Global custodian and securities services provider BNP Paribas Securities Services (BNPPSS) is employing a trade-matching tool using artificial intelligence and predictive analysis – called Smart Chaser – to further automate the trade processing services it provides to investment managers.
“Not just in Asia, but across the world, asset managers face the same challenges with their trading transactions generating operational and capital risks. This new innovative solution, that cleverly uses artificial intelligence, brings a new level of operating efficiency and risk management to clients,” Remi Toucheboeuf, head of investment and fund services product, Asia for BNPPSS, tells Asia Asset Management (AAM).
“We estimate that up to 30% of the trades processed on behalf of asset managers require manual intervention in order to complete. This is an industry-wide challenge which is often caused by counterparties holding mismatching data for the same trade,” explains Thomas Durif, global head of middle office products at BNPPSS, in an October 10 company statement.
He continues: “Using predictive analysis, Smart Chaser will analyse historical data to identify patterns in trades that have required manual intervention in the past and proactively warn clients and their brokers on their live trading activity so they can take action promptly. We are already making good progress, having reached around 98% prediction accuracy. “
Maxime Boyer-Chammard, global head of investment services and analytics, at BNPPSS, adds: “We are delighted to be working on this new tool. Smart Chaser is a great example of how we aim to transform our middle office technology and make straight through processing a reality thanks to big data and predictive analytics, to the ultimate benefit of our clients.”
According to the firm’s statement, trade matching – the comparison of trade details between the client and its broker – is a key part of the middle office service provided by BNPPSS to its investment manager clients. The firm says matching must be performed in a timely manner or there is a risk a trade may require manual intervention or, in some cases, fail. Intervention or failure is particularly likely if a trade is not settled on the day of execution.
The company goes on to say that through using machine learning and predictive analysis, Smart Chaser will predict the likelihood that a trade will not “match” automatically and will therefore require manual intervention. With Smart Chaser, BNPPSS aims to be able to predict the likelihood of a delayed “trade matching”, ascertain the contributors to the delay and suggest a pre-designed email template to be sent by the middle office operational team to relevant clients.
“It will help to reduce failed trades which is a real challenge in Asia where some markets have a strong policy for buy in. We can use historical data to predict and proactively warn clients and their brokers during a live trade of any inconsistencies. Smart Chaser is another step forward and part of our digital transformation journey that answers some of the key challenges faced by asset managers in the region,” Mr. Toucheboeuf explains to AAM.
BNPPSS is a wholly owned subsidiary of the French-headquartered BNP Paribas Group. It provides multi-asset post-trade and asset servicing solutions for buy and sell-side market participants, corporates and issuers.