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Confirmation matching: Looking back.... to the future!

Even though the market for matching trade confirmations automatically is a mature one with many tools in place for more than a decade, manual processes still exist.  Challenges including working with many counterparties, managing static data, manual matching, chasing and handling of paper confirmations continue to be key themes.  Why haven’t these automated tools evolved significantly enough to meet industry challenges?

Data discrepancies between internal systems, counterparties and brokers continue to exist.  Corporations continue to send paper confirmations, manual matching continues to be an inconvenient necessity and creating quality reports continues to be an onerous task.  Technology needs to do a better job of handling these issues but where should it focus? Which issues create the greatest risk? Which issues represent the greatest cost to an organization?

Business intelligence can deliver some of the answers, by helping us understand which counterparties are most costly, when and why manual matching is required and who is doing it. It can also identify areas for further automation.  In short, it can help us understand where the issues lie.

Solution evolution, the key to achieving greater automation and cost reduction, will be delivered by those tools that can act on the results of the intelligence gained.  These tools will deliver workflow components that automatically assign tasks based on current workload and provide greater flexibility and sophistication around exception handling. They will also highlight discrepancies rather than consistencies, and alert users when patterns emerge rather than waiting for thresholds to be breached.

When these issues have been solved, we will be encouraged to use the results of confirmation matching, a critical pre-settlement activity, to proactively identify issues in post-settlement activities, including erroneous static data issues, misbooked or missing trades on trade reconciliations and mismatches on nostro reconciliations.

Legacy systems of old do not offer the features that are demanded by today’s dynamic business world.  The past, however, can be used to anticipate and plan for the future.   It’s said that “past performance does not guarantee future returns” but it’s not a bad place to start.


Comments: (1)

A Finextra member
A Finextra member 22 December, 2011, 12:57Be the first to give this comment the thumbs up 0 likes

Good points all. We examine this area in more detail in our recent whitepaper:

Even I would not suggest this as classical holiday-season reading - but it does identify where the pain, and the potential benefits of the next wave of STP investment, are coming from.

Best wishes to everyone - see you next year!