In other FinTech news, the CFTC will work more closely with the FCA, ION acquires Reval, and OTAS finds a new partner.
BCEE Implements SmartStream’s Corona
Banque et Caisse d’Epargne de l’Etat of Luxembourg (BCEE) has implemented a way to help the bank meet reporting and audit trails regulatory requirements of the Internal Revenue Service (IRS) that have a tight turnaround time. In general, banks only have a few weeks to reconcile annual data before the legal cut-off for reporting to the IRS.
“BCEE is a long-standing customer of SmartStream and uses Corona solutions for cash and securities reconciliation, investigations and confirmations,” explains Alain Mercier, deputy head of the IT development department and BCEE, in a statement.
BCEE officials report that they have implemented the Corona Universal Data solution from post-trade systems and software vendor SmartStream Technologies to meet IRS reporting and audit trail requirements for all transactions.
“As a qualified intermediary, BCEE must fulfil the reporting obligations to the IRS,” says Alex Revelant, head of the securities department at BCEE, in a statement. “Our team needs to ensure that the data provided by BCEE (relating to U.S. payments) is in line with the classification of the same payments, reported by each of our custodians. The reconciliation is performed by combining different codes relating to the instrument, the income type, the beneficiary and of course the taxation data, all of this for each income payment is necessary.”
With each intermediary owning its own system, there is no standardization of the disclosure, the format of the files or event, and the number of fields provided, Revelant says. “Each year, the reconciliation was time consuming and in part was performed manually for many weeks,” he says. “Today, as a result of having Corona, the functional team can focus on the real issues rather than on the reformatting of the files received. In addition, operational risk is reduced.”
As banks work to meet IRS requirements, they have to manage possible errors and exceptions, “which need to be taken into account and escalated,” according to SmartStream officials. “As each bank works on its own system, manual processes often involving Excel spreadsheets are common practice. As a consequence, operational risk remains high.”
The Corona solution updates data from the custodian, reconciles it and alerts the bank of any errors, providing a full audit, vendor officials say. “Within a few weeks, we managed to set up the tool and tested the solution quickly,” adds Christian Schiebl, executive vice president, Corona Business Unit, SmartStream.
CFTC, FCA to Better Cover Dealers Working in U.S., U.K.
The CFTC and U.K. regulator, the Financial Conduct Authority (FCA), will be exchanging more information about regulated firms that work in cross-border markets in the U.S. and the U.K., according to a memorandum of understanding (MOU) that facilitates cooperation between the regulators.
The MOU was recently signed by Timothy Massad, CFTC chairman, and Andrew Bailey, chief executive of the FCA. “Through the MOU, the CFTC and FCA express their willingness to cooperate in the interest of fulfilling their regulatory mandates. The scope of the MOU includes the 20 firms registered with the CFTC as swap dealers,” according to the CFTC.
ION Investment Group to Acquire Reval
Workflow automation vendor ION Investment Group is acquiring a provider of cloud-based solutions for treasury and risk management, Reval, so that ION can expand its footprint in treasury cloud services and offer more functionality for risk and hedge accounting, officials say.
ION offers trading and workflow automation software to financial institutions, central banks, governments and corporates.
“The acquisition of Reval substantially increases our footprint in treasury cloud services and enriches our product portfolio with leading functionality in risk and hedge accounting,” says Andrea Pignataro, ION’s CEO and founder, in a statement. ION will also be able to “leverage Reval’s strong sales, marketing and customer success teams across the product portfolio” under Jiro Okochi, CEO and cofounder of Reval.
Reval was founded in 1999 and has headquarters in New York with regional centers across North America, EMEA and Asia Pacific, officials say.
OTAS Technologies Partners with ExtractAlpha
A specialist provider of market analytics and trader intelligence, OTAS Technologies (OTAS) is partnering with ExtractAlpha, a fintech research company to offer actionable trading factor analytics, targeting buy-side and sell-side clients including quants and asset managers.
The ExtractAlpha Tactical Model is now available within OTAS Core Summary offering clients quantitative analysis, intended to help with alpha generation and improved trade timing, officials say. The ExtractAlpha quantitative models are designed to optimize trade entry and exit points, and avoid crowded trades. The vendor has three stock selection models for U.S. equities, and more models are in the works global coverage to follow.
“We partnered with OTAS as together both companies can provide a unique offering of trading analytics to the market that isn’t available through any other company,” said Vinesh Jha, CEO of ExtractAlpha, in a statement. “With the proliferation of new data sets available today, forward thinking managers will now have an opportunity to be ahead of the game.”
OTAS Technologies uses artificial intelligence and big data analysis to alert clients to opportunities and risks, in real-time and in plain English, officials say. The OTAS offering are generally integrated into clients’ existing order and execution management systems and/or portfolio management systems (PMSes).
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