Securities processing software firm, Torstone Technology, has announced that its Inferno back office solution has been chosen by GFI Group to manage its reconciliations. According to Torstone, the deal is a multi-year contract where GFI will be using Inferno to reconcile trades, positions and cash balances of STP orders for its derivatives products.
While often overshadowed by front-end trading software, reconciliation products are an integral piece for trading desks to monitor the reporting of trades. Within FX, reconciliation software is used to verify that order flow meant to be hedged is actually sent to the market and matched with an accompanying client trade. Breaks in the execution of hedged trades or delayed reporting can create discrepancies between customer and proprietary risk exposure. Problems with breaks become more likely and firms increase the amount of trading platforms they execute and counterparties they trade with. Within retail FX, demand for reconciliation solutions has increased due to more brokers adopting agency STP models.
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According to Torstone Technology, the firm is also seeing interest for their Inferno product due to regulatory changes taking place. Commenting to Forex Magnates about this trend, Brian Collings, CEO of Torstone Technology, stated, “The emphasis over the past few years has been on consolidation across business areas and often globally to provide regulators with a full picture. The next stage is proving completeness and accuracy of that consolidation information, which not only requires more automated reconciliation, but tools that allow you to resolve breaks more quickly. The message we are getting from our clients is that the regulators are becoming much more interested in how financial institutions are managing the process of information consolidation, not just the overall risk numbers being provided.”
In the public statement about the news, Prash Naik, GFI Managing Director Finance & Operations EMEA, added, “Working with an agile technology firm such as Torstone means that we’ll be using the latest technology. In addition, their hosting service and upgrade process mean that they will keep us on the latest version so that we don’t need to go through painful and costly upgrades.”