Living in the 70s

In the mid 80s I worked for a merchant bank that traded bills and bonds. Screen trading was relatively new. Before screen trading, the market for bills, bonds and cash was traders ringing around the market place with their peers to conduct a trade, are you a seller or a buyer, and at what price and quantity? It was less than perfect market. It was also conducted in a certain time frame. All day trading was halted around 11am or it was a case of forward trading. The primary reason for the limited time frame for trading was the necessity to physically settle all trades same day. Settlements were done in the afternoon after bank cheques were drawn (for tens of millions) and you had drawn up your round for physically exchanging bank cheques and securities. Then you got on your bike (or tram) and went from one bank to another settling the trades.

Two changes to the market took place in the mid to late eighties. One, the introduction of screen trading. Two, Austraclear introduced electronic settlements of fixed interest products. In 2006, SFE Austraclear has an inventory of over $600 Billion in securities and trades over $30B daily. The new ASX Austraclear System simplifies settlement complexities and enhances straight-through-processing (STP), office integration and cross border opportunities to facilitate the registering, bookkeeping, clearing and settlement of a broader range of derivative, security and cash asset classes. (source ASX)



The property market - in a nutshell "we" seem to be stuck in the 1970s.

It is an obvious thing to say that "we" need to emulate systems like Austraclear and CHESS. Our current settlement systems for property conveyancing and mortgage processing are hapless. And the efforts of the Land Registries, Revenue Offices, Financial Institutions and Law Societies to bring about the necessary changes on a national basis seems to have been reduced to a morass or quagmire.

First to bring about change "we" don't need big bang changes. What "we" need to do is start to solve the communication quandries between the parties to the settlements chain. With a concerted commitment and co-operation by the Financial Institutions this could be solved quite easily.