Research & reconciliation data - break investigations | Gresham
The following is an enhanced excerpt from our recent WBR Research Report, Navigation Investment Operations in 2023 and Beyond: How the Buy-Side is Responding to Data, Reconciliation and Technology Challenges. Download it here.
Determining the root cause of fails: It’s the #1 reconciliation challenge buy-side investment operations leaders face today, according to our recent survey and report with WBR Research. In addition, 65% of respondents said their average number of daily exceptions increased in the last 12 months.
While it’s essential to have technology that helps to manage failed trades properly, it’s even more important to understand their origin. This is especially important in a T+1 environment when there will be less time to resolve discrepancies before settlement.
The typical way
Combining your research and reconciliation data is one of the most powerful things you can do to enhance operational efficiency. But what does your operations team currently do when a break occurs? Typically, the process goes something like this:
1. Team is alerted to the break and investigates to identify the root cause.
2. Team requires information on failed trades, corporate actions, etc. to determine what has happened and why.
3. Team spends multiple hours trying to gather this information from emails, spreadsheets and external data sources, often stored within siloed systems across the organisation.
4. Multiple back-office and middle-office teams get involved, duplicating effort and requiring correction of errors and omissions.
5. Team finally has the information required to identify the root cause of the break.
The better way
It’s easy to see where the pain exists in this process. And largely speaking, the problem is not the root-cause analysis itself – it’s the time it takes to investigate the break by gathering the research data, and then fixing it.
The key challenge is the siloed nature of operations. If only the process could be modified to be more efficient, like this:
1. Team is alerted to the break and investigates to identify the root cause.
2. Team requires information on failed trades, corporate actions, etc. to ascertain what has happened and why.
3. Team has access to a research data repository that serves as a single reference point for all your failed trades, corporate actions, securities lending and collateral.
4. The reconciliation platform integrates transactions, positions and cash, and links post-reconciliation breaks with the underlying cause of the break within the research data repository.
5. Team no longer needs to spend valuable time searching for answers in emails or bank websites.
With this modified process, your team can accelerate investigations into the root cause of breaks, reduce manual intervention and errors, and free up staff to focus only on true exceptions and other value-add tasks. In addition, you’ll have better cross-functional collaboration and transparency throughout operations, eliminating duplication of effort across teams.
Time to re-examine your approach?
What’s your process for root-cause analysis? It may be time to evaluate your current approach to data aggregation, data validation, integration throughout the investigations process, and reconciliation to ensure you get the insight you need to ascertain why a trade has failed.
Having the right technology partners and solutions can help facilitate a trade reconciliation process that identifies and resolves issues quickly. Contact us to explore how Gresham does reconciliation better.
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Download our recent WBR Research Report, Navigation Investment Operations in 2023 and Beyond: How the Buy-Side is Responding to Data, Reconciliation and Technology Challenges.
