A high proportion of buy-side firms still suffer from data reconciliation errors which can prove costly to a company’s reputation, a new report has warned.
The findings are part of a survey from investment management solutions provider SimCorp, which found 63% of buy-side respondents experienced reconciliation errors which impacted portfolio valuation accuracy.
Furthermore, half of the firms questioned said errors occurred during the daily and tracking and reporting of assets and exposures.
“If a fund manager has to correct a net asset value price due to the wrong portfolio value, it is very damaging to the firm’s reputation,” said David Kubersky, managing director, SimCorp North America. “For other buy-side organisations, inaccurate portfolio valuations lead to poor investment decisions and deplete investor confidence. At the heart of these failures is a disparate system landscape and fragmented position-keeping.”
Despite the prevalence of reconciliation errors, 35% of survey respondents said they have no plans to modernise back-office infrastructure in the near future.
“Our question to investors is: ‘Do you want the 35% who have zero plans to upgrade their infrastructure to manage your investments?’” said Kubersky.
SimCorp surveyed over 50 executives from around 30 buy-side firms across North America.
The firm’s findings chime with a report released in October by transaction solutions provider Gresham Computing, which found 60% of market participants had not yet planned or begun real-time reconciliation for any asset classes.