In order to improve its reconciliations capabilities, Greenwich, Conn.-based hedge fund AQR Capital decided it needed to replace its legacy, largely manual-process-heavy reconciliation system, and turned to Electra Information Systems.
The Waters Technology editor asserts it’s unacceptable that up to 80 percent of reconciliations at major financial institutions still take place through the use of manually intensive, spreadsheet-based platforms and highlights how Electra automated this process for AQR Capital.
Electra CEO John Landry discusses how regulatory mandates and the increased flow of institutional money into hedge funds have created a growing demand for automated reconciliation systems from the asset management community. This will force hedge fund to compete for institutional assets on a playing field that’s new to them.
Automated reconciliation pays dividends in efficient data management for Pzenza Investment Management.
Citing a study on reconciliation spending from CEB TowerGroup, Electra CEO John Landry writes that having an accurate and efficient reconciliation system should always be a priority for financial firms, but rather than focus exclusively on technology that drives revenue, market participants should also consider technology that helps to preserve revenue, in order to maximize the effectiveness of the solution.
Reconciliation teams must ensure trade instructions are followed, provide transparency for fund managers, clarify the impact of corporate actions, and verify key elements such as the dates of transactions and settlements. Yet as information technology has found its place in streamlining other areas of operations, reconciliation has resisted automation—until now.
Reconciliation can be difficult when it comes to personal relationships. And it’s no different in the financial services industry, as buy and sell-side firms must make their internal and external connections work. Harmony is more than just a state of mind- it’s essential to survival, because breakups can be costly.
New York-based Pzena Investment Management’s methodical transition to a reconciliation platform in 2004 is still yielding productivity gains today. And Electra has been there all the way.
The fungibility of over-the-counter swaps and exchange-traded financial futures is at the center of calls for parity with exchanges by operators of swap execution facilities (SEFs) and other market participants. Electra Managing Director, Ian Danic, comments on the post-trade reporting issues the industry is facing due to the looming regulations.
For buy side institutors, the fee billing process is still a largely manual process. As the complexity of portfolios continues to increase, institutional investment managers are at a greater risk of losing revenue while still using an outdated fee billing process.