Administration is hardly the most exciting element of structured investment trading for most people, but problems can quickly arise if effective processes are not put in place.
Traditionally, if an investor wanted to allocate a large sum of money across multiple accounts and portfolios, each instruction would need to be individually faxed to the trading floor.
Unsurprisingly, with potentially dozens of instructions and only a couple of working fax machines among hundreds of traders, this quickly becomes a chaotic, inefficient approach.
However, by implementing fully automated trade recognition and reconciliation software and other effective administration processes, investors can enjoy a number of key advantages. Here are three ways better administration benefits structures trading.
1. Greater access to structures
Salespeople at investment banks are busy people, and with many organisations facing redundancies in the wake of the global economic downturn, this rings true even more.
With little time to perform the manual input of new trades, major banks have often moved away from the structured investment space in order to take advantage of easier, lower-hanging fruit. However, removing the administration burden makes structures more profitable and enables financial institutions to re-enter the space.
2. Fewer errors
An automated system records orders, reconciles them and creates summaries on each one, with a fully documented paper trail detailing all of the relevant data.
This minimises the number of errors and missed instructions, which reduces disputes and strengthens relationships between investment banks and their clients.
3. Better pricing
When an independent firm is in charge of administration on structured investment trades, it frees up valuable time and human resources at both the bank and the company with which they are dealing.
Time is money, and knowing laborious admin processes will be handled externally enables investment banks to pass on these savings on each trade through more competitive pricing.
Affinity Capital has extensive experience providing administration services in the structured investment space. Contact us today to learn more.