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CISI Technology in Investment Management study materials
CISI Technology in Investment Management study resources

CISI Technology in Investment Management: Post-Trade Processing, Settlement and Asset Servicing Technology

CISI Technology in Investment Management · Work through your exam, one topic at a time.

All guide sections

Post-Trade Processing, Settlement and Asset Servicing Technology

What this domain tests

The exam tests the post-trade chain - confirmation, clearing, settlement, custody and asset servicing - and the messaging, cut-offs and regulatory disciplines that surround it, including CSDR settlement discipline and the move to shorter settlement cycles.

Core rules and concepts

  • Confirmation and affirmation: trade details matched with the counterparty, often via platforms such as CTM or MarkitWire; faster affirmation reduces fails.
  • Clearing and settlement: CCPs novate eligible trades; settlement is delivery versus payment (DVP) or free of payment (FOP) through a CSD/ICSD (for example Euroclear, Clearstream, DTCC). CLS settles eligible FX.
  • Messaging: SWIFT MT5xx for securities and ISO 20022 (MX) migration; mapping errors are a live operational risk.
  • Corporate actions: announcement, ex-date, record date, election deadline, payment. Mandatory versus voluntary events; proxy voting; income collection; tax reclaims.
  • CSDR settlement discipline: cash penalties for failed settlement (in force since February 2022) and a buy-in regime for persistent fails.
  • Settlement cycle: US T+1 since 28 May 2024; UK and EU planned for 11 October 2027, which compresses affirmation, FX and funding windows.

Worked example

A trade in shares is executed on 13 June. The ex-date is 14 June, the record date 15 June and the dividend payment date 15 July. Reasoning: entitlement follows the ex-date. A buyer trading on 13 June settles on 15 June (T+2) and is the holder on the record date, so the buyer receives the dividend. A buyer trading on 14 June - the ex-date - buys without the dividend, so the seller receives it. As a second illustration, a €5m settlement fail lasting three business days at an illustrative 1 basis point per day would attract €5m × 0.0001 × 3 = €1,500 in cash penalties, separate from any buy-in. The reasoning is date-driven: identify trade date, ex-date, record date, settlement date and the applicable penalty basis.

Traps that cost marks

Confusing ex-date with record date; assuming settlement date equals trade date; treating buy-in as automatic on the first fail; ignoring cut-off times and time zones; overlooking ISO 20022 mapping differences during migration; forgetting that penalties and buy-in are separate CSDR disciplines.