Have you been seduced by technology? Imagine sitting in a conference room
listening to a vendor expound on the amazing capabilities of their products, then,
taking the plunge and integrating this amazing software into your workflows. The
vendor sends out an integration specialist (at your expense) to help implement said
software. Everything is going wonderfully. Then, the specialist moves on to his next
project, only to leave you with software that doesn’t quite live up to its conference
room presentation.

Vendor presentations are created to show the capabilities of their products.
Therefore, they are crafted and designed with precise parameters. Carefully
rehearsed so there are no rough edges. Wouldn’t it be great if there were no rough
edges in the real world?

Adeptyx Consultants can help smooth the rough edges. We take an objective view
of your workflow and of the vendor solutions. Applying industry best practices,
we construct workflows that work for your business utilizing the capabilities of
software.

Adeptyx was recently engaged to help a company with their trading system
workflows. The root of the problem, we discovered, was from the suite of back
office products. Data was incorrect. Corporate Actions were being missed.
Reconciliation was an arduous process (much more than usual). Dividends were
posting incorrectly or not at all. They were bleeding. While the engaged consultant
had never worked with this vendor’s products, he rolled up his sleeves and jumped
in.

We started with corporate actions. For over a year the “automated” process
had been inoperative. The company had come to rely on custodian data for
Corporate Actions and dividends. We rebuilt the process from the ground up and
successfully “integrated” Corporate Action Notification. Now that we had data
flowing in this enabled the back office to post on ex-date with the ability to adjust
the data, if necessary, prior to pay-date.

Reconciliation is often an arduous process. The vendor’s products offered a solution
to reconcile positions, and if necessary, transactions. A very capable suite of tools
on the surface. However, the solution implemented was solely a transaction-based
reconciliation. In addition, the system wasn’t exception processing. Matches were
manually approved, near matches were manually approved (making the cash
position incorrect), and mismatches were investigated. Dividend accruals were
also an issue. Some banks accrued, while others did not. This made the month end
reconciliation very problematic.

We discovered a report that allowed for exception based position reconciliation.
Not only did it allow reconciliation of the cash position daily, it would compensate
for any buys or sells posted in the accounting system trade date-2 against the
custodian’s position. In terms of positions, some banks supply Trade date positions,
some supply Settle date positions. To complicate matters, some large banks deliver
Trade date positions, but Settle date cash. Working with the vendor we learned
of a beta report that would allow reconciliation of trade date positions and settle
date cash. It also allowed us to either include dividend accruals or not at an account
level. Utilizing this report, we executed an exception-based workflow that not only
saved valuable time and resources, but also now delivers correct position data to the
trading system.

Compliance is a trader’s enemy. Data is key to compliance violations. Now
that we had correct data flowing to the trading system, it was time to unravel
the compliance puzzle. During the implementation of the trading system, the
compliance department was informed that the trading system could not perform
basic compliance validation. To deal with this limitation, adaptations were created
outside of the vendor system using Excel. With the compliance department’s
consent, we decided to look at fixing the compliance rules in the trading system
as an initial implementation. The contracts and mandates were examined for all
compliance violations and they were organized so as not to create duplicate rules
in the trading system. In starting the process from the beginning, we were able to
automate 99% of the compliance rules in the trading system. This enabled us to
eliminate the need for Excel spreadsheets. The new process not only saved valuable
time and resources, it also allowed the traders to execute trades without invalid
compliance violations.

By correcting the data at its source, and re-implementing compliance into the
trading system, the rough edges of the trading system started to smooth out. The
ghosts plaguing the system were gone, not by adjusting the trading system as
originally thought, but by correcting the underlying problems. The approach to look
at the entire process not only rectified the trader’s workflows; it saved time and
resources in the Back Office and Compliance departments. By taking a holistic view
of the entire process we were able to build a solution that works utilizing the chosen
vendor packages.

Posted in Optimizing Operations