Blockchain May Solve Capital Markets’ Internal Reconciliation Problems

Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe Read this Term technology could help with a vast number of intersystem data reconciliations taking place horizontally and vertically across enterprises that are not being addressed, according to a new TABB Group research, “Inside Reconciliations: Capital Markets Dirty Little Secret.” The report details the internal reconciliation processes in financial services firms and discusses the potential for distributed ledger technology to help.

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The report’s author, TABB senior analyst Dayle Scher, explains that the capital markets industry suffers from a surfeit of internal reconciliations that result from the inadequate transfer and synchronization of replicated data from platform to platform. The resulting discrepancies can cause errors in trading, pre-trade compliance checks, client and regulatory reporting, Analytics Analytics Analytics may be defined as the detection, analysis, and relay of consequential patterns in data. Analytics also seeks to explain or accurately reflect the relationship between data and effective decision making. In the trading space, analytics are applied in a predictive manner in an attempt to more accurately forecast the price. This predictive model of analytics generally involves the analysis of historical price patterns that are used in an attempt to determine certain price outcomes. Analyt Analytics may be defined as the detection, analysis, and relay of consequential patterns in data. Analytics also seeks to explain or accurately reflect the relationship between data and effective decision making. In the trading space, analytics are applied in a predictive manner in an attempt to more accurately forecast the price. This predictive model of analytics generally involves the analysis of historical price patterns that are used in an attempt to determine certain price outcomes. Analyt Read this Term calculations and pricing of securities and funds. More than 50 percent of the 150 firms surveyed experienced trade errors caused by incorrect position or cash data across different systems, and two-thirds of the firms attributed this to poor reconciliation between systems.

The report details how the inefficiency of internal reconciliations have gone unresolved because in many cases they have not been acknowledged at a corporate level. Data reconciliations are often occurring across business siloes and each department addresses errors independently. TABB suggests that one solution may be an internal, enterprise-wide private blockchain as an alternative to the traditional database structure, though various interdepartmental privacy and permissioning issues would need to be integrated.

“A single immutable source of data, which could potentially be made possible through distributed ledger technology, vastly reduces the need for multiple internal reconciliations and the risk of trade or reporting errors,” says Scher. “The reduction in the total cost of ownership for the reconciliations process, personnel and systems will be dramatic if curtailed or completely eliminated with a private blockchain solution.”