Hedge Fund Implementation

Payments and Cash Management solutions for Hedge Funds

Sujith Nair — Wed, 13 Oct 2010 20:43:03 GMT

I have been writing our hedge fund solutions overview and case study this last week and thanks to our creative team's efforts with the pictures and formatting, it is ready for release now. Look for it on our website later this week. Here is a quick excerpt that provides an overview of treasury sciences solution for hedge funds.

Treasury Sciences offers a configurable solution that is tailored to hedge fund specific needs. Key features include:

Centralized configurable payment controls and templates across financial institutions provides one system for all users across operations and management

Multi-currency support for wires, transfers, credit notices, ACHs and forecasts with the ability to systematically capture accounting treatment and supporting documents. Near-real time reporting, automated alerts and notifications

Multi-bank connectivity for payments based on SWIFT and ISO 20022 and automated integration for statement reporting, automatic reconciliation of transactions with payment forecasts and automated application of accounting treatment

STP - End user configurable, scheduled automated updates in transformable XML format that can be applied to backend Portfolio Management System for Straight Through Processing

Best in class reporting capabilities; end users can create rule based reports, share, export into MS-Excel and PDF and schedule automated delivery of reports via email

Cash Position, GL Integration, Hedge Fund Treasury Worstation, Netted Payments, Reporting, Straight Through Processing, Treasury Management , Treasury Management System , Treasury Workstation

Payments, Positioning & Integration for Hedge Funds - Overview

Sujith Nair — Thu, 07 Oct 2010 06:07:41 GMT

The last 2 posts detailed out various aspects of our implementation for a large hedge fund. Todays post or picture provides an overview of the complete implementation - this picture is an early version of the picture that will appear in a case study of our payments and cash management system implementation for hedge funds. Will post a link to it when available. Meanwhile, here is the overview.

Automated Accounting Treatment, Cash Position, GL Integration, Hedge Fund Treasury, Hedge Fund Treasury Worstation, Multi bank payments, Netted Payments, Payment workflow implementation, Reporting, Straight Through Processing, Treasury Management , Treasury Reporting, Treasury Workstation, Treasury Workstation Reporting

Transaction Manager for Netted Payments from Portfolio Management Systems - Hedge Fund Implementation

Sujith Nair — Wed, 06 Oct 2010 04:51:09 GMT

In the last post, I described the integration features provided by TS EFT into Sungard VPM and other portfolio management systems. Today, I will discuss the transaction manager dashboard within TS EFT that enables end users net transactions and some other value added features.

Note: These screenshots are created from our implementation of TS EFT for a hedge fund customer. Even though the screenshots are from a test environment (we provide a user acceptance environment where end users at the customer can test and verify a feature before we push the feature out to production) I have hidden some data fields to ensure that I don't expose any customer data inadvertently.

The screenshot above shows the transaction manager screen and all features provided by it. On the left of the screen, you can see the options to view this dashboard, ability to import files manually from Sungard VPM or other portfolio management systems, the ability to map payment templates to certain fields to enable auto population of data and a screen that lists all submitted transactions.

On the top part of the screen, are the various filter criteria- here we have the ability to filter by account, fund, security type and multiple other filters. Also available is the ability to filter based on transactions that are mapped or not mapped to a template.

Do note that this screen including the fields listed and the filter options available are completely configurable to a customer's needs.

Below the filters we have the table that lists all the transactions imported from the portfolio management system - Sungard VPM in this case. Each column is sortable, the columns are configurable per deployment as well. On the left of the table are the check boxes that users can select to net transaction together.

As mentioned in my previous post, we have an automated scheduler that pulls data from VPM into TS EFT module. Additionally, we provide a quick end user import feature that enables end users to import file s manually into the system - the import screen is shown below.

Finally, a quick look at the mapped payment templates via the template mapping option on the left nav of the screen- here the system lists all the templates mapped and criteria based on which the templates are mapped.

Note that the payment template mapping criteria for this hedge fund customer is based on account type, security type and currency. This mapping criteria is again configurable and can be setup differently for another deployment.

End users can also add additional template mappings and remove existing template mappings using this screen.

Thank you for reading. Do let me know should you have a question or if you have similar needs.

Hedge Fund Treasury, Multi bank payments, Netted Payments, Treasury Management

Netted Payments from Sungard VPM - Credit Notices, Transfers and Wires - Hedge Fund Implementation

Sujith Nair — Tue, 05 Oct 2010 06:59:49 GMT

In a previous post, I had described some of the challenges and implementation details of a recent payments system implementation for a hedge fund customer. You can read that post here.

This post further details the integration of our payments module (TS EFT) with Sungard's Virtual Portfolio Manager (VPM), subsequent details of netting and eventual transmission of payments, credit notices and transfers to the banks. The picture below provides an overview of the integrated system, details follow.

Sungard VPM Integration: Scheduled exports from Sungard VPM are created and uploaded to folder from which the TS scheduler pulls the data into the TS EFT module. The file imported has a list of transactions and each transaction has a unique transaction identifier and a field that indicates whether the transaction is a new one, an update or a delete request from VPM. Note that transactions from VPM can only be updated or deleted ONLY if the VPM transaction is not part of a netted EFT transaction already. If not, the EFT has to be rejected and only then will the transaction be updated or deleted.

Transaction Manager & Netting Capabilities: The EFT transaction manager lists all imported transactions and allows users to select transactions to net based on rules that can be defined per combination of fields - for example, only certain transactions maybe netted together based on multiple configurable fields (say the clearing broker and currency) from the VPM import file. As the transaction manager is completely XML driven; the product can easily be configured to support other portfolio management systems such as Advent Geneva. It can even be configured to integrate with in-house portfolio solutions.

Template Mapping: TS EFT supports creation and use of templates for all payment transaction types - note that these are templates that are independent of the banks themselves. The transaction manager also allows to map templates to end user selected mapping criteria based on data in the VPM input file. Here again, you could create and map templates - one per clearing broker and currency thereby requiring the user who nets the transactions to create the EFT to enter minimal information on EFT origination.

Payment Types: For this customer deployment, their custodial accounts are at BONY and CSFB has their prime broker accounts. Cash positioning for the custodial accounts held at BONY is done via TS CMO module and hence the need for forecasting for BONY accounts. Based, on the mapped templates or banks and accounts selected on free form transactions, the system presents the appropriate forms. The payment type selection criteria and associated transaction types for payments, notices and forecasts is described in the picture below.

A note about SWIFT for transmission: Our customer choose to utilize SWIFT for transmission to the banks (CSFB only, we communicate directly with BONY). It should be noted that if the payment bank supports secure transmission via FTP and since Treasury Sciences EFT supports standard formats such as ISO 20022 and SWIFT MT files, you do not need to use SWIFT only for transmission- it may not be cost effective.

I will describe some of these features using screenshots from the application in a later post. Thank you for reading.

Hedge Fund Treasury, Multi bank payments, Netted Payments

Treasury Management System Implementation for a Hedge Fund - Electronic Payments

Sujith Nair — Sat, 12 Jun 2010 17:36:51 GMT

We recently completed an implementation of our product suite (cash management operations module and electronic funds transfer module) for a large Hedge Fund. This customer uses our EFT module to make payments for margin calls, to manage excess collateral, netted transfers between accounts or to make vendor payments.

In this post, I will share some of the key implementation details of the electronic funds transfer module for this customer, hopefully this information would be useful for other organizations (especially hedge funds) that are planning on implementing an electronic payments solution.

Systematic enforcement of Payment Policies & Procedures: One of the primary needs of this hedge fund customer was the ability to systematically enforce their specific payment policies and procedures. Their policies of payment approval and release described a group of payment originators and another group of payment approvers. The originators would originate payments- either free form wires or wires based on pre-approved templates. One approver would then approve the payment and then the policies requires another approver from the same group of approvers to approve the wire again before systematic release to the payment bank. Note that template based originations made it easier to approve- i.e. the approver already knows that the template is approved which implies that all beneficiary information is approved, so all an approver has to verify is the specific value date and amount.

The TS product team configured the a 3-step workflow as described above and created 2 roles- originators and approvers. These are the only 2 roles that would now participate in the workflow (Yes, system administrators do not have any visibility into the payment approval or release process) .The procedure/policy implementation for this hedge fund customer is below:

TMS software needs to support configurable workflows and roles that can then be tailored to a customer's specific business requirements. If configurability is not an option, then either the customer has to live with a new process dictated by the system or spend significantly on customization.

Support for multiple payment banks: Ability to connect with multiple financial institutions to make payments and transfers while maintaining a seamless end user experience was another key requirement- well supported by Treasury Sciences EFT module. The additions we made for this implementation (and for future needs) was support for additional payment formats. EFT supports the ISO 20022 standard out of the box; now we have added support for SWIFT MT messages as well. Together with that we created a custom adapter for another financial institution; which will eventually be replaced by a standard payment message format (SWIFT MT or ISO 20022).

The key feature TMS's and financial institution's need to provide is the support for payment standards - a standards based implementation reduces time and cost and increases changes of successful implementation. From what I have seen so far, support for either the ISO 20022 (preferred because of the XML based implementation and improved definition) or the SWIFT MT format is required.

Netted Payments: The next key implementation need was the ability to net payments and transfers originating from an investment/portfolio management system (in this case it was Sungard's Virtual Portfolio Manager) and generate netted transactions to multiple financial institutions- the business benefit being the reduction in the number of transactions (wires) and thus cost. Netting capability for payments is a new feature that was introduced into the EFT module and here is a quick overview of its capabilities.

Some of the interesting challenges related to netting were in ensuring that the appropriate validations were in place so that a user does not net transactions that they were not supposed to be netted together, the ability to make sure that a netted transaction that was originated as a payment or transfer is not made available to be netted again, associating appropriate accounting treatments and approval processes to each payment. As part of the netting capability we introduced a transaction manager - a dashboard that lets users manage transactions, import, sort, filter and net. As has been our practice, we have made this functionality fairly configurable and ready to meet the next implementation challenge.

As a final note, one feature not to forget is Ad Hoc reporting capability. I have discussed the importance of reporting multiple times before, so would not go into details again. However would add that no business system or software should exist without a powerful and secure reporting engine- it solves so many problems and is typically very beneficial to users of the system.

Thanks for reading, I will discuss additional features and benefits in a later post.

Hedge Fund Treasury Worstation, Hedge Fund Treasury, Multi bank payments, Netted Payments, Payment workflow implementation