Association, but the integration efforts across the industry has “been met with mixed results at best,” says Sang Lee, a managing partner with Aite Group. “The problem is there are so many derivatives products out there, that are very much bilateral in nature, so it’s very hard to develop a common standard that can address all of the details of a given product and transaction.”

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