SmartStream sets out back-office utility
SmartStream aims to consolidate back office processes to reduce cost
Financial technology company SmartStream has launched a reconciliation solution designed to provide low-cost back office services.
SmartStream’s TLM reconciliations premium version 2.4 supports cash, securities, credits and debits, exchange-listed derivatives, OTC derivatives, net asset valuation and market valuations as well as generic intersystem reconciliations.
The idea behind the reconciliation tool is to reduce costs by cutting away multiple systems and licences and replacing them with a single utility in the back office. In theory, having one team manage the entire back office should also help firms to achieve better control and communication, including reporting.
The latest version also includes a standard reconciliations package for OTC derivatives, which is clearly aimed at firms concerned about the new EMIR regulations in Europe and Dodd-Frank in the US. Both sets of legislation require the bulk of OTC contracts to be centrally cleared and reported; the clearing obligation takes effect in Europe from next month.
In testing, TLM reconciliations premium version 2.4 has been benchmarked with two tier-one investment banks, which were able to carry out half a billion auto matches in one hour.
The tool is designed to be appealing to mid- and small-tier brokers, many of whom are still using outdated back office methods such as email and telephone to confirm trade matches according to a recent study by financial research firm Aite. The lack of investment reflects budgets squeezed by a combination of declining commission revenues and increasing regulatory burdens. The broker commission pool decreased by 29% last year, according to estimates provided by TABB Group. Meanwhile, staff cuts at many major financial institutions have further added to the difficulty of finding sufficient resources.
“From conversations I’ve had with the major banks it’s clear the big focus for this year is to develop a single platform for all back-office operations,” said Darryl Twiggs, head of product management at SmartStream Technologies. “Clients are looking to take advantage of economies of scale, cost reductions and overall control of the back office by bringing it closer together, with one team managing the entire process.”
