How integrating data with reconciliation helps | Gresham

The world of investment management operations is becoming increasingly complex with more and more information being processed each day. With so many moving parts in the investment lifecycle, it can be challenging to keep up with all the different types of data that need to be reconciled and incorporated within the investigations process.

However, integrating certain types of data with the reconciliation process can help investment managers minimize the time spent investigating trading and position discrepancies. Here, we explore the benefits of integrating different types of data such as failed trades, corporate actions, and securities lending with your reconciliation activities.

Detecting patterns to avoid failed trades

The reasons for a failed trade can be numerous − including incorrect or stale standard settlement instructions (SSIs), insufficient collateral, price mismatches, or shares on loan that were not returned before settlement date. 

Integrating failed trade data within the reconciliation process can help to identify and resolve these issues quickly. By analyzing the data, you can see patterns in the reasons for failed trades and take steps to avoid them in the future.

Knowing where your securities are held when participating in securities lending programs is an important element to reducing fail rates. When you reduce the number of failed trades, you can reduce the risk of trading breaks and the associated costs of repairing them.

Ensuring accurate and up-to-date corporate actions

Because corporate actions can have a significant impact on the value of an investment portfolio, investment managers need to stay on top of them to ensure their portfolios remain accurate and up to date. Improperly reconciled corporate actions can result in cash and position exceptions.

For example, an incorrectly recorded stock split can cause a mismatch between the number of shares held and the number of shares reported. This can hurt your firm from both revenue and reputation perspectives when it comes to portfolio valuation, leading to client fee billing errors or investor trust issues when performance is overstated.

Integrating corporate actions data with the reconciliation process can help ensure your portfolios are correct and current. By automating the reconciliation of corporate actions, you can reduce the risk of position exceptions and improve the accuracy of your portfolio valuations.

Increasing portfolio accuracy with securities lending data

Securities lending can be a profitable activity for investment managers, but it can also create reconciliation challenges. When securities are lent out, they are no longer in your possession, making it difficult to accurately reconcile the portfolio. If the reconciliation process doesn’t take into account the securities that are on loan, it can result in position exceptions and failed trades when they aren't returned prior to settlement date.

Integrating securities lending data with the reconciliation process can help investment managers reconcile their portfolios more accurately. By tracking the securities that are on loan and ensuring they are properly accounted for, you can reduce the risk of failed trades and exceptions and ensure your portfolios are accurately reflected.

Driving better decisions with precise pricing data

Pricing is yet another critical area where the integration of data can be valuable. Accurate pricing of securities is essential to ensure you are properly valuing your portfolios and making informed investment decisions. By integrating data on pricing, you can quickly identify any breaks in the pricing process and take the appropriate action. This may involve working with your data vendors to correct pricing errors or adjusting pricing models to account for changes in market conditions.

Identify and resolve breaks faster

Integrating various types of data is critical to quickly identify and resolve breaks related to trading and cash/securities positions. Failed trades, corporate actions, collateral held, securities lending, pricing and many other data types can all be used to uncover the root cause of breaks and take appropriate action. With a comprehensive data integration and data quality strategy, you can ensure your operations are efficient, reliable and prepared for changing market conditions.

Our solutions address every aspect of investment managers’ reconciliation and exception management lifecycle. Let us show you how a comprehensive data catalog coupled with robust, innovative reconciliation and exception management can address not only the challenges of today, but those coming down the road tomorrow as well.


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