Custodial Data Quality

One of the biggest challenges to an efficient back office operation is custodial data quality. Obviously, every time one has to intercede or touch custodial data it slows the entire work flow and potential consternation downstream as your Moxy import, therefore trading is delayed. Reporting can be effected, whether daily, monthly or quarterly.

Most people don't understand that every custodial accounting system is different and so when writing these interfaces you have to "normalize" the data the best you can to incorporate it into the portfolio accounting system, in our case Advent. Even within large institutions, like Merrill Lynch, you can have multiple accounting systems, so depending on where your assets are custodied you may or may not even has access to your data.

So what can an operations manager do about it?

1) First, understand the data thoroughly. Sounds obvious, but no matter what the online documentation says, it may be wrong. For example, it may say all data is "trade date", hooey! I have seen the transaction data be trade date, but the positions settle date. Even within the position files I have seen positions trade and the cash settle. (Frankly, this is the hardest to deal with!) So knowing exactly what the data is saying is a large part of the data, because at a basic level you can create workflows to accomodate.
- In my example above I would have the client run the position report trade for positions and settle for cash recon. Clumsy, but it works.

2) Another answer could be to explore ByAllAccounts. www.byallaccounts.com

We have several clients that have used them successfully.

3) The last option is building a software solutions. It could be a report that can handle your issue or building an application that can "normalize" the data based on rules you identify. This is the most expensive solution, but depending on the time savings can easily be justified.

4) Automation can sometimes be a solution, but frankly it breaks periodically, so this isn't always the cleanest solution.

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