The solution allows real-time, business-driven controls to be put in place as soon as a trade takes place, so that any errors can be identified and rectified from the start (T+0) preventing potential discrepancies or loss events. Clareti Transaction Control covers all transaction types and asset classes and can handle innovative financial products just as easily as standardized flow products (such as simple equities), so that even the most complex derivative trades are tracked and audited appropriately.
"Given the volume of new financial products being continually created, and the difficulty in keeping track of these across multiple processing systems and applications it's all too easy to understand how breakages often occur in the transaction processing lifecycle, and as a result losses (or gains) can easily go undetected for substantial periods of time. Many financial institutions find that their ability to quickly innovate new financial products is constrained by the middle and back office which are struggling to provide the levels of service and control in an attempt to limit on the number and or structure of new products traders seek to trade", stated Bob McDowall, Senior Consulting Analyst Aite Group
Chris Errington, CEO of Gresham Computing stated: "In our experience financial organisations have typically invested in 'fix after fail' solutions, only seeking to repair transactions breaks after they have happened. Tier one banks can have literally thousands of known risk points in a transaction flow where something can silently go wrong. Clareti Transaction Control is the only commercially-available solution that has been built specifically to address this problem. The solution provides control from order execution through to settlement, preventing loss events and minimising the risk of failure. Given the magnitude of loss events and the number of people involved in manual 'sticking plaster' solutions, we expect to deliver ROI for our customers within 12 months at most."
Data from the Operational Risk Data Exchange Association (ORX) helps to illustrate the problem. The ORX Global Operational Risk Database recorded 27,000 loss events in its latest annual summary, with a total value of 9.1 billion euro, 31% of which were in Execution, Delivery and Process Management. This data was gathered from just 57 banks (out of over 5,000 banks).
In contrast to today's 'fix after fail' solutions, which lack the ability to describe all but the most
straight-forward of non-vanilla products, Clareti Transaction Control provides 'prevent-based' controls, giving better control of operational risk and reducing the incidence of financial loss events in rapidly innovating environments.
Clareti Transaction Control uses a Grid based Cloud computing architecture with a business rules engine developed by Gresham that allows users across the front, middle and back-office to easily put the appropriate controls in place using business terminology, rather than computing code. This enables organisations to build an operational risk culture where the right controls are injected at the right time and in the right place to satisfy the needs of the business.
Clareti Transaction Control incorporates a real-time, low-latency, in-memory matching engine that is designed to process extremely high volumes of transactions. The solution is unique in its ability to process high volumes of flow products (such as equities) whilst also having the richness to match non-standardised, innovative financial products such as structured products. The user interface is built on a rich internet platform providing ease of delivery and a high quality user experience.