Trade Settlement Fail Rate
Percentage of trades that fail to settle on the contractual settlement date
What is Trade Settlement Fail Rate?
Trade settlement fail rate is the percentage of trades that fail to settle on the due date. It shows how well post-trade processing works.
Failed settlements cost money, create risk and can lead to regulatory penalties, so a low rate is a mark of a well-run operation.
How this KPI is measured
- Function
- Operations & Supply Chain
- Sub-function
- Trade Settlement
- Industry
- Financial Services
- Type
- Lagging
- Impact
- Operational
- Unit
- %
- Measurement frequency
- Daily / Weekly
- Formula
- (Failed settlements / Total settlements due) × 100
How to calculate it
Divide failed settlements by total settlements due, and multiply by 100.
For example, if 60 of 20,000 settlements failed, the rate is 0.3%.
Track causes such as missing instructions, insufficient securities or funds, and counterparty issues, and measure by value as well as number.
Where it is used
Managing operational risk
Reduce failures.
Avoiding penalties
Meet regulations.
Improving processes
Fix causes.
How to improve it
Tips and common mistakes
- Measure by value as well as count.
- Follow regulatory rules on penalties and reporting.
- Track ageing of fails.
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