Middle Office

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Middle Office Technology

In today’s ever-changing environment fund managers have to take a vital decision: Move forward or lag behind. Fund managers who move forward and outsource or co-source their middle office functions create a more robust infrastructure, which in turn leads to better bottom line results. Those fund managers who decide to lag behind and maintain the status-quo risk being left behind in an increasingly turbulent and competitive environment.

Our in-house Circle technology platform is the middle office solution many customers have relied on for many years for their post-trade execution processing.

Middle Office as a Service

Point Nine has been providing middle office services, either outsourced or co-sourced, to our clients since 2002, assisting them in achieving better bottom line returns. Our team of experienced professionals coupled with our technology become a seamless extension of our customers’ operations.

Trade Processing, Operations And Reporting

Our Work

Point Nine makes available to all our clients our proprietary operations platform. Clients access the platform through the web, log in, and use it to capture their transactions (including uploading of any associated term sheets, Bloomberg snapshot screens, etc.), store them, monitor them (including generation of all the required reports) and manage all aspects of their transactions’ life cycle.

Alternatively, clients may choose to notify our operations team of transactions details via telephone, fax, secure e-mail or other secure file delivery channels. Our operations team inputs the transaction details into the system, and our clients log in to confirm them.

Point Nine stores all transactions executed by our clients in a structured way in the secured database of our operations platform. This becomes our clients’ books and records. All economic and legal details of transactions are captured and stored.

Point Nine also maintains a robust and secure Disaster Recovery process to ensure continuity of our clients operations. Examples of the transaction types we support:

  • Fixed Income: Bonds, Bond Futures, Bond Options, Interest Rate Futures, Interest Rate Swaps, Caps, Floors, Swaptions, Exotic Interest Rate Securities or Derivatives (e.g., Inverse Floaters, CMS, PRDCs, TARNs, etc.)
  • Credit: Bonds, Bond Options, Loans, Credit Default Swaps (CDS), Loan Credit Default Swaps (LCDS), Credit Linked Notes (CLNs), Index Trading (e.g., CDX, iTraxx, etc.), Collateralised Debt Obligations (CDOs) (Single Tranches and Full Capital Structure, Synthetic or Cashflow), Nth-to-Default Swaps, Credit Default Swaptions
  • Foreign Exchange (FX): FX Spot, FX Forward, Basis (Cross-Currency) Swaps, FX Options, Exotic FX Securities or Derivatives (e.g., PRDCs, TARNs, etc.)
  • Equities: Stocks, Stock Options, Exotic Equity Derivatives
  • Commodities: Commodity Futures, Commodity Over-The-Counter (OTC) Transactions, Exotic Commodity Derivatives
  • Exotic Derivatives: Variance Swaps, Volatility Swaps
Confirmation and daily reconciliation with our client

Confirming and daily reconciling all transaction details with our client.

  • On an ongoing basis, Point Nine confirms and reconciles all transaction details with our client.
  • Any differences are corrected by Point Nine.
  • Point Nine produces a daily reconciliation report for our client with all appropriate trading activity and details, with any breaks clearly identified and explained.

For a seamless process, where appropriate, we develop automatic interfaces that link our operations platform with any relevant systems of our client.

Confirmation and reconciliation with the counterparties

Confirming and reconciling all transaction details with our client’s counterparties.

On an ongoing basis, Point Nine confirms and reconciles all transaction details with our client’s counterparty.

  • Any differences are reported back to our client, and following instructions from our client, Point Nine resolves them with the counterparty.
  • Point Nine produces a daily reconciliation report for our client with all appropriate trading activity and details, with any breaks clearly identified and explained.

For a seamless process, where appropriate, we develop automatic interfaces that link our operations platform with any relevant systems of our client’s counterparties.

Disseminating and optionally daily reconciling all transaction details with our client’s third party service providers.

  • On an ongoing basis, Point Nine disseminates and optionally daily reconciles all transaction details with all appropriate third party service providers, for example:
    • prime brokers
    • fund administrators
    • clearing houses
    • matching service providers (e.g., DTCC)
    • other service providers
  • On an ongoing basis, Point Nine receives from our client (or its prime brokers or its other third party data providers) all trade or corporate events related to the transaction, for example:
    • fixings
    • payments
    • deliveries
    • option exercises
    • novations
    • terminations
    • cancellations
    • credit events
    • amendments
  • Point Nine disseminates all the trade or corporate events to all appropriate third party service providers.

Dissemination of trade or corporate events relies on our client (or its prime brokers or its other third party data providers) granting us access to all appropriate trade or corporate events.

For a seamless process, we liaise with most prime brokers and a number of fund administrators and other service providers and have developed automatic interfaces that link our respective operation platforms.

Settling all cashflows and asset deliveries related to a transaction.

On a daily basis, Point Nine generates a report with all cashflows and asset deliveries related to transactions of our client that have to be exchanged on the day. Examples of such cashflows and asset deliveries:

  • settlement
  • interest
  • principal
  • dividend
  • exercise
  • novation
  • termination
  • cancellation
  • credit event settlement
  • delivery of securities

Point Nine’s report takes into account amendments due to trade or corporate events or changes in holiday calendars and includes all appropriate details like counterparty, account details, etc.

On a daily basis, Point Nine settles these cashflows and executes the delivery of assets on behalf of our client.

Point Nine produces a daily settlement report for our client with all appropriate activity and details, with any breaks clearly identified and explained.

For security purposes, Point Nine’s operations team does not have the authority to physically execute any cash or asset movements. Point Nine enters the payment or delivery instructions into the appropriate payment or delivery system and produces a daily report for our client with all such instructions. These instructions remain pending in the system until explicitly confirmed by our client.

Processing and recording on behalf of our client all transaction life cycle events and reporting to our client all such events and each transaction’s status.

  • On an ongoing basis, Point Nine receives from our client (or its prime brokers or its other third party data providers) all transaction life cycle events, for example:
    • documentation exchange
    • confirmation signature
    • fixings
    • option exercises
    • novations
    • terminations
    • cancellations
    • credit events
    • amendments
  • Point Nine processes on behalf of our client all the transaction life cycle events.
  • Point Nine stores all the transaction life cycle events in a structured way in the secured database of our operations platform. This becomes our client’s books and records.
  • Point Nine reports all the life cycle events and each transaction’s status to our client.

The transaction life cycle event processing and recording service relies on our client (or its prime brokers or its other third party data providers) granting us access to all appropriate trade or corporate events.

Point Nine offers a wide variety of live, on demand reports to our clients. Depending on our client’s specific requirements, these reports are accessible only by our client, or by our client’s prime brokers, fund administrator, investors, other third parties, etc.

Reconciliation reports

  • On a daily basis, Point Nine generates reconciliation reports between our client and Point Nine.
  • On a daily basis, Point Nine generates reconciliation reports and its counterparties.

For a seamless process, we liaise with most prime brokers and a number of fund administrators and other service providers and have developed automatic interfaces that link our respective operation platforms.

Point Nine offers a wide variety of live, on demand reports to our clients. Depending on our client’s specific requirements, these reports are accessible only by our client, or by our client’s prime brokers, fund administrator, investors, other third parties, etc. Here are examples of the reports we produce:

Position reports
  • On an ongoing basis, Point Nine generates position reports which include all known transaction and counterparty details.
  • Point Nine reports it in various level of aggregation: By type/group of transactions, by book, by strategy, by currency, by maturity, by reference obligor, by group of reference obligors, by rating, by geography, by counterparty, by date, etc.
Profit and Loss (P&L) reports
    • On a daily basis, Point Nine receives from our client (or its prime brokers) the valuation (present value) of each of its transactions, the brokerage fees and the funding charges levied by our client’s prime brokers.
    • Point Nine generates the P&L and reports it to our client and, if required by our client, to our client’s fund administrator, in various level of aggregation: By type/group of transactions, by book, by strategy, by currency, by reference obligor, by group of reference obligors, by counterparty, by date, etc.

The reports include a breakdown of all the P&L components, for example:

    • capital gain
    • interest or dividends
    • funding charges
    • brokerage fees
  • The reports include a distinction between realised and unrealised for every P&L component.

Production of the P&L reports relies on our client (or its prime brokers) granting us access to the valuation (present value) of each of its transactions, the brokerage fees and the funding charges levied by our client’s prime brokers.

Profit and Loss (P&L) attribution reports
  • On a daily basis, Point Nine receives from our client (or its prime brokers) the valuation (present value), the risk measurements (e.g., deltas, etc.) of each of its transactions, the relevant market movements that occurred on each day, the brokerage fees and the funding charges levied by our client’s prime brokers.
  • Point Nine generates a detailed breakdown of the market movements, brokerage fees and funding that contributed to the daily P&L and reports it to our client and, if required by our client, to our client’s fund administrator.

Production of the P&L attribution reports relies on our client (or its prime brokers) granting us access to the valuation (present value), the risk measurements (e.g., deltas, etc.) of each of its transactions, the relevant market movements that occurred on each day, the brokerage fees and the funding charges levied by our client’s prime brokers.

Risk reports (market and specific risk)
  • On an ongoing basis, Point Nine receives from our client (or its prime brokers) the valuation (present value) and risk measurement of each of its transactions.
  • Point Nine reports it in various level of aggregation: By type/group of transactions, by book, by strategy, by currency, by maturity, by reference obligor, by group of reference obligors, by rating, by geography, by counterparty, etc.

Production of the risk reports relies on our client (or its prime brokers) granting us access to the valuation (present value) and risk measurements (e.g., deltas, etc.) of each of its transactions.

Counterparty reports (credit risk)
  • On an ongoing basis, Point Nine receives from our client (or its prime brokers) the valuation (present value) of each of these transactions.
  • Depending on the specific report requested, Point Nine also receives from our client (or its prime brokers) the potential future exposure (PFE) of each of these transactions.
  • Point Nine groups together all transactions executed by our client against a specific counterparty where there is a counterparty exposure.
  • Depending on the specific report requested, where there are netting agreements in place between our client and the counterparty, Point Nine nets the valuation (present value) and the potential future exposure (PFE) of all the relevant transactions.
  • Point Nine reports the gross and net notional counterparty exposures in various level of aggregation: By type/group of transactions, by book, by strategy, by currency, by maturity, by reference obligor, by group of reference obligors, by rating, by geography, etc.

Production of the counterparty reports relies on our client (or its prime brokers) granting us access to the valuation (present value) and, depending on the specific report requested, to the potential future exposure (PFE) measurement of each transaction where there is a counterparty exposure.

For a seamless process, we receive the valuations and, if applicable, the potential future exposure (PFE) measurement of transactions automatically. This is achieved by developing interfaces that link our operations platform with any relevant systems of our client’s (or its prime brokers) and its counterparties.

Depending on the specific report requested, this service may rely on our client (or its prime brokers) granting us access to any ISDA Master and CSA netting agreements between our client and its counterparties.

Cashflow and liquidity reports
  • On a daily basis, Point Nine generates a report with the known future cashflow and asset deliveries of every transaction executed by our client.
  • Point Nine’s report takes into account amendments due to trade or corporate events or changes in holiday calendars and includes all appropriate details like counterparty, account details, etc.
  • Point Nine reports it in various level of aggregation: By individual transaction, by type/group of transactions, by book, by strategy, by currency (netted or unnetted), to be paid/received to/from a specific counterparty or to/from a specific prime broker (netted or unnetted), by date, etc.
  • Point Nine generates specific liquidity reports by reporting the future cashflows netted by currency and specific time intervals (e.g., daily, weekly, monthly, quarterly, annually, etc.)
Option exercise schedules
  • On a daily basis, Point Nine generates the known future exercise schedules of every option transaction executed by our client.
  • Point Nine reports it in various level of aggregation: By individual transaction, by type/group of transactions, by book, by strategy, by counterparty, by date, etc.
Other reports

Point Nine produces the following additional daily reports:

  • Expected cashflow and asset delivery report.
  • Actual settlement report.
  • Life cycle event and transaction status report.
  • Collateral management report.