17 July 2023
The integration of digital tools and technologies is transforming the prime brokerage landscape, revolutionising processes and mitigating risks. For example, the automation of margin calls, trade confirmations and settlement have reduced manual errors and improved operational efficiency. Blockchain and DLT are also reshaping the way firms operate.
However contract analysis has arguably lacked investment when compared to other areas of the prime brokerage ecosystem. At present, there continues to be an over reliance on manual processes for the collection of counterparty contract data, while easily removed inefficiencies persist in client onboarding and management.
Prime brokerage agreements involve a high degree of counterparty risk, therefore a lack of data availability is also impacting decision making and slowing reaction times to market events. And this is critical at a time when regulators are demanding firms invest in improved risk management.
Perhaps shortfalls in investments are unsurprising when you consider that the cost of providing prime brokerage services – including technology infrastructure, regulatory compliance, and talent acquisition – can be substantial.
If firms want to accelerate growth, they need to find new ways to optimise their operational efficiency while delivering value to clients. A software solution that is holistic in its approach and caters to prime brokerage complexities will help firms achieve this.
Business should be aware, when reviewing prospective contract analysis software providers, of the key abilities that technology solutions in this space really ought to offer:
On the face of it, these abilities sound straightforward. But despite the advent of cloud-based SaaS solutions in prime brokerage, many firms still struggle to quickly access accurate data, and this is often down to the fact software solutions are often not able to provide solutions to all three areas mentioned above.
Likezero is helping prime brokers to acquire the key abilities by providing fast, contextualised counterparty visibility. And with abilities come outcomes.