In a market with falling volumes and revenues, it’s important for investment banks to know they’re being billed correctly for their transaction costs and that they are being allocated appropriately. The advent of commission unbundling also points the spotlight on client costs beyond research to ensure you have profitable execution relationships.
Can you be sure you know the costs of dealing with your clients? How much are you paying for non-trading clients? How do you know that EMS, OMS, trading venue and FIX connectivity providers are charging you correctly?
MDSL’s Transaction Reconciliation Reporting (TRR) is an expense management platform for your trading costs, from exchange fees to client connectivity. It ensures you’re being billed correctly and that invoices are allocated to the right clients or desks. Having all this spend in one system gives you a global view across multiple asset classes, which can then be used to make informed business decisions.
Whether we are looking at the multiple trading venues (on and off exchange), network connectivity or the EMS/ OMS providers, they all enjoy finding the most varied ways of charging you for their service. The invoice comes in; the invoice is paid. Questions are seldom asked, and even then only after someone has spent hours within multiple spreadsheets trying to get the information together to check it.
You need a service that will give you confidence that you’re being billed correctly. This shouldn’t tie up your own resources or be outsourced to a costly army of people (increasing opportunities for human error). TRR uses a calculation engine that can predict the invoice amount for each trade placed, for each vendor involved in the process. A solution that simply compares the invoice totals is no longer sufficient, identifying only that there is a difference, (and not why there is a difference), means there is a separate task of analysis that needs to be performed later and manually by another member of staff. TRR can compare the invoice detail against its prediction and provide you with any discrepancies to raise with the vendor. Our red-amber-green reporting makes it easy to focus on the lines of interest, reducing the time taken to review and raise disputes.
The next problem for a financial institution is how they then distribute those costs incurred to the correct desks and clients. This is a task requiring a vast amount of data, and if you’re not including the costs for their transactions, many will appear as profitable when in fact they may have been making a chronic loss. It’s not just external allocations; we frequently hear stories of disgruntled users on desks who have received an even split of a bill (for which nobody can justify if it is seldom used for their desk) or worse yet that the whole invoice has hit their cost centre.
TRR correctly assigns the invoiced amounts to the right clients and area of your business. All the invoicing is allocated at a trade level so that you can easily see how the total is created. Our flexible online reporting portal means that you’re never more than a few clicks away from seeing the cost of a client or desk. These are easily shared to the appropriate audience with live data.
With TRR, you have all this information managed within a database, combined with a powerful reporting portal. Upon entry from various sources, the data goes through our mapping engine to ensure that you’re seeing a normalised data set from the beginning, saving countless hours of file manipulation. Contracts and associated information are also loaded into our role-based portal, so that you can enable the right people to view this information (e.g. an electronic version of a contract). Our alarms mean that you never miss a key contract date again, with customisable emails sent out to contract owners and sourcing teams.
By using TRR, you are using a solution built from our award winning expense management platform, with $7 Billion of spend under management. With commission unbundling either underway or having already taken place at your institution, there has never been a better time to put your execution costs under the microscope and ensure the agreed commission rates are profitable.