Straight Through Processing - STP

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DEFINITION of 'Straight Through Processing - STP'

An initiative used by companies in the financial world to optimize the speed at which transactions are processed. This is performed by allowing information that has been electronically entered to be transferred from one party to another in the settlement process without manually re-entering the same pieces of information repeatedly over the entire sequence of events.

BREAKING DOWN 'Straight Through Processing - STP'

While presently only a concept that many are working toward, STP represents a major shift from present-day T+3 trading to same-day settlement.

One of the benefits of STP is a decrease in settlement risk. This is because a shortening of transaction-related processing time will increase the probability that a contract or an agreement is settled on time.

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