Reconciliation System Implementation Case

The Challenge

A major institutional asset manager with approximately $150 billion in assets under management wanted to consolidate the core operations of one of its affiliate companies within the parent company’s system platform to achieve operating efficiencies and economies of scale. In doing so they sought to bring SMF, corporate actions, trade support, new accounts and portfolio reconciliation into the current processes of the parent.

The affiliate had been using a combination of Excel spreadsheets, a reconciliation module of the accounting system, and Access databases to reconcile more than 350 institutional accounts and 400 commingled participant accounts.

The parent company needed the ability to absorb new accounts into the existing operational structure. This process involved several challenges including:

  • Multiple reconciliation system options in operation at the parent company (proprietary application vs. vendor reconciliation application)
  • Affiliate company trading in different instruments (fixed income and derivatives)
  • Different timing on reconciliation: positions monthly vs. daily; cash all currencies daily vs. USD daily and FX ad-hoc

Adopting new feeds and new service vendors – the affiliate used an outside data collection service to obtain transaction and holding information for existing accounts. The consolidation required developing new reformatters to take data into the existing reconciliation system.

Client Goals

  • Determine whether or not to add affiliate accounts to the in-house reconciliation
  • system or to the vendor reconciliation application
  • Build new reports in Business Objects for affiliate users to monitor reconciliation
  • results in the vendor reconciliation application
  • Develop new reporting and escalation procedures to communicate breaks
  • Absorb affiliate accounts into existing reconciliation process
  • Identify and resolve any unidentified cash or position breaks
  • Streamline cash management process to report investable cash numbers to PMs
  • Automate affiliate’s monthly market value reconciliation process and develop feeds to load billable market values into the billing system
  • Train new employees on business procedures

Approach

  • Performed gap analysis of existing reconciliation systems to determine which system to use for affiliate accounts
  • Tested and developed reports using Business Objects allowing for multi-site real time access to data and overnight batch reports
  • Developed flow diagrams and written procedures depicting business processes
  • Validated existing cash and position reconciliations, and worked with Operations group to assist in identifying root cause of any unknown breaks
  • Worked with technology to develop reformatters for new feed sources
  • Analyzed business processes and developed an integrated multi-site model
  • Brought accounts on in stages by product type and custodian

The Results

Went live with all position accounts and cash accounts (including over 2,000 foreign currency balances that are reconciled daily) after a 6 month engagement.

<< Back