The STP Investment Services website has been redesigned by the software team at STP. The redesign put an emphasis on our core competencies and services we provide. Let us know if you like it!
Author: Robert Martin Title: Assistant Vice President – Operations Manager
Managing pricing data and valuation of securities is a critical variable in successful investment accounting and performance measurement. Common practice is to outsource pricing related data to a respected vendor in the financial services industry such as Bloomberg, Reuters, and Interactive Data. Many operations choose to elect only one pricing data vendor, where the quality of the single price source is controlled using “best practice” criteria like day to day percentage price change. This will alert operations staff that they need to find a second or third source to confirm that their lone vendor’s price is accurate. This is a widespread and acceptable procedure for pricing; however, it is far from a robust, efficient and entirely accurate practice. For one client, STP utilizes price data from 3 different vendors, then uses business rules to determine the best possible price available, creating a “gold copy” price.
For example, one vendor, Bloomberg”s BVAL, delivers a confidence number with each price provided. The benefit to the end user is that they have a greater understanding of the quality of data that has been used to determine each security’s price. The business rule that STP uses is, if a Bloomberg BVAL price comes into the system with a confidence level lower than 7, our system will automatically defer to the next vendor’s price as determined by a client specific vendor hierarchy rule.
STP also uses a price comparison control across our multiple vendors, and if different vendor’s prices break a pre-determined tolerance, our system will alert the user that they will need to analyze and choose which vendor price to use as the “gold copy” price.
Another benefit to sourcing multiple vendors is the efficiency that comes with having 2 or more prices readily available within the accounting system. If an accounting operation is only sourcing prices from one vendor, they will need to provide a second pricing source for each variance exception. This will often require the accountant to log into a separate vendor terminal, input an identifier, and log the backup pricing data in some manual fashion. When 2 or more vendor prices are directly sourced in one accounting system, the user can easily toggle between vendors to analyze a backup price when a price’s accuracy is in question, and the there is no extra work to log the data, because it is already loaded directly into the accounting system.
At STP we believe the quality of our output is only as good as the quality of our data inputs, so we are pushing ahead of the industry curve, providing multi-sourced, best of breed, quality, shimmering “Gold Copy” Prices.
Author: Dennis Cristofoletti Title: Accountant
The Importance of SAS No. 70
In today’s highly regulated market place, a financial services organization needs to have a SAS No. 70 audit completed to be competitive. This “SAS 70 audit” ensures that a service organization has been through an independent third party review of their control objectives and activities. The successful completion of a SAS70 audit provides investment advisors with the assurances and confidence that their service partner has the proper control procedures in place. We understand at STP, even though costly and time consuming, a completed SAS70 audit is critical to ensuring a focus on accuracy in everything we do.
In preparation for our audit, we engaged in a complete diagnostic of our control procedures before our testing period began. This diagnostic from our auditor provided a benchmark of our preparedness for the audit. We were able to implement some proprietary applications to track and store procedures, review signoffs and compile backup documents that are crucial in passing the audit. The benefit to this diagnostic helped us become more efficient and improve our day-to-day processes. Since all of our clients request a SAS70 report each year, we implemented a web-based control checklist coupled with a document management solution to help track all of control objectives.
Through our web-based checklist, each task listed requires a reviewer and processor to sign off on it. Along with capturing the time and date of the signoff, we are proving that each task has had the “four eyes” review that is a standard in our operation. The document management system that coincides with the checklist helps us capture and link to any backup documentation needed. We believe that each task and control we create needs to have a reviewer so that nothing “slips through the cracks”. We use this checklist for other aspects of our business besides only SAS70 controls. It’s an excellent tool to use to follow our day-today schedule. An example would be that we use this to capture all data feeds and uploads that flow into our system. We capture when the feed occurred, that the data flowed into our system successfully, review any exception reports and evaluate other additional checkpoints to ensure accuracy of the data. Through our web-based internal audit checklist system, we can confirm that it has been reviewed by two people.
Did you know?
In June 2011, the SSAE16 will be taking over the SAS No. 70 audit due to a number of new rules and requirements.
Author: Patrick Murray Title: President and CEO
Fewer systems are better.
Fewer systems cost less.
Fewer systems are easier to upgrade.
Fewer systems have less to integrate.
Fewer systems are easier to understand.
Investment operations can have varying levels of complexity depending on factors such as products, parties, demands of regulators, market data sourcing, report timeliness, and demands of clients. With so many variables, solving the problem with too many systems, which creates more integration points, over-complicates the problem.
In order to effectively achieve Straight Through Processing (STP) in an operation, the focus must be on keeping things simple. Every time a new proprietary or vendor system is introduced into an environment, it will need to be integrated, maintained, configured and customized, and eventually upgraded. Each time a new system makes its way into your operation to solve a problem, your total cost of ownership and maintenance just went up significantly. The new system will need to be fed with data, monitored, controlled, and properly rolled out to users. Maybe you have the staff to handle the implementation and subsequent application, integration, and network maintenance and maybe you don’t, but one thing is true across the board and that is your organization’s resource capacity has been reduced often significantly. To some the value-added with another new system will be high, but are enough people, without a stake in the system, receiving enough value to justify the cost?
The key to simplifying an investment operation is to use as few systems as possible. Start by defining the required functionality across your organization. Build, buy, or outsource a system that handles the largest and most important functional points and has an open architecture. Then build around this core by using web-based built applications and web services. If there is a need for additional systems where company-wide value relative to total cost of ownership is a clear win for the company, then the system is a worthwhile endeavor. As the number of systems increases, value diminishes, while complexity, cost, and confusion run wild.
Investment operations can be a chaotic place, but by limiting the number of systems and simplifying workflow you can successfully control the chaos!
Author: Patrick Murray Title: President and CEO
Decision makers are often faced with the question of whether to make, buy, or outsource. Developing something from scratch provides control over functionality, but introduces maintenance costs and extensive time to develop and adequately test. Buying a product or service often gets you 50-75% of the way there, but is rarely “plug-and-play” as integration, customization, deployment, and upgrade costs can put tremendous pressures on Total Cost of Ownership (TCO). Outsourcing allows businesses to get back to core competencies and provides access to a center of excellence relatively quickly, but raises the question of confidence and dependability.
So how does one build trust and achieve confidence with clients who choose to outsource?
In everything I do personally and professionally, I pride myself in being genuine while striving to be the best. At STP, by leveraging technology and talented/experienced staff, we are able to deliver faster results, and due to our systematic and human controls, be confident in our accuracy. With a focus on service and proactive dedication to improving our clients’ businesses, confidence can be more easily attained than by strictly providing a commoditized service with no care for the big picture, downstream effects, or the client’s business in general, which can be the case at larger service providers. Confidence is about building a relationship where both sides function as partners to improve both of their respective businesses. Satisfaction is acquired by setting the bar high, building a roadmap, and most importantly achieving it.
How do you outsource with confidence? Find a provider like STP who cares about moving your business forward.
Author: Chris Sallemi Financial Systems Developer
Technology is a core focus at STP. We recognize that technology enables us to provide unmatched services to our clients. To ensure the best quality of service, we have integrated a number of software based tools to help improve our daily processes. These tools directly enhance our operational effectiveness, which in turn allows us to provide an exceptional client experience.
The first tool is KnowledgeTree, a robust document control system. We utilize this system to manage and maintain all workflow and supporting control documentation required to run an automated and controlled operation. This open source system also allows us to version, secure, tag, monitor, and backup every financial document within our environment. Ultimately, KnowledgeTree is an ideal match for our file sharing and collaborative needs. Gone are the days of multiple versions of the same document. Documentation at STP is centrally housed in KnowledgeTree and referenced via links and a check-in/check-out process, which avoids wasted network space and multiple versions of the same document. This web-based document and content management tool ensures the integrity of our data and documentation.
Our vision is to provide a quality of service that will strengthen the core business of our clients. To provide such a service, we understand that organizing, maintaining and handling client requests seamlessly is essential. Currently, most of our client’s requests come directly from email, phone, and instant messaging software. To effectively handle these requests on a daily basis and to make sure no request is overlooked, we rely on a web 2.0 based application called Zendesk. This tool enables us to properly categorize, maintain, prioritize and ultimately capture any new lessons from a support ticket throughout its entire life cycle. We also use this system to create internal task based tickets to improve our business operation. When we open a ticket from a client, we not only want to solve the issue as soon as possible, but we want to capture the lesson and share this knowledge with each person in our organization. This sharing enables us to continuously learn and improve our services.
Read further blog posts to learn about other great tools we use here at STP!
Author: Doug Ladley Title: Senior Trade Operations Specialist
An organized, efficient, and detail-oriented operations department is at the core of every successful investment advisory business. STP utilizes proprietary web 2.0 based systems as well as industry tools such as Bloomberg, Charles River, Omgeo CTM and Eagle Investment Systems to streamline the back-office process, eliminating manual procedures wherever possible. We often refer to operations as the “last line of defense” After all, it’s our job to catch and remedy mistakes before they evolve into bigger, more costly errors. It can often be a thankless job as you may not hear praise for successes achieved. However, rest assured that you will certainly receive “constructive feedback” if a mistake is not caught!
In trade operations, success cannot be achieved without outstanding working relationships with both external and internal clients. Our external clients are the brokers and custodian banks that we confirm and settle trades with every day. At STP, our custodian banks provide us with daily trade fail and treasury non-receipt reports so that we can proactively manage the trade settlement process. We are all striving to achieve the same goals, working quickly to settle trades accurately and avoid costly trade fails. Our internal client relationships are equally important as we are a firm where individuals work closely together from the top down. In trade operations, we rely heavily upon the portfolio accountants and administrators who reconcile the daily trade activity to identify any potential issues. Trade reconciliation breaks are then communicated to trade ops so that they can be resolved before causing a negative financial impact.
Having an excellent rapport with your clients is critical to the success of an operations department. We strive to maintain a friendly, courteous and professional relationship with all of our clients. We take a proactive approach to our daily business, calling and emailing counterparties to ensure all trades have settled on a daily basis. Internally, we do not have any walls or boundaries between departments. This cohesiveness allows us to work quickly to resolve any potential issues or discrepancies. At STP, trade operations strives to earn your trust by effectively supporting your trade activity and developing long-standing professional relationships.
Welcome to the STP Investment Services, Inc. blog. We will use this blog to write about our company and the various process and techniques we use to provide our clients with superior service.
