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Reconciliations: a new weapon of choice

In a recent report, Celent highlights that firms are investing in reconciliations technology in a bid to strengthen their operations and reduce risk. So what’s driving this change? Derivatives trading volumes are booming and regulators are pushing for executive accountability for any errors through rulings such as Dodd-Frank and EMIR. As a result reconciliations are coming under the spotlight at asset management firms that want to ensure that they have an accurate, holistic view of their operations.

Excel spreadsheets have long been the weapon of choice for recs. While they are quick and simple to operate, they’re also open to manipulation and errors. Excel no longer cuts the mustard in terms of compliance and cost efficiency when regulators and investors are calling for transparency and complete audit trails. It’s clear that accounting errors as a result of spreadsheet misuse are no longer acceptable.

The push for transparency is particularly important when it comes to derivatives transactions. With these complex instruments, it’s vital to have substantial evidence of control. Without those controls, there is no confidence. The days of ‘my word is my bond’ are no more. Traditional legacy reconciliation platforms have struggled to cope with new matching requirements while a spreadsheet remains costly and complicated to maintain and is not up to regulatory snuff.  

So what’s the alternative? Asset managers want a tool that can integrate with their systems as rapidly as Excel, while meeting regulatory requirements. They must be sure they place the investment dollar on the tool that can be onboarded quickly and easily to deliver the necessary controls and rapid ROI.



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