Custodian Accounts Reconciliation

Key Benefits

  • Support different data sources and normalize custodian data
  • Automated process for a timely view of the financial operation
  • Support for compliance demands and best practice
  • Minimize financial risk

 

Overview: Reconciling custodian accounts is a complex but necessary process made difficult by the many complications between the various custodian banks and sub-custodians. ReconArt provides a complete end-to-end progression to make this a long term and beneficial business process to reduce operational risk and meet compliance demands.

Purpose: With trade volume on the rise and the number of custodian entities increasing, reconciling this information becomes critical. Investment managers need a timely and relevant stance on the financial operations. Matching is the first step along with a robust and easy to manage exceptions workflow. Together these provide a singular position to handle discrepancies before they become larger problems while ensuring reporting accuracy.

Compliance: BASEL III requires a full reconciliation of all regulated elements on consistent basis. Dodd-Frank Act also requires full reconciliation with a 5 day resolution of exceptions. Full documentation of the reconciliation process is required by both. The ReconArt solution provides full auditing and reporting to support these process documentation needs.

Challenges:

  • Investment and securities firms need an accurate, automated and sustainable solution to identify issues between internal records and that of the custodian institution. Manual reconciliation is too slow, time consuming and prone to human error. As the operation grows this process does not scale to meet demand.
  • Accounts can be held at a vast array of custodian institutions and sub custodians. This introduces a high level of complexity catering to differences amongst each. Since these parties typically do not utilize a standard for transmitting details, managing a large amount of data in these varying formats quickly becomes unwieldy, opening up the process to error, slowing the operation and reporting issues.
  • Identification of transactions can be a confusing and frustrating exercise with no standard means of documenting trades and securities across the lot. Multiple security identifiers such as Ticker, ISIN, SEDOL, CUSIP, SIN or none at all are used by custodian banks with no regard for consistency.

 

The Solution:

  • ReconArt provides an automated process for matching and reporting exceptions, ensuring accurate and timely information to investment managers. Applying business driven rules to the reconciliation is done using our extremely flexible rules engine. During the matching process we not only match but categorize matched and outstanding transactions for further processing as exceptions, exporting and reporting. Issues can be quickly identified, assigned and resolved using our exceptions workflow. Resolving exceptions takes judgment and justification. Exceptions are presented for further research at which time notes and files explaining the reason or validating the issue can be supplied and stored with the transaction for a swift resolution.
  • Working with multiple global custodian banks as well as many sub custodian agent banks is made possible using ReconArt’s elastic account structure. An unlimited amount of accounts can be housed in the system, organized in any number of ways: by bank, fund, fund type, customer, etc. Transactions and balances can easily be populated into these accounts automatically using our robust import, enrichment and routing process. Information is there when and how you need to see it, so daily operations run smoothly.
  • ReconArt provides a data enrichment process to normalize the incoming financial information in a way that makes sense. This is used to match transaction in a long term and sustainable fashion, as well as, allow you to work with the data in a more meaningful way. Long meaningless strings of information can be transformed into beneficial material used throughout the entire process.
  • Control financial risk on a daily basis with process transparency. ReconArt provides multiple real-time dashboards and reports providing a quick overview or a deep dive into the operation so there is no question where you stand with your custodian reconciliations. Match rate, aging and outstanding transactions are just a few of the metrics we provide so you can see your stance at any point in time. Reporting needs against the reconciliation process or for summary outcomes are important to each individual operation. The ReconArt solution can be configured to provide distinct views or reports using any piece of information in the system.

 

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