What Is the International Securities Association for Institutional Trade Communication (ISITC)?

The International Securities Association for Institutional Trade Communication (ISITC) is an industry organization of financial institutions and technology providers that work to improve the operational effectiveness of the financial industry.

The ISITC functions by introducing and maintaining communication protocols aimed to improve the speed and reliability of financial transactions. As of 2021, ISITC has 53 member firms.

Key Takeaways

  • The International Securities Association for Institutional Trade Communication (ISITC) is an industry trade group focused on developing standards and best practices in financial services operations, 
  • The ISITC was founded in 1991 and is known for advocating the adoption of new, more efficient technology standards.
  • By encouraging the adoption of Straight-Through Processing (STP) and similar protocols, the ISITC works to improve the reliability and efficiency of financial markets.

Understanding the ISITC

The ISITC was founded in 1991 and is known for advocating the adoption of new, more efficient technology standards. Throughout the 2000s, the ISITC was a leader in publishing best practice guidelines for the industry. This included market practices in support of ISO standards, custody holdings reconciliation guidelines, settlement requirements for the MT548 standard, and many others.

The mission of ISITC is to engage the collective expertise of its global community of securities operations and technology professionals to create a platform to collaborate on key initiatives in financial services operations. 

ISITC and Straight-Through Processing

The ISITC was also active in promoting the adoption of new technologies, including automatic payment processing systems like Straight-Through Processing (STP).

STP was invented in the early 1990s and enables the automation of transaction processing tasks in the equity markets. Financial institutions can use STP to reduce the time required to settle transactions. During the settlement process, STP allows transaction information to be transmitted electronically from one party to another without requiring manual re-entry of information at each stage in the process. This speeds up transactions while reducing the risk of human error.

Currently, many financial transactions take several days to complete because some stages in the process are still completed manually by human actors. By encouraging the adoption of STP and similar protocols, the ISITC works to improve the reliability and efficiency of financial markets. Rather than taking days to complete, STP can enable transaction settlements within a day, minutes, or even seconds.

ISITC Stakeholders

The ISITC is a nonprofit organization whose membership consists of financial institutions involved in various aspects of the transaction settlement process. These include investment managers, asset custodians, broker/dealers, and technology platform providers.

Other ISITC Initiatives and Activities

Soon after their founding in 1991, the ISITC created an advanced electronic communication protocol for trading mortgage securities. In under a year, the new format replaced legacy delivery methods, such as fax, Telex, and manual re-keying. This new electronic format soon became the industry standard, leading the way for similar changes in other industry sectors.

In 1995, the ISITC's initiatives helped move the standard settlement cycle from T+5, short for "trade date plus five days," to T+3. Today, further progress has been made, with the market operating on a standard T+2 cycle.

In 2012, the ISITC launched a working group concerned with overseeing international regulatory policies for the global financial markets.