Waters Rankings 2015: Best Reconciliation Management Provider ─ Bloomberg

Every year, these rankings toss the magazine’s editors at least one curious result, leaving us with the entertaining task of figuring out “Why? What happened here?”

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Earl Monroe and Justin Woddis.

That is the case this year with the best reconciliation management provider category—which, for fairly obvious reasons, has been historically controlled by the DTCC or its Omgeo subsidiary unit. The 2015 award—in quite a twist—goes to Bloomberg and its AIM (formerly POMS) buy-side platform.

So, what could lift Bloomberg above a flush group of 13 competing entrants? Our best guess is this: Handling reconciliation has become a real, pervasive problem for buy-side firms. An era of consolidation and acquisition in asset management, as well as hedge funds’ growing desire to branch into multiple strategies early on, has left many firms operating a handful of different systems patched together for post-trade purposes with workarounds of substandard quality. Investing in AIM, of course, is one replacement for this situation that many firms consider. And as they do so, the operational strength of the system shouldn’t be underestimated as a decisive factor.

It starts with a high level of automation. Beyond the typical collection of position and transaction data involved in reconciliation, AIM can process security and cash positions between multiple sources; integrate cash handling; map OTC and custom identifiers; support market value and accrual reconciliation; and perhaps most importantly, it features a set of advanced exception management workflows that include exception aging, severity and ownership tracking.

What’s also significant is the extent to which AIM has spawned a cottage industry of reconciliation expertise around it. In fact, a simple search of niche IT consultancies will yield almost half-a-dozen around the world that work specifically with buy-side firms looking to either migrate to AIM or connect AIM with proprietary systems they wish to keep running, e.g. micro books of record that sit within a specific trading desk.

Bloomberg will be pleasantly surprised to see AIM’s ubiquity rise to an award-winning level in a category usually reserved for a far different set of providers—but this is what makes these awards so interesting. Whether there are real tea leaves to be read here or not, perhaps we’ll reserve judgment for 2016, but notice has been served: The buy side is willing to show its appreciation in numbers, highlighting an issue of growing frustration and complexity, and a sturdy solution that is up to the task.

Bloomberg will be pleasantly surprised to see AIM’s ubiquity rise to an award-winning level in a category usually reserved for a far different set of providers—but this is what makes these awards so interesting. Whether there are real tea leaves to be read here or not, perhaps we’ll reserve judgment for 2016, but notice has been served: The buy side is willing to show its appreciation in numbers, highlighting an issue of growing frustration and complexity, and a sturdy solution that is up to the task.

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