“Details of the trade should be passed to the prime broker and to the administrator if applicable. In most cases this will be done electronically, thereby reducing the risk of error in re-keying any information."

“The Hedge Fund manager should subsequently reconcile the prime broker’s and administrator’s records of positions against its own records on a regular basis...”

AIMA CANADA,
Sound Practices for
Canadian Hedge Fund Managers, 2004

 

Trade Reporting and Reconciliation

At the end of the day the system automatically transmits the trades done to one or more prime brokers for settlement. The system supports numerous file formats and several means of transmission to accommodate the requirements of virtually any prime broker or custodian (e.g. Excel or csv files sent via ftp, e-mail, encryption etc).

Once the prime broker has received the trades they will typically update their positions overnight and the updated position reports will be available from the prime broker the next morning. The Portfolio System can automatically download the new positions in the morning and perform an automatic reconciliation. Any differences are highlighted and can be easily investigated and corrected. This can help avoid failed trades and costly errors.

Regular reconciliation is also an essential part of effective operational risk management.