Improving Investment Management Operations: Reconciliation

Several factors contribute to the industry’s angst surrounding investment management reconciliation, not the least of which is the differing purposes of the books-of-record to which investment managers attempt to reconcile. Institutional managers reconcile their IBOR to fund accountants’ ABOR, where income and expense accruals are factored into the process of striking of daily NAVs. Retail-focused investment managers reconcile their IBOR to custodians’ books, and are often faced with the challenge of having one client account with holdings across multiple custodians, each working from a different technology platform and with unique file exchange and information requirements.

Assuming that IBOR must fully match ABOR and CBOR does not always fit with an investment manager’s need for its records to be trading-ready. Indeed, an investment manager may consider its accounts fully reconciled when discrepancies between its records and other parties’ have been identified, understood, and adjusted on the IBOR system. In this way, managers can be fully confident that cash and shares are correct, and can claim proper oversight of fund accountants.

A highly automated reconciliation technology, including predictive capabilities to identify false breaks, is the foundation for any successful reconciliation process. When coupled with experienced operations support able to implement global reconciliation adjustments for such breaks as missed corporate actions, managers reduce trade and performance reporting errors. And angst.

More on this topic is available here.