Operations teams in securities finance face material challenges when managing basket Total Return Swaps (TRS) flows. TRS baskets are reshuffled on a daily basis, and the number of economic and non-economic parameters are vast. Manual cash flow verification has become not just inefficient but a material risk to financial institutions.

The legal confirmation process is outdated and manual. While new trades are manually confirmed on paper, subsequent reshuffles are often unchecked. In the absence of standardized industry-wide trade reconciliation, cash flow reconciliation remains the sole method for identifying PNL discrepancies. Market-wide, there is a need for a comprehensive solution which manages risk and improves controls.
 

The Breakthrough: Wematch’s Cash Flow Management Module

Wematch’s solution provides a transformative front-to-back solution, which streamlines and centralizes cash flow management via three core features:

1. Independent cash flow calculation and centralization of all non-economic cash flow preferences
2. Trade booking synchronization through the reconciliation of all economic terms
3. Fully automated cash flow reconciliation which highlights cash breaks and identifies the root cause

Key Advantages of Wematch’s Cash Flow Management Solution

1. Fully automated reconciliation: eliminating the inefficiencies of manual cash flow validation. Our automated reconciliation module compares cash flow data across counterparties in real-time, using intelligent break assignment to reduce investigation times and enhance accuracy.
2. Enhanced Trade Capture: our daily trade reconciliation mitigates operational risk by ensuring your booking details always match your counterparties. This can be easily integrated into your booking workflow via API connectivity.
3. Streamlining communication: a shared platform creates a common language allowing users to identify and resolve breaks faster. Workflow features make communicating with your counterparties effortless.

Bottom line: How Do Financial Institutions Benefit?

• Fewer PNL adjustments: by reducing trade capture breaks at source, cash breaks can be resolved more quickly, helping to prevent unwanted PNL adjustments and associated errors
• Improved settlement timeliness: late settlement costs carry a real financial cost, including late settlement fees, internal funding costs and margin call inefficiencies. More efficient settlement processing via our platform mitigates these risks.
• Stronger client relationships: clients are highly sensitive to incorrect or late settlements, and these can be the difference between securing future business or losing it to a competitor. Our platform mitigates this risk, fostering trust and long-term partnerships.

Next steps…

Wematch’s cash flow management solution enables operations professionals to save time, reduce risks, and improve operational efficiency. It’s time to move away from manually investigating cash breaks. Embrace automation and take control of your settlement process – speak to our team today.