Solve these 4 challenges of multi-asset reconciliations with Duco
Multi-asset strategies create opportunities for your front office – and big challenges for your middle and back office. New asset classes, new funds, a roster of prime brokers. These all maximise market opportunities while optimising execution and financing and diversifying counterparty risk.
But the chaotic nature of multi-asset data creates four key challenges for your Operations teams. These challenges are often embedded in technology stacks and operating models, making them very difficult to solve.
They are frequently a symptom of the shortcomings of the very technology that was meant to solve data reconciliation and transformation problems!
Let’s explore how you can overcome these challenges with the Duco platform.
Challenge: A flurry of prime broker data formats
Your prime brokers could be sending data as CSVs attached to emails, fixed-width text files over SFTP, a modern API that needs IT to connect, XML files, and much more.
There are a multitude of variables to deal with – unique column headers, different instrument identifiers (ISIN, CUSIP, Sedol, Ticker, and so on) and various formats for date and quantity.
This creates a huge problem for traditional on-premise legacy systems. They are designed to accept data in a specific format. Firms often require an expensive layer of extract-transform-load (ETL) tools or manual work to take data and shape it in a way the system can accept.
Duco’s data prep module, on the other hand, wasn’t built to handle data in a specific format. Instead, our philosophy was that change is inevitable, so our platform should react to it, rather than forcing users to transform their data just to get it into the platform.
This means your teams can ingest, normalise, and transform data from multiple sources into a single output, without ETL processes or manual work.
It not only works for flat files or industry standard templates, like FIXML, ISO XML and Swift messages, but also unstructured files like PDFs or images. Simply upload the files, and let Duco identify the file type, structure and data types associated with each field. You can quickly map different data sources to one another, creating a normalised data set that you can then feed to downstream systems or into Duco’s reconciliation module.
Challenge: the business moves faster than Ops can
Imagine the scenario: the front office is excited to bring on a new prime broker because they offer access to a new market. They want to go live in four weeks.
But when your Operations team goes to IT, the reality is a six-to-nine-month project. Your IT team has many strategic priorities to focus on, from implementing a new HR system to ensuring firewalls are doing their job. They simply don’t have the time or resources to be onboarding new data sources or building and changing reconciliation processes for your team in the timeframe the business requires them.
This has an unfortunate side-effect: Operations teams, faced with the challenge of quickly meeting the needs of the business, resort to manual work. Whether this means manually entering data into a system in the correct format or reconciling it in a spreadsheet.
Duco changes the approach, providing Operations with greater agility while keeping governance firmly in the hands of IT.
Duco’s data prep module enables business users to quickly add new feeds. There’s no need to rebuild processes from scratch. Similarly, your teams can use our no-code interface to quickly build or change prime broker reconciliations without developer support.
IT remains in charge of the overall platform, ensuring integration with your tech stack and that the correct governance measures are in place.
Challenge: high manual effort = high risk
Your Operations teams are trying their best to keep pace with the demands of the business. But resorting to manual work creates risk for your business. Human error can have significant consequences.
For example, an incorrect filter could accidentally exclude a multi-million dollar position from a reconciliation. Or a manual normalisation process misses the fact two prime brokers have handled a corporate action differently.
These are unhedged risks that can lead to failed trades, inaccurate net asset value (NAV) calculations, poor client reporting, and unwanted attention from regulators and auditors.
Manual processes usually come about because the need for a new process is too urgent, the volume is too small to warrant the wait for development, or your on-premise system can’t cope with the complexity of the data.
The Duco platform tackles the challenges of multi-asset data that have previously made full automation impossible on traditional systems. The flexibility and speed of our platform removes the need to resort to manual processes in the first place.
Duco customers are empowered to consolidate or remove manual processes or end-user developed applications (EUDAs), replacing them with fully automated controls. In many cases, they have demised the outdated systems that were holding them back in the first place.
Challenge: analysts can’t analyse
Your reconciliation analysts are experienced professionals. But the shortcomings of technology and the needs of the business mean they often spend their time on manual tasks.
Even automated processes on legacy systems can cause problems. Poor match rates create false noise for your analysts to wade through. They waste a lot of time resolving the same problems day in, day out while hunting for the genuine errors that need solving.
This routine of repetitive, low-value tasks isn’t rewarding. Many firms are aware of the impact it’s having on their ability to attract and retain the best Operations talent.
Duco does things differently, elevating your analysts to a position where they can make an impact. Our proprietary matching algorithm spots connections other systems can’t. This pushes your match rates significantly higher, cutting down on the noise of false exceptions.
And there are many features of the platform that accelerate exceptions investigation. Breaks are shown on a field level, meaning you can instantly see where the problem is. Less time spent digging, more time spent fixing.
On top of this, with Duco your analysts can create parent-and-child relationships between processes to overcome common sources of breaks when dealing with multi-asset data. For example, creating a parent-child relationship between trades and processes enables you to identify when an underlying trade break is causing a position break.
These connected processes save time on root cause analysis as they quickly identify the source of the error. It also reduces duplicate effort, as you are not having to independently investigate a trade break and a position break because you can’t see the relationship between them.
Master your multi-asset data with Duco
The solution to multi-asset data chaos is a control framework that is agile enough to respond to the changing needs of your business. One that handles data whatever shape it’s in, that removes the noise of false exceptions and provides a transparent view across your processes.
All of this is possible when you break away from on-premise technology and embrace the latest in AI-powered, no-code data prep and reconciliation in the cloud. The Duco platform already helps asset managers overcome the chaos of prime broker reconciliations, unlocking accurate, timely and transparent views across their trades and positions.
It delivers agility, empowering your business users to onboard new prime brokers and other data sources themselves.
And most importantly, it gives you deep insight, allowing you to move beyond simply identifying breaks to instantly understanding their root cause. Your analysts no longer spend their time on unrewarding manual tasks. They are free to focus on protecting the business from genuine, costly data errors.
This is how Duco helps you tame complexity, reduce operational risk, and create a more scalable and efficient post-trade environment.
Watch our multi-asset data webinar on-demand to find out more.