Paying it Forward with Automation

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By Jack Dixon, Head of Workflow Automation, Acadia 

Historically, the interest payments on cash collateral, securities collateral and swap payment (i.e. swap periodic cashflows) matching processes are a significant cause of inefficiency and an operational hurdle for buy- and sell-side firms. This inefficiency is caused by the reliance upon outdated manual processes and email communication, resulting in extended dispute resolution times. Acadia developed Payments Manager in close collaboration with our community of firms to effectively standardize a workflow process, allowing for counterparties to pair, match and finalize payment information efficiently, resulting in firms saving significant time and reducing the costs associated with manual processing. 

For Acadia, the issues our clients were having with payments represented a prime opportunity to serve the derivatives community by developing an automated solution to reduce the friction and stress in the system, applying our model of building successful industry leading automated processes in the margin and collateral areas to the payments space. 

Increasing Speed, Accuracy and Operational Alpha 

Since its launch, Payments Manager has proven to be extremely effective for its user base of more than 325 global firms. When both firms are using Acadia’s automated monthly interest statement matching process, the vast majority of statements matchup instantly upon receipt, with more than 90 percent of payments either matched - or written off - before settlement. When mismatches occur, they are quickly identified, and our process helps facilitate comparisons of the details and allows firms to resolve the difference in a streamlined, efficient process. 

The benefits of automation in payments processes are highlighted by examples from our base of community members that we serve and continue to learn from. One client was having difficulty settling their accounts by the 5th business day of the month, which required matching thousands of interest statements in a compressed time frame. Prior to leveraging Payments Manager to automate their process, they averaged less than 50 percent of the statements matched by their deadline. With the benefit of automation, that number rose to nearly 95 percent due to the dramatic reduction of human intervention required, resulting in a substantial increase in operational alpha. 

Community-Based, Solution-Oriented 

Payments Manager is an example of Acadia’s role as a community hub within the derivatives industry, connecting firms that do business with one another on a common platform. The reliance on Acadia’s service offerings is rooted in the trust gained through years of experience and deep client relationships, which affords us the opportunity to understand the issues firms are facing and partner with them in our working groups to develop solutions collaboratively. 

Payments Manager is built upon the AcadiaPlus infrastructure, leveraging existing connectivity to Margin Manager, which serves as the industry standard for margin communication. Working with and on behalf of the client community gives us real-time insight into opportunities to expand our offering to meet the evolving needs of the industry. This year, payment types supported by Payments Manager are expected to continue to grow to include FX netting and Mortgage TBA netting. 

As Acadia continues to build out our broad suite of automated, centralized services, the benefit to our community is better optimization of resources across the entire trade life cycle as we collectively move the derivatives industry forward towards a long-term goal of real-time settlement. 

If you would like to find out more about Payments Manager and the workflows we support click here or book a meeting with one of our team. 

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About Jack Dixon 

Jack is Head of Workflow Automation at Acadia and leads the Margin Automation initiative which focuses on expanding the margin call process to other areas such as Repos, TBA, Exchange Traded, OTC Cleared derivatives and Payments. Jack leads numerous Acadia working groups and participates in industry working groups with ISDA, ISITC, FIA and SIFMA. Jack has over 20 years experience in financial services. Prior to Acadia, Jack worked at Omgeo and served as a Principal Consultant at Capco and Cap Gemini. 

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