Having centralized its global reconciliations operations onto a single server in its Toronto headquarters last year, RBC Global Services now is preparing to implement London-based SmartStream Technologies' TLM Reconciliations platform. The system is due to go live in the fourth quarter.
RBC currently uses the vendor's SmartStream Reconciliations (SSR) application but plans to upgrade to TLM Reconciliations - in large part to support a move from positional to transactional asset reconciliations, according to Mark Housden, senior manager, operation support, with RBC Global Services. Once TLM Reconciliations is implemented, the next stage will be to plan the migration to the transactional model, a process that will be mapped out in greater detail at a later date. "The other big driver," says Housden, "is that there is a lot more flexibility within TLM, so we believe we can increase our efficiencies from a matching point of view."
For the time being, TLM Reconciliations will be used only for RBC's existing operations - the deal will not impact RBC Dexia Investor Services, the recently announced joint venture (JV) between RBC and Dexia that will combine their institutional investor services businesses. "The intention would be that once the JV is in place, the possibility of different types of integration will be looked at," relates Housden.
RBC has three reconciliation centers - in Canada, the U.K. and Australia - that previously operated on servers based in each location. "Part of the business case for centralizing the servers was that we were always looking to upgrade to TLM, and, obviously, to upgrade one server was a lot easier than to upgrade three," explains Housden. "The existing SSR application is linked to all the systems we have that we need to do reconciliations against, so all we are doing is changing over to TLM, which will adopt the existing links," he continues. "As a result, there are no other technology changes apart from doing the upgrade."
The firm also wanted a centralized server so that it could be accessed by the other regions. "It gives us the ability to move reconciliations to different areas," says Housden. "So, for example, we can do the reconciliations for London in Toronto." In addition, the firm wanted to provide a consistent look for its reconciliations globally and to make sure the process and support was consistent, Housden continues.
Though RBC did consider other vendors, which Housden declines to name, the firm decided to stick with SmartStream. "At the end of the day, we still felt this was the best product," Housden says. "And obviously, we'd already built the infrastructure around it, so it would have to be a pretty strong reason for not" staying with SmartStream.
Supporting the Trade Life Cycle
With TLM Reconciliations, SmartStream is enabling firms to track trades throughout their life cycle, enabling them to identify and correct errors before final reconciliation, according to Joshua Derrick, global securities industry consultant with Olmstead Associates. This reduces the number of fails and improves straight-through processing capabilities. "Previously, reconciliations were concentrating more on the back end of things - just a position-to-position type of match," Derrick says. "With TLM, [SmartStream has] concentrated more on specifically supporting some of the other life-cycle pieces."
The ability to tie reconciliations back to the actual trade life cycle represents significant progress, Derrick suggests. But reconciliation vendors need to spend more time with the various Industry Standardization for Institutional Trade Communication (ISITC) working groups so that they continue to understand the industry's reconciliation requirements better, he stresses.