Union Bank of California and Financial Information Network (FIN) have launched a new, straight-through-processing (STP) solution that automates post-trade processes, including custodian trade notification, allocation and settlement.
Union Bank and FIN developed the reconciliation interface, dubbed FINGPS, on behalf of pilot investment management client RNC Genter Capital Management of Los Angeles, an investment advisor with $1.4 billion under management and over 500 custody accounts with Union Bank.
Daniel Genter, president and CEO of RNC, says: "The settlement part of the trade process has always been a challenge, particularly since RNC executes block trades that require allocation breakdowns to these individual accounts. This new STP solution has improved our productivity and the efficiency of our accounting, while moving us toward a true 'real time' automated trading and settlement process."
Before, RNC conducted its trades electronically and faxed Union Bank the information necessary to allocate the trades to the appropriate custody accounts. Union Bank needed to re-enter that information in its system before it could settle the trades and communicate back to FIN for post-execution accounting.
Under the new system, RNC enters the custody account information when it executes trades at the front end, Union Bank is notified electronically and can post to the Union Bank custody account for trade settlement.
The delivery of integrated post-trade processing systems by global custodians is viewed as a potential threat to the development of industry-wide matching utilities, such as Omgeo's CMU.
Piet Westerbeek, executive vice president of institutional services & asset management at Union Bank, comments: "Without an industry-wide STP solution that automates every phase of the trading process, we feel it is very important to develop solutions that meet the specific needs of our custody clients, especially our investment advisors."