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Enhancing operational efficiency - The role of trade processing systems in asset management

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by corfinancial
| 04/01/2024 12:00:00

Samil Aslam, Research Analyst at corfinancial®, investigates the role of trade processing systems in asset management.

In today's rapidly evolving financial landscape, operational efficiency is a critical factor for success in asset management. Trade processing systems play a pivotal role in achieving this efficiency by reducing manual intervention, lowering error rates, and ultimately cutting costs. This article delves into the significance of trade processing systems and highlights industry best practices for designing and implementing an effective trade processing workflow. Additionally, we explore how platforms like Salerio and SureVu are transforming operations in asset management, streamlining processes, and driving operational excellence.

The importance of trade processing systems
Trade processing systems are the backbone of any asset management middle office operation, facilitating the seamless management and settlement of trades. These systems automate and streamline various stages of the trade lifecycle, from trade capture and validation to confirmation, settlement, and reconciliation. By leveraging technology and advanced algorithms, trade processing systems reduce the reliance on manual intervention, mitigating the risks associated with human error.

Firms navigating asset management without a robust trade processing system face heightened risks of errors, delays, and inefficiencies. The absence of such a system jeopardises operational integrity in an industry where precision and speed are crucial. Failure to adopt these systems poses a risk to the firm's financial well-being and reputation.

Reducing manual intervention
Manual intervention in trade processing is a significant source of operational inefficiencies. Human errors, such as data entry mistakes or miscommunication, lead to costly trade discrepancies and delays. Trade processing systems are designed to automate routine tasks, ensuring accurate and timely execution of trades. This reduction in manual intervention not only minimises the potential for errors but also frees up valuable time and resources that can be redirected towards more strategic activities.

Lowering error rates
A primary benefit of workflow-based trade processing systems is the ability to significantly lower error rates. These systems employ sophisticated algorithms to validate trade details against predefined criteria, flagging any discrepancies for further review. By implementing real-time validation checks and exception-handling mechanisms, trade processing systems help ensure that trades are executed accurately and in compliance with regulatory requirements. This proactive approach to error detection minimizes the likelihood of costly trade failures and associated penalties.

Cutting costs
Efficiency gains achieved through trade processing systems translate directly into cost savings. By automating labour-intensive tasks, firms reduce the need for staff members dedicated to trade processing. Additionally, the reduction in error rates and subsequent trade failures leads to fewer costly rectification processes. These measures contribute to the overall cost reduction of asset management operations.

Industry best practices for trade processing workflow
To harness the full potential of trade processing systems, firms should consider implementing the following best practices:

  1. Automated trade confirmation: implement automated processes to swiftly confirm trade details with counterparties. This minimises the risk of discrepancies and ensures timely settlement.
  2. Straight-Through Processing (STP): aim for a high level of STP to enable seamless trade processing from execution to settlement without manual intervention.  
  3. Real-time exception handling: integrate real-time validation checks and exception handling mechanisms to promptly identify and address trade discrepancies or exceptions.
  4. Reconciliation and reporting: establish a comprehensive reconciliation process to verify trade settlement with multiple custodians and generate accurate assessments for governance and internal analysis.
  5. Scalability and flexibility: design the trade processing workflow with scalability in mind to accommodate future growth and adapt to changing market conditions and regulatory requirements.

Salerio and SureVu are two leading platforms that exemplify the transformative impact of advanced trade processing systems in asset management.

Salerio offers a comprehensive trade processing solution that seamlessly integrates with existing OMS platforms and back-office systems. Its advanced automation capabilities reduce manual intervention, enabling firms to process trades efficiently and accurately. Salerio's real-time exception handling and validation checks contribute to lower error rates, ensuring timely trade execution and settlement. The platform's scalability and flexibility make it an ideal choice for firms looking to future-proof their trade processing operations.

SureVu is a cutting-edge failed trade management platform that revolutionizes the management of the trade settlement process. By automating the management lifecycle, SureVu provides governance to reduce the risk of settlement discrepancies. Its intuitive interface empowers users to avoid settlement failure rather than manage it, enabling high levels of STP.

In the dynamic landscape of asset management, operational efficiency is paramount for success. Implementing industry best practices in trade processing workflow design is essential for harnessing the full potential of these systems.

Embracing trade processing systems is not just a strategic move; it becomes a vital imperative for those seeking to fortify their position in the competitive asset management arena. Platforms like Salerio and SureVu exemplify the transformative impact of advanced trade processing technology, streamlining operations and driving operational excellence in asset management. By embracing these technologies and best practices, firms can position themselves for sustained growth and success in the competitive world of asset management at a price point that makes sense. 

If you would like to discuss any of the points raised here, please contact us at or click here to learn more about corfinancial’s post-trade settlement solutions, Salerio and SureVu.