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CO-WRITTEN / PARTNER | Staff Reporter, Singapore

SmartStream slashes cost of trade breaks due to bad data by around 90%

Three of the world’s biggest banks – Goldman Sachs, JPMorgan Chase and Morgan Stanley – are now founding members of SmartStream’s Reference Data Utility.

Over the past few years, financial firms have become more conscientious when it comes to the handling of their data. There is simply no room for complacency as companies are beginning to place a heavy premium on investing in data processing and management. Firms can no longer afford to be caught flat-footed with inefficient and inflexible systems in the face of economic headwinds.

Enter SmartStream Technologies, a global software and managed services provider founded in 2000 to bring automation and control to post-trade operations by creating more efficient, customer-focused, cost-effective, and compliant operations.

Originally focused on reconciliations, SmartStream now claims to outperform most of its peers in the financial markets sector, with services and products including innovative post-trade processing solutions and data management services. When it comes to transactions, the company aims to provide a real-time and pre-emptive approach to reducing trade failures while also accelerating and automating trade processes.

In its 15-year existence, SmartStream has kept one step ahead of its competitors thanks to its firm commitment to providing transaction value to its customers, its top executive says. “It’s all about thinking what is unique to a bank, what should be performed inside a bank, what is ripe for ‘mutualisation,’” shares Philippe Chambadal, SmartStream chief executive officer, when asked to describe the company.

The London-headquartered firm’s most significant and recent offering is the SmartStream Reference Data Utility (RDU), a product first developed five years ago that addresses issues around cross-referencing, data cleansing and data enrichment. “In effect, we have created a common data model for the industry, and we have very high-quality data so we can increase STP (straight-through-processing) rates within the financial world,” Chambadal says. “In terms of benefits to users, the direct impact is on the cost of data management systems—typically we can save at least 30 to 40% of the direct operational costs of data management systems. However, the greater benefits are on the impact of bad data on downstream systems. With SmartStream, repair costs of trade breaks due to reference mismatches are slashed by a significant 85 to 90%.” 

The founding banks

Just how effective is this reference data utility? Well, in October 2015, Goldman Sachs, JPMorgan Chase and Morgan Stanley – three of the world’s biggest banks – signed up to the RDU, becoming shareholders in the process.

“The founding banks – all of whom are significant names – are becoming both clients and shareholders. The goal for them is not only to improve their internal efficiency and improve their operational risk control,” Chambadal shares, “but also to deploy the same data model and the same pristine data to their clients. This way they can eliminate a lot of friction and trade breaks, and improve quality of service between say, prime brokerage and the hedge funds, or the custody-side and the buy-side.”

And it’s not only in the reference data management world that the SmartStream utility model is starting to become an industry standard. “We believe that in the post-trade world, all services performed are ripe for mutualisation. We have another utility for brokerage clearing and exchange fees management,” adds Chambadal, “where SmartStream takes in all invoices and deconstructs them down to transaction level. Additionally we are in discussions around developing utilities in the collateral management space and derivatives trade reporting space to see if we can improve efficiency in other parts of the market.” 

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