Post-Trade Systems Tackle Reconciliation

Terry Flanagan

Under volatile and demanding market conditions, investment companies require frequent and efficient reconciliation processes in order to reduce risk as well as costs.

“The biggest issue our customers have been facing recently is pressure on the back office from increased trading volumes, especially in the more complex asset classes,” said John Landry, CEO of Electra Information Systems, a provider of trade settlement, reconciliation, data collection and aggregation services.

In response to this, Electra has made dramatic changes in its approach to reconciliation over the past year. It introduced into its reconciliation solution, OpenSTaARS, an intelligent, tightly integrated workflow around cash, transactions and positions that eliminates the redundancy often associated with traditional reconciliation solutions.

“The ability to simultaneously view the impact of a transaction break on both the underlying position and cash position significantly accelerates the reconciliation process, enabling our clients to process higher transaction volumes without increasing staff,” Landry said. Electra has also introduced product innovations for the reconciliation of complex asset classes such as ETD and OTC derivatives.

Having introduced the first application for transforming flat files of buy and sell data into ISO standard messages in the 1990s and having continued to produce innovations for the trade settlement process, Electra has competed with several trade settlement service providers, including Broadridge Financial Solutions. “Our trade settlement solutions, ACTioN and FailSafe, give us a unique market position, so there’s no one company that competes with us directly,” said Landry.

Electra is expanding to the Asia Pacific region via a partnership with First Treasury, a consulting firm which delivers services to financial institutions and financial departments in large corporations.

First Treasury will resell Electra-provided solutions, including eSTaARS, OpenSTaARS, Quantum, ACTioN and RecCollect, to clients in Australia and the Asia Pacific region.

“It is now more critical than ever that firms are able to efficiently manage their post-trade processes,” said Dennis Brandt, managing director at First Treasury, in a statement. “Our clients could greatly benefit from the innovative technology Electra has developed for trade settlement, reconciliation, data collection and aggregation.”

Because custodians provide different data availability and different methods by which to access data, investment managers are often overwhelmed and unable to handle data coming in from multiple custodians in multiple formats.

Accordingly, clients often specify that the reconciliation and exception management system integrate a messaging layer and data transformation tools to handle the integration of multiple data formats with ease, said Landry.

In the United States, multi-currency clients of investment managers typically maintain a single custodial account for US and non-US assets.

Reconciliation and exception management systems designed originally for European users are often unable to accommodate this requirement (instead forcing the use of separate custodial account numbers for investments denominated in different currencies).

Accordingly, a true multicurrency system that includes multiple currencies within an account and offers the ability to handle cash balances for the single account in multiple currencies is high on the list of many U.S. clients’ requirements.

“Our solutions are the result of working closely with clients to identify those areas within post-trade processing that require innovation,” Landry said. “With that in mind, Electra invests more than 20% of its revenue back into research and development which allows us to produce solutions that ensure rapid ROI with a lower total cost of ownership.”

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