Smart Confirm

A solution for automating two/three-way matching of Treasury Confirmations (MT3nn)

A Treasury Confirmation is the manual record of a deal ticket produced by a Front-Office Trader and consists of many fields of information. It differs between individual types of transaction such as spot and forward Foreign Exchange and Money Market deals, Derivatives, etc.

Treasury confirmation matching involves whichever of:

  • Our side,
  • the counterparty's, and
  • the broker's confirmations

and may include any subsequent AMENDs, CANCELs, ROLLOVERs, etc. Our's and the counterparty's confirmations may be collected as they pass through the SWIFT terminal, whilst broker confirmations can typically be received from Reuters 2000 or the ACS network.

Swallow Technology was the first supplier to produce a system that could genuinely match confirmations both two and three-way. Which means that the SMART-CONFIRM product not only matches a Counterparty Confirmation (THEIR side), against a Bank Confirmation (OUR side), but also (when relevant) incorporates a BROKER's Confirmation into a match. This is then compared to both the THEIR and OUR sides, making it a full two or three way matching system.

Automatic matching

"Matching" is a main system process within SMART-CONFIRM, which is

  • typically run in a real-time cyclical mode, or
  • may also be linked to an input process, or
  • may be requested "on demand" when relevant.

During the matching process SMART-CONFIRM attempts to find the best possible matches and grades each one according to the quality parameters (matching criteria) set up by the user. Match qualities are

  • user definable
  • chosen by simple mouse clocks.
  • manual matches possible
  • by particular message type
  • optionally by counterparty/account and composition
  • using all appropriate fields

Message queues

Once SMART-CONFIRM has determined the quality of a match, it will assign it a status and place it within a relevant system queue, either 'Confirmed', 'Offered' (to the users for review) or "Outstandings" (unable to be "matched").

Processing "Offered" Matches

The match queues divided by status (Offered, Confirmed), are further subdivided by message type and counterparty/account or composition as appropriate, with access restricted by user.

Matches are presented one-by-one and the users can take the appropriate action on each. The queues allow multi-user access with matches currently in use by another user being bypassed.

In all situations, the user may either

  • confirm the match if they are satisfied it is correct,
  • suspend it for further action, add or delete items, or
  • unmatch it, i.e. take the whole match apart.

Outstandings

SMART-CONFIRM will always attempt to find the best match for an item, but the data may be of a quality such that items belonging together do not have sufficient common elements for them to be offered as a match, or the relevant matching items may not even have been received into SMART-CONFIRM at this time. These items will remain in an "Outstandings" queue.

Brokerage

For those institutions that utilise the three-way matching functionality, there is also the facility for

  • Brokerage charges/discounts to be recorded
  • accurately checking Brokerage Statements
  • advising front office traders of reaching broker thresholds for discount entitlement
  • producing result and exception reports, for example for tariff inconsistencies
  • immediate recognition and highlighting of rate and interest gaps, rather than at the end of the month, when investigation may be more time consuming.

Follow-up

SMART-CONFIRM has a very comprehensive and versatile follow-up and chaser capability, which enables the user to easily create :

  • on-line e-mails
  • SWIFT-messages
  • faxes
  • memos or
  • letters

for sending to other Counterparties, or alternatively to create correspondence to various internal departments.

A major area of concern within Confirmation Matching is the requirement for tracing or chasing of Confirmations queries, for example, when one side of a forward trade has not been confirmed and remains outstanding for a certain period of time.

In such cases Counterparties can be chased at an individually set number of dates after initial transaction date.

SMART-CONFIRM has the capability of producing all these tracer messages

  • automatically
  • using a variety of text templates and
  • inserting all relevant information of the actual transaction using "key words".

This alleviates the User having to manually compose each message and insert details of each trade to be chased.

SMART-CONFIRM, working in a customer environment

SMART-CONFIRM can run as a departmental system in the Back-Office of the Trading Room, or as a central application for all reconciliation tasks in a specific Control Department. Both will be equipped with a great enhancement of their ability to expertly resolve queries and investigations quickly and efficiently. Matching of Confirmations is a crucial function for a Treasury Environment and is normally referred to as the 'Last Line of Defence' for stopping errors.

SMART-CONFIRM matches confirmations automatically, leaving the staff to deal with the exceptions and anomalies such as:

  • Incorrect Settlement Instructions
  • Acounterparty/or OUR side confirmation that has advised an incorrect Paying Instruction for the sale side of a Foreign Exchange Deal.
  • An incorrect Value Date
  • A Counterparty Confirmation states a different Value Date from the OUR side Confirmation.
  • Unapplied Counterparty Confirmation
  • No match offered in the automated system - the confirmation may have been sent in error by the
  • Counterparty, the dealer from the OUR side perspective may not have written out the deal, or the deal has been transacted in another Counterparty name.