Despite having already automated much of its confirmations process, there were still many inefficiencies and unnecessary costs. To eliminate these issues, Baker Hughes introduced Enterprise Workflow into its TMS – FIS Quantum – and leveraged the in-built confirmations matching capability. This case study outlines the implementation journey undertaken by the treasury team, and details the benefits now being reaped.
When we look at the life cycle of a treasury deal from an overall process perspective, three main sequences can be distinguished. Front Office executes the deal and passes it over to Middle Office, which confirms the terms with the counterparty bank, settles the transaction, and performs an operational transaction cash reconciliation. Back Office makes sure that all cash transactions are reconciled and is responsible for their accounting in the ledger.
Homing in on Middle Office activity, the cycle starts with a confirmation where the terms and conditions (T&Cs) of each deal are agreed with the counterparty. If our confirmations (“our side”) and the counterparty’s (“their side”) are not matching, Middle Office should follow up with the counterparty and agree on the final T&Cs.
The matching process can be automated via generating SWIFT messages for deals delivered through the SWIFT network to compare or can be manual for more complex instruments. Baker Hughes’ treasury uses SWIFT to confirm FX and money market deals. Our TMS, FIS Quantum, had been integrated with an external matching platform to collect and reconcile confirmations. The external system then communicated the match status back to it via an interface.