What is the International Securities Association for Institutional Trade Communication - ISITC

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

BREAKING DOWN International Securities Association for Institutional Trade Communication - ISITC

The International Securities Association for Institutional Trade Communication’s (ISITC) retains a membership composed of professionals who seek to improve the financial markets by making the process faster and more efficient. One key initiative the ISITC promotes vigorously is the industry-wide use of straight through processing (STP). STP was invented in the early 1990s and describes automation when processing transactions in equities markets. Financial companies can use STP to make transaction processes faster and more efficient, reducing the time it takes to process a transaction and increasing chances that a contract or an agreement settles on time. During the settlement process, STP allows the digital entry of transactional information to move from one party to another without needing to manually re-enter this information again and again across the entire sequence of transactions. 

Currently, many financial transactions take several days to complete because of the complexity involved and because parts of the process are manual. By encouraging and supporting the use of STP, the financial markets can become more resourceful and economical. The ISITC believes that STP can reduce time and costs making the financial markets more effective. Rather than taking days, transaction settlements now can take place within a day, minutes or seconds.

History and Impact of International Securities Association for Institutional Trade Communication (ISTC)

The ISITC was founded in 1991. Soon after, the ISITC created an advanced standard electronic message format for mortgage securities trading, a product in line with their advocacy for STP. In under a year, the new format eliminated slower delivery methods, such as fax, Telex, and re-keying. This electronic message practice soon became a standard and showed promise outside of mortgage securities to be extended into other industry sectors. In 1995, the settlement cycle moved from T+5, a term short for “trade date plus five days,” to T+3, shortening the cycle by two days, a significant accomplishment. Today the market operates under a T+2 cycle.

Throughout the first decade of the 21st century, ISITC was a leader in publishing best practice guidelines for the industry: market practices in support of ISO15022 standards, market practice custody holdings reconciliation, settlement market practice requirements for the MT548 standard, listed derivative market practice guide, communication of alternative commission details, compensation claims guidelines and best practices, and market practice for communication of standing settlement instructions.

In 2012, the ISITC launched a regulatory working group overseeing global regulatory policies and in 2014 launched the middle office working group.