Realising the Benefit of Online Dealing Portals

by Cristiane Candeloro, Assistant Treasurer – Operations, AstraZeneca and Andrew Marshall, Director, Covarius

AstraZeneca prides itself on its sophisticated treasury technology infrastructure and aims to implement highly efficient and secure processes wherever possible. One key area of development has been the implementation of an independent portal for short-term cash investment instruments, such as money market funds (MMFs). Here Cristiane Candeloro, Assistant Treasurer – Operations, AstraZeneca and Andrew Marshall, Director, Covarius, who worked with AstraZeneca throughout the project outline, describe how a portal can offer compelling operational benefits, although these are not always obvious when considering whether to replace existing manual or proprietary dealing methods.

Key Points

• Recognising the value that online dealing would offer, AstraZeneca approached its fund managers to see if it was possible to standardise the functionality they offered through their portals, in line with the firm’s requirements
• When this proved unrealistic they looked for an independent, multi-fund, multi-provider portal to be seamlessly integrated with their existing TMS
• After a rigorous selection process SunGard’s SGN Short-Term Cash Management portal (STCM) was chosen, based largely on the degree of automation and integration it offered
• The authors describe the implementation process and the benefits which AstraZeneca has gained from STCM

Project background

Before implementing a MMF portal, SunGard’s SGN Short-Term Cash Management portal (STCM), most of our fund transactions were conducted by telephone, so dealers needed to contact each of our fund providers to find out what rates were offered. Although each fund provider had its own portal, which they encouraged us to use, it was impractical to access multiple portals, each of which had different functionality, workflows and user rights. In addition, to maximise the benefits of an online dealing portal, it was important for us to be able to integrate the portal with our treasury management system (TMS) and we found that each of the proprietary portals we looked at used different integration formats.

However, we recognised the value that online dealing, fund analytics and straight-through processing to our TMS would offer to our business. We therefore approached our fund managers to find out if it was feasible to standardise the functionality they offered through their portals and develop their integration capabilities in line with our requirements. Ultimately, given the diversity of requirements across their client base, this was not realistic, so we needed to find an alternative solution.

Identifying potential solutions

Specifically, we decided to look for an independent, multi-fund, multi-provider portal that would enable us to achieve comprehensive and consistent analysis across funds, and standardise our workflow. The solution would need to be integrated seamlessly with our TMS for straight-through processing of transactions, and support our security and audit objectives.[[[PAGE]]]

We embarked on a formal selection process to review potential solutions across a range of criteria. We do not invest in a large number of funds, and as these were accessible through each of the portals that we considered, our selection criteria were more operationally focused. For example, the automatic integration of transactions into our TMS was essential, but just as importantly, we needed to streamline our month-end processes. Each fund provider provided month-end reporting in different formats and with a different approach to producing data. For example, some reported interest calculations on an actual/360 basis while others used actual/365, with a four/five day week and a two/three day weekend. As a result, it frequently took around two days each month to collate, standardise and reconcile fund information with our own records. Rebate processes were also very complicated, particularly as we have a complex, multi-tier rebate calculation structure.

Selecting and implementing STCM

Each of the portals we considered supported the funds in which we invest, and were capable of transmitting transaction information through to the TMS. However, SunGard’s SGN Short-Term Cash Management portal (STCM) was unique in the degree of automation and integration that it provided, including enabling us to reconcile our interest statements automatically, and pass rebate amounts directly through to our TMS. This represented significant value to AstraZeneca in addition to the benefits of online multi-provider, multi-fund dealing. We were also confident and enthusiastic about working with SunGard as a user of AvantGard Quantum, with very positive experiences of working with the SunGard team.

The implementation was straightforward and took less than two months. SunGard took ownership of the integration process throughout. It was helpful that we also use a SunGard TMS (AvantGard Quantum) as we only had to deal with a single provider, and we needed to dedicate fewer resources from AstraZeneca, as SunGard was already familiar with our business, as well as managing both systems.

Sharing advice

The benefits of implementing STCM were significant across the treasury function. For example, front-office users are now able to assess our cash position in Quantum, consider potential funds based on real-time data and transact directly without the need to access a separate solution. Transaction details are recorded automatically in Quantum, and processed according to our standard workflow. Furthermore, back-office users can reconcile and post interest and rebate amounts automatically.

Based on our experience, treasury departments that invest in short-term cash investments, such as MMFs, should consider the potential value of an independent, multi-fund portal. This involves reviewing current processes from end to end, evaluating how much time and resources are required for each task, and pinpointing where this could be reduced. For example, dealers may currently phone multiple fund providers for rates, or access different portals. In other cases, the value of integration, reconciliation and/ or analytics may be more compelling. By taking a methodical approach to evaluating potential value, it is far easier to build a business case. While there is no cost to using these portals for buy-side users, it is still important to quantify the benefit and establish what processes and systems would be affected, particularly as every project requires resources and therefore needs to be justified.

At the time that we reviewed independent MMF portals, providers tended to focus on their front-end capabilities and fund coverage when pitching their solutions to potential clients. In reality, this is not where the differentiation between solutions really lies. Instead, there are often important distinctions in areas such as integration, risk reporting and back-office processing e.g., for interest and rebate reconciliation and posting. For us, these areas were essential, and SunGard took the trouble to understand our needs and priorities, and focused their presentations and proposal accordingly.

Furthermore, the value of an independent portal such as STCM is not limited to users of TMS or ERP: the benefits of price discovery, analytics, risk reporting and standardised interest statements still apply to treasurers who do not use these solutions, or who prefer not to integrate the portal with these solutions. In addition, STCM can automate the cash movements associated with transactions dealt over the portal, extending its benefit into the back office.