Straight-through Processing or STP is a process of execution that modifies the end-to-end processing of transactions of the financial instruments. It involves use of a single system to process and regularize all elements of the work-flow of a financial transaction, including the Front, Middle, and Back office, and General Ledger. STP is defined as electronically capturing and processing transactions in one pass, from the point of first step to final settlement.
At the international level, STP is used at the organization level or at the closed group level. None of the global markets have adopted STP at broader level. The organizations using STP in their own organizational functions are using different means and form of messaging standards. There is STP but only within clients who are networked with one Service Provider. The issue of inter-operability between STP Service Providers has not yet been resolved. However, globally it has been accepted that whether it is viewed as a problem or an opportunity, markets will have to adopt the system.
The followings are the benefits of adopting the STP mode in India:-
Shortening of the settlement cycle.
Elimination of costly duplication
Elimination of manual intervention
Reduction in Risks and errors
Faster data capturing, processing and report generation