Investment over the past two years by sell-side clearing firms in automation has had a significant impact on post-trade operations, a new report suggests.
The Q4 Acuiti Sell-Side Clearing Management Insight Report is based on a survey of the Acuiti Clearing Expert Network, a group of more than 100 senior executives.
In Q4 2021, Acuiti conducted a study of the state of reconciliations following the volatility of Spring 2020 and the failings it exposed in sell-side post-trade processing. Acuiti found a market in the middle of investment as it sought to address inefficiencies and reliance on manual processes.
Acuiti head of research Ross Lancaster said: “Firms across the sell-side have made significant progress since 2020 when it comes to increasing the efficiency of the reconciliation process.”
“This is reducing overall operational risk across the market and providing a competitive edge for firms that invest. However, there is still some way to go for many firms to fully optimise the reconciliations process,” Lancaster said.
More than two thirds of firms had made an investment in reconciliation software over the past three years with a majority using third-party software.
As a result, 39% had fully automated their reconciliation processes, including 44% of Tier 1 banks, a significant increase on 2021.
One persistent area of inefficiency is the continued use of spreadsheets in the reconciliation process. While 36% of firms no longer used spreadsheets at any stage of reconciliations, a third still used them as part of the core process and 18% for external analysis of the data. In addition, firms are looking to run more reconciliation processes per day and over 20% experience difficulties when onboarding new clients or processes.
Fola Oyeleye, product manager at HelloZero, one of the co-authors of the report, told BEST EXECUTION: “Spreadsheets are often the go-to tool for reconciliation processes because professionals in the sector have a long history of use on the platform dating back to their early work days. Most professionals are familiar with them and become hesitant to embrace new systems. While spreadsheets can give users a sense of control over small changes, normal workflows become fraught with problems when you have to deal with large datasets, complex business operations and the need for automation.”
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