Trade break reduction refers to efforts aimed at minimizing or eliminating discrepancies between the records of trading parties regarding a transaction. A “trade break” occurs when details of a trade, such as price, quantity, or settlement date, do not match between the buyer and seller, requiring manual intervention to resolve. Reducing these breaks enhances operational efficiency and lowers settlement risk.
Context
In financial news, particularly concerning post-trade processing, trade break reduction is a key objective for market participants and regulators, especially with the push towards shorter settlement cycles like T+1. Blockchain technology is often discussed as a potential solution for trade break reduction due to its immutable and transparent ledger, which can provide a single, consistent record of transactions. This capability could significantly streamline operations in both traditional and digital asset markets.
Implementing a shared ledger for securities lending establishes a single, auditable "golden record," critically de-risking the post-trade lifecycle for the $4 trillion monthly market.
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