Recent market volatility combined with the growth of OTC derivatives trading has middle office operations struggling to keep pace with reconciliations.
Portfolio reconciliation disputes most often arise during the collateral call process. Until resolved, these disputes can result in exposing traders to unnecessary credit risk and generating avoidable write-offs or losses for asset managers. A large percentage of reconciliations are completed using manual spreadsheets, which are hugely inefficient and therefore can't be completed frequently enough. In today's investment climate, investors are increasingly concerned about the quality of the internal financial controls within the accounting operations of those who manage their money. Automated transaction reconciliation solves the major challenges facing collateralised trading operations today including reducing risk, increasing transparency and improving operational standards to ensure competitive advantage and enhanced investor confidence.
The Colline Reconciliation Module is built around an intelligent trade-matching engine that facilitates fast, frequent, and accurate reconciliations. Colline has the ability to auto-schedule reconciliations, so counterparty reconciliation can occur on a more regular basis, daily even. A preview of the Colline Reconcilation module will be shown at the ISDA Symposium in Sydney. It is available as a standalone solution or integrated as part of Lombard Risk's end-to-end Colline Collateral Management solution, or available as part of our hosted partners asset management, valuation and collateral management services.
Northern Trust, a leading provider of investment management, asset and fund administration, fiduciary and banking solutions for corporations, institutions and affluent individuals worldwide offers the Colline Reconciliation module as part of their collateral management offering. "Frequent reconciliations make the collateral management process more fluid which is crucial for our clients because they are looking for ways to better manage credit risk. Regular reconciliations are even more critical during periods of volatility," commented Revel Wood, product manager for Northern Trust's Corporate and Institutional Services.
Stephen Bruel, a TowerGroup analyst and author of a recent industry report on collateral management technology, identified a need for a more proactive approach to portfolio reconciliation. Mr. Bruel reported, "Lombard Risk is well positioned for success given the functionality of its applications, has developed a good track record for functionality, and is managing the growth of its client base well. TowerGroup expects Lombard to remain a top player in this space and continue to expand into tier 2 banks."
John Wisbey, CEO of Lombard Risk added, "I fully concur with TowerGroup's forecast for strong growth in collateral management spending. We are optimistic that the broadening and innovative functionality within Colline will contribute to that growth."