Operations, Accounting and Hedge Accounting

A single front to back office platform for operations, back office accounting and hedge accounting

  • The Challenge

    A comprehensive front- to back-office platform is needed to navigate today’s financial and commodity markets. This is becoming increasingly difficult as businesses face geopolitical changes, as well as inconsistent regulations across continents and ongoing market volatility. While markets in Europe are experiencing an increase in regulation, the U.S. may be scaling back. These changing conditions force market participants to become more flexible in their strategies, operations and IT infrastructures. To be competitive, firms must find effective ways to hedge their bets when implementing risk management and accounting practices that are closely aligned to protect the bottom line and avert disaster.

    The Opportunity

    One way companies can respond to these challenges is to centralize data. This helps ensure data integrity, transparency and accessibility, as well as avoid data silos that can severely restrict the effectiveness of strategies to safeguard investments. 

  • The Openlink Solution

    The cross-market nature of Openlink eliminates the costs associated with maintaining multiple back-office and accounting systems for each enterprise silo by instead coordinating transaction workflows, confirmations, affirmations, invoices, settlements, reconciliation, accounting and P&L all in one solution. To meet the demands that a fast-paced, continually evolving trading desk can place on the back office and accounting, we provide a fully integrated, secure STP operations system offering unsurpassed flexibility, scalability and adaptability for rapidly changing market requirements and visibility across the business, from physical to financial assets. And these solutions can evolve and scale as needs evolve over time.

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    • Process all product types through one system

      Challenge

      Today's businesses are required to deal with an incredible array of product variety – simple to complex, high to low volume, cash or derivative, single or multi-currency, with or without options. While most systems can process standard trades comfortably, new transactions that are more complex often need to be processed outside the system, typically in a spreadsheet

      Solution

      An Openlink solution can be configured and customized with unique workflows into an automated environment. Our extensive suite of back office and accounting modules, standard solution packages, combined with unmatched asset class coverage, ranges from traditional financial products to physical commodities to complex user-defined instruments that can rapidly roll out workflows for new products.

    • Real-time exception based processing

      Challenge

      Real-time exceptions are needed more and more to keep pace with the fast workflows happening across businesses. Flagging them and more importantly being able to react to them quickly has become a must-have.

      Solution

      The freedom to design and apply your own rules to trade workflows, automated back office tasks and account processing enables your staff to focus on exceptions. With our workflow designer, you can define your own exception and compliance rules which can be inserted at any stage of a trade. For example, deals with unusually high payments or questionable mark-to-market (MtM) values may be highlighted as exceptions while routine deals are processed automatically.

    • Multiple asset class support

      Challenge

      A major challenge for accounting, scheduling and operations functions in today’s rapidly changing markets is keeping up-to-date with new business processes and products. This is especially true for hybrid and structured products that span asset classes. These challenging products require cross-market operational activities that may not fit well into a vertical/siloed solution.

      Solution

      Openlink's advanced multi-currency sub ledger seamlessly handles the accounting requirements for all asset classes in a consistent manner. The accounting features include true multi-entity/multi-book treatments that automatically generate corrected postings resulting from resolved trade errors or omissions. It simultaneously supports multiple accounting methodologies, including mark-to-market, accrual, cash, historic book value, statutory, tax and hedge accounting as well as ASC 815/IAS39/IFRS9 accounting standards.

    • Simplify and speed up internal and external reporting across the business

      Challenge

      Individual trading groups often have specialized trading platforms in the front office for different asset classes, which is reflected in multiple back office platforms. However, regulatory reporting pressures and the imperative to manage the business more proactively means firms have to get a consistent, timely, integrated view of financial and operational results across the business. With multiple front and back office systems, standardizing and integrating the necessary data extracted at a granular level from each system to produce required reports requires a lot of manual effort.

      Solution

      Openlink's back-office and accounting solution provides support for interest rate, credit, FX, equities, commodities and associated derivative products. The Openlink platform can aggregate transactions from any upstream third party specialized or legacy trading platform. Data is directly accessible via configurable viewers to group, sort and sum on selected attributes. The integrated framework allows the creation of interactive report tabs, publication to a network or output to Excel.

    • Integration of risk and accounting under new accounting standards

      Challenge

      Accounting Standard setters (FASB and IASB) are introducing significant changes to hedge accounting principles. The changes aim to improve the hedge accounting model in order to facilitate financial reporting that more closely reflects an entity’s risk management activities. In addition, the amendments make certain targeted improvements to simplify the application of hedge accounting. Entities wanting to hedge exposures from commodities and financial instruments must make use of favorable accounting treatments, reducing P&L volatility.

      Solution

      As a fully integrated trading, risk management and accounting system, Openlink can help position organizations to address challenges resulting from changes to hedge accounting principles. The Hedge Analyzer and Accounting Pro package remain the gold standard, conducting required tests, generating hedge documentation, designations and classifications to support emerging standards and associated regulatory reports. It can also handle specific guidance respecting risk component hedging, the rebalancing/de-designation of hedge relationships, effectiveness testing and incorporation of credit risk provided under ASC 815 and IFRS 9.

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