GSTP pulls the plug

Cross-border trade matching utility winds up operations, citing lack of support from the asset management community as a major reason.

The supervisory board of GSTP, the commercial arm of the Global Straight Through Processing Association, has confirmed that its shareholders have decided to suspend business operations and commence dissolution proceedings.

The news comes only two months after the company's Transaction Flow Manager (TFM) solution went live. The software was accepted by the industry last year after extensive testing had advanced through a pilot programme with the support and active participation of some of the world's leading investment managers, broker dealers and global custodians.

But GSTP - which was competing with the Thomson/DTCC joint venture Omgeo to build critical mass for its virtual matching utility - had been struggling to grow volumes since September. The shareholders had been seeking to secure the commitment of the investment/asset management community to use the matching services offered by the utility.

But they voted to wind up the company when evidence suggested that projected volume would not be enough to warrant further operation of the company beyond year-end. In a statement the GSTP said that, "Matters that impacted specifically included the shelving of T+1 settlement plans in the US, declining market volumes globally, and the general state of the global economy."

Earlier this year GSTP dismissed a technology consortium called axion4gstp, which was going to provide the network infrastructure for the TFM, and replaced it with SunGard. SunGard had previously begun the process of putting together its own matching utility to compete with Omgeo and GSTP, but put these plans on hold after becoming involved as facility manager for GSTP.

GSTP was created by 41 member firms of the global securities industry in 2000, and billed itself as "by the industry, for the industry", as opposed to Omgeo, which is strictly a for-profit corporate entity.

Many industry participants were apparently not comfortable with GSTP having entered into a commercial relationship with SunGard, and some of the backers of the consortium did not want to continue to fund an operation that lined the pockets of a third party vendor.

There is some speculation that SunGard will now continue with plans to create its own matching utility, leveraging the large install base for its many financial applications to compete with Omgeo.

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