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Middle office Digital Transformation

The Context

Middle-office outsourcing involves delegating various non-core yet essential functions from an investment firm to a third-party service provider, aiming to increase efficiency and reduce operational costs.

BNYM middle-office outsourcing solutions offer either a comprehensive service package or the flexibility to select individual, modular components tailored to a client's unique requirements. The suite of services includes:

  1. Trade Support: Facilitate a smooth post-trade execution process for marketable assets, foreign exchange, and derivatives.

  2. Derivatives and Collateral Management: Includes electronic trade capture, third-party transaction notifications, and full lifecycle management.

  3. Bank Loans: Enables streamlined processing and a portfolio accounting overview of bank loans.

  4. Investment Book of Record (IBOR): Delivers real-time investable balance information to portfolio managers in sync with local market openings.

  5. IBOR services are bundled with custodian reconciliation and corporate actions to form a robust servicing module.

  6. Investment Performance delivers daily performance metrics across multiple dimensions, including individual instruments, asset classifications, currencies, portfolio compositions, and comprehensive aggregate reporting levels.

The Issue

The client experience in middle-office outsourcing remains predominantly analog, primarily facilitated through emails and telephone conversations. Data is usually shared with clients in the form of end-of-day files, leading to:

  1. An absence of immediate or near-immediate information access.

  2. A dependence on BNY Mellon operations personnel for data retrieval.

  3. Limited oversight, accountability and traceability in client interactions, with some inquiries disappearing into a void.

  4. A lack of self-service options for tasks that require client action.


In a digital age, these limitations not only affect operational efficiency but also impede client satisfaction and engagement.



The Solution

Created an Extensive Strategy for Oversight Tools Incorporating Digital Interfaces for Both Clients and Internal Operations Teams

  1. Trade Oversight Dashboard offers near real-time insights, allowing users to view exceptions and execute actions like manually matching transactions or rejecting discrepancies, as well as sending rejection notices to counterparties.

  2. Broker Scorecard featuring trade volume metrics, confirmation timeframes, efficiency failure rates, and settlement performance indicators.

  3. Trade Metrics and KPIs that include volume statistics, STP (Straight Through Processing) rates, cancellation frequencies and rates, as well as block and allocation confirmation percentages.

  4. OTC Dashboard featuring both bilateral and cleared positions, monthly trade position breakdowns and trend analyses, a comparison of OTC vs. CCP product types, and a variety of pricing sources.

  5. Cash, Pricing, and Holdings Dashboard that includes start-of-day cash projections, pricing tolerance breaches, stale and zero-priced assets, halted assets, a summary of the top 10 holdings, as well as investment positions sorted by portfolio and associated activities.

This strategy is designed to serve as a roadmap that incorporates digital touchpoints, aimed at enhancing operational efficiencies and improving the client experience for both external customers and our internal operations team

Lets Deep Dive

Before the  Trade Oversight Dashboard

  • Trade Blotter and Metrics Report for End-of-Day Client Delivery

  • Usually dispatched to an FTP site or directly into client email inboxes.

  • Operational Teams Receive Hourly Status and Exception Alerts

  • The internal operations team is notified hourly via email about trade statuses and issues requiring attention.

  • Client-Initiated Actions Handled by BNYM Operations Team

  • Clients communicate their chosen actions, such as forcing a match or rejecting discrepancies, to BNYM's operations team, who then execute these actions on the client's behalf.

  • Supplemental Trade Details Sent for Updates

  • Missing elements like client-specific security IDs, initially absent in the original trades, are forwarded to the internal operations team via spreadsheets for updating.

After the  Trade Oversight Dashboard

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