Duco connected processes is a powerful optional add-on to Duco that enables brokers, banks, hedge funds, asset managers, fund administrators and custodians to link the outputs of multiple reconciliation processes.
These means you can:
Save time on root-cause analysis
Which combination of trades is causing this position issue?
Perform real-time ‘what if’ analyses
If I fix this trade, what will my account balance be?
Validate your processes with ease
My cash breaks are all fixed, but are there additional issues I may have missed?
Cut out unnecessary issue resolution communication with third parties
Was it my broker or my admin that caused the issue?
Watch this video for an introduction to our Insight module.
Account and Total Equity Balances
The majority of financial participants need to ensure their account balances are correct on a daily basis, which usually involves reconciling a key summary balance such as total equity with internal systems and third parties.
When everything matches, there’s no issue. However, when balances are out, trying to find the underlying reason can be painful. Checking the day’s cash activity, positions, prices, static data, trade activity or corporate actions can offer clues and save significant time for operations departments.
Duco connected processes dramatically simplifies this approach:
- It automatically detects how much of a balance break is caused by underlying issues, providing a breakdown of explained versus unexplained issues.
- Underlying breaks in price, static data or activity can be identified in just one click. When the underlying activity is fixed, higher level balances are recalculated in real-time.
- Enables Operations staff to perform 'what if' analysis to prove that a fix to a trade or other underlying item would bring balances back in line.
Most asset managers and hedge funds have outsourced NAV reporting to fund administrators. However, between communication with brokers, custodians and administrators, processes are not perfect and balance breaks are common.
Duco connected processes:
- Can triangulate NAV issues across all parties, for example identified trading issues that may have caused a net asset value break.
- Provides assurance to management that administrators are performing their work correctly.
- Cuts investigation time spent on the phone and in email conversations with third parties.
Keeping accurate collateral positions avoids operational risk and keeps the balance sheet efficient. Duco Insight simplifies the explanation of issues associated with collateral positions by correlating breaks with collateral movement activity.
Duco connected processes:
- Trace collateral position errors to any underlying issues with collateral movements, valuations or static data - for example later delivery.
- Prove that addressing underlying issues would correct the collateral position and bring the firm back in line.
- Provide reassurance to shareholders and operational risk managers that any underlying breaks are accounted for.
Duco connected processes allows users to link the outputs of a 2-sided process (the “Parent Process”) with one or more 2-sided processes (the “Child Processes”).
This connection allows the exceptions resulting from partially matched or unmatched items in the child processes to be reflected against the exceptions in a parent process. Duco Insight automatically detects how much of a break in the parent process is reflective of these underlying exceptions in the child processes, providing a breakdown of explained versus unexplained issues.
The degree to which a break in the parent rec can be accounted for by breaks in the underlying connected child processes can be identified in two ways. A visual indicator is given by the coloured bar underneath the break itself.
The degree that the bar is filled represents the percentage of the break that is accounted for in breaks in the connected recs. So if a bar is completely red then the break is wholly accounted for in underlying exceptions, whereas a bar showing some white indicates that breaks within the child recs do not entirely account for the parent break.
A more detailed analysis can be made by hovering over the parent break, which will deliver a pop-up providing information about the break and its connection to any underlying exceptions within child recs.
The pop-up lists out the Difference causing the break, and then underneath the percentage of this difference that can be Explained by breaks in the underlying child recs. The original values for both sides of the parent rec are also provided. Finally, at the bottom of the pop-up, child recs containing exceptions that are connected with the parent rec are listed, along with the number of exceptions that are contributing, and a colour-coded bar reflecting the review workflow status of those exceptions.
The connection between the parent and the child processes is ‘live’. So when underlying exceptions pass through the Exceptions workflow, this will immediately be reflected in the coloured bar displayed in the pop-up against the break in the parent exception.
A delta symbol is placed against parent exceptions where underlying breaks have moved within the review lifecycle, allowing for quick visual identification of where activity has occurred. Where all items have been resolved, and in effect brought into line, the bar beneath the parent exception will show as completely white.
Duco connected processes also allows you to quick-navigate, with a single click, to the underlying exceptions associated with the break in a parent rec. Where the parent break is associated with breaks from only one of the underlying recs, then clicking on the parent break will immediately navigate you to the child breaks.
However, if the underlying breaks are distributed across two or more child recs, you will be presented with a drop-down from which to select which of the connected reconciliations you wish to navigate to.
Swiftly navigating between connected processes can be done using the Latest run button.
Control how breaks surface
When you connect two processes together and configure the appropriate conditions, Duco will surface all breaks in the child reconciliation that meet the conditions to the appropriate parent reconciliation.
Sometimes it is not possible to define the conditions with enough granularity and irrelevant items may be surfaced.
In those cases, you have the ability to decide whether to surface an individual item in the parent reconciliation. You can make this decision either for an individual item in the details page or on the run results page itself.
Click on the ID of the child break, and then select Workflow.
From the drop-down, choose Ignore break in parent.
When a break is ignored, it is clearly marked as such.
It is possibly to re-surface an exception that had been ignored.
Select Surface break to parent from the Workflow menu.
Here you can learn how to configure the connected processes.