Sarah Hayward discusses how Calastone Reporting supports reconciliations and distributions challenges
30 Jun 2016
The end of the financial year is here and with it comes the seasonal challenges for managed fund back offices to reconcile all holdings and prepare annual tax statements.
Relieving this administrative burden that intensifies at tax time, Calastone has developed Calastone Reporting, a domestic and cross-border reporting service incorporating 4 statement types: for reconciliation - statements of holdings and statements of transactions; and for distributions -statements of tax and statements of income. Sarah Hayward, Managing Director of Australia and New Zealand, explains the unique features of Calastone Reporting and the relief it brings for all reporting cycles, particularly during the tax season.
How did Calastone Reporting come to be developed?
After order routing reached a tipping point in Australia, we spoke with our clients to understand what other significant manual processing pain points they had. The overwhelming response was that reconciliations and distributions were consistent issues. Using this feedback we set about building our Australian market solution.
What does Calastone Reporting enable?
It enables three key things - increased efficiency, reduced risk, and reduced time associated with how unit holdings in managed funds are reconciled (reconciliations or “recs”), and how the income generated by these holdings is reported for tax purposes (“distributions”).
Fund managers need to send statements of holdings and transactions to their platform investors on at least a monthly basis in order for the platform or investor to be able to reconcile the balances. This is currently a manual process, where the fund manager will send these statements by fax, email, via a web portal or a number of other manual methods. The platforms receiving these often require a dedicated team to manage the process of collating the statements, manually keying them into their back office system, and ensuring the balance is as they expect. The manual entry of these statements introduces operational risk and increases the time of processing and receipt.
Distributions is similar, but allows for automated statements of income and tax. Again, rather than the platforms receiving multiple formats of statements and having to manually enter them, the fund manager sends these statements to Calastone electronically, which we convert and provide to the platform in one automated feed.
One of the key benefits to the platforms is the ability to receive the reconciliation and distribution/tax statements in one consistent automated format, directly into their back office system. This replaces the need for large teams to sit and manually collate the data. Calastone’s reporting solution reduces the time spent processing those statements, increasing accuracy and overall operational efficiency ensuring timely delivery to the end investor.
The benefit for fund managers is being able to seamlessly interoperate with the platforms. Calastone automates the entire process, translating the statement information and sending to the platforms in the format that they need it. By enabling this, they are providing a valuable service to the platforms, the benefits of which again is passed on to the end investor.
How have Australian clients and potential clients responded to Calastone Reporting?
Calastone Reporting has proven to be a great success. Today we have a good cross section of clients using the solution for both statements of reconciliation and distributions. Some use this domestically in Australia and also adopt it for other international markets where they operate.
Feedback has been extremely positive, particularly concerning the speed and access of statements and having the choice of receiving them in the clients preferred format.
A number of our clients initially started by simply downloading the statements from Calastone’s Execution Management System user interface, and then moved on to a fully integrated STP solution. This flexibility has allowed clients to ensure it meets their needs and build accordingly.
Commonly, reconciliations is performed by platforms on a monthly basis, but with the increased efficiency of Calastone Reporting, this can allow platforms to move to weekly and even daily reconciliations. As further clients adopt, we expect to see significant efficiency gains across the industry.