(Repost) Bloomberg -- AI Tool Helps Fix Faulty Trades Amid Shift to Faster Settlement Times

 (Transcribed with OpenAI Whisper)

AI tool helps fix faulty trades amid shift to faster settlement times. As the financial industry grapples with the shift to shorter settlement times, banks and broker-dealers will soon have a new artificial intelligence tool to fix and prevent trades that go awry during the settlement process. Broadridge Financial Solutions, Inc. is rolling out OpsGPT, a chatbot that uses generative AI and large-language model technology to analyze and resolve operational issues such as failed trades, and offer insight on the cause of the issue and suggestions for how to resolve it and prevent it from happening again. The product was developed to help firms deal with added stress and costs as the market moves to a so-called T plus one requirement later this year, speeding up settlement times for securities trades to one day from two. The need for operational efficiencies in areas like real-time fails resolution is amplified in a T plus one world, Vijay Mayadas, President of Capital Markets at Broadridge, said in an interview. The new tool helps with that transition by allowing users to understand the deeper reasons of why a trade failed and being preemptive about it, he said. The world's biggest financial firms have been experimenting more with artificial intelligence, spurred by the promise that it will help them boost staffers' productivity and cut costs. Read more, Citi charts path for thousands of coders to experiment with AI. The new tool, which is in a trial period with a handful of Broadridge clients, can also be used in multiple languages, including Japanese, leveraging the power of large language models, Mayadas said. New York-based Broadridge integrated the technology on its existing post-trade system, which clears and settles roughly $10 trillion in trades a day. OpsGPT can identify a trade and figure out how positions are linked using Broadridge data across asset classes and geographies. It then recommends solutions for failed trades to avoid repeating the same error. Some banks could have billions of outstanding, failed trades on a daily basis, Mayadas said. If you can reduce that amount by even 10% to 15%, you can save millions of dollars. The new offering adds to an earlier Broadridge AI application that caters to the fixed-income market. BondGPT, launched in 2023, offers a chat function that uses data to answer bond-related questions and helps investors identify corporate bonds that fit their investing thesis. OpsGPT is expected to go live in two to three months, according to Mayadas. Read more about the T plus one rule making US stocks settle in a day, quick, take.


Key Takeaways from the Article:

  1. Introduction of OpsGPT by Broadridge: Broadridge Financial Solutions, Inc. is launching OpsGPT, an artificial intelligence chatbot designed to address and prevent issues in trade settlements.

  2. AI Tool for Trade Settlement Issues: OpsGPT uses generative AI and large-language model technology to analyze, resolve operational issues like failed trades, and provide insights and solutions to prevent future occurrences.

  3. Response to Shorter Settlement Times: The development of OpsGPT is in response to the financial market's move towards a T plus one settlement requirement, which accelerates securities trade settlements to one day from two.

  4. Operational Efficiencies in T plus one Era: Vijay Mayadas, President of Capital Markets at Broadridge, emphasized the need for operational efficiencies, especially in real-time resolution of failed trades in the faster settlement environment.

  5. AI Adoption by Financial Firms: Major financial firms are increasingly experimenting with AI to enhance staff productivity and reduce costs. OpsGPT is a part of this trend.

  6. Multilingual Support and Integration: The tool, currently in trial with select clients, supports multiple languages, including Japanese. It's integrated into Broadridge's existing post-trade system that handles approximately $10 trillion in trades daily.

  7. Functionality Across Asset Classes and Geographies: OpsGPT can identify trades, understand how positions are linked, and recommend solutions across different asset classes and geographies.

  8. Potential Cost Savings: The tool's ability to reduce failed trades can lead to significant cost savings for banks, potentially reducing billions in outstanding failed trades by 10% to 15%.

  9. Earlier AI Application by Broadridge: Broadridge had previously launched BondGPT for the fixed-income market, providing data-driven assistance in bond-related queries and investment decisions.

  10. Upcoming Launch: OpsGPT is expected to go live in the next two to three months, marking a significant advancement in AI-driven financial solutions.

The article highlights the growing role of AI in the financial sector, particularly in improving the efficiency and reliability of trade settlements amid evolving market requirements.

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