Asset Servicing – Breaks

Reduction in Pre Reconciliation

JP Morgan Chase, Mumbai
Academic Instructor: Dr. K. Bindumadhavan, CFA, FRM
Administrative Instructor: Dr. Uma Natrajan

Sumir Swarup Kapur

2011B2A2688H
 Introduction and Overview of LOB
• Parent Line of Business: Custody and Fund Services (Asset Servicing), Corporate and
Investment Bank
• The objectives of this division is broadly categorized into two sub-divisions:
1) Custody Services: It holds customers' securities for managing and risk mitigation. The team
processes all the trades initiated by the client and performs accounting.
2) Fund Services: It majorly performs book-keeping for the Fund performing key role in
forecasting future cash flows and accruals.
• My Team
Name: Pre Reconciliation Team, Fund Services – Income
Business Responsibilities:
a) For a payment on an asset to reach the client’s account from the issuer’s account, it has
to go through a system of many checks and verifications, which involve matching of data
between custody and fund accounts.
b) In case of any discrepancies or ‘breaks’, the payments are not processed by the
processing software automatically and ‘fall out’, and then have to be reconciled.
c) Reconciliation is generally performed on Pay Date + 1 in most regions
d) Pre Reconciliation Team investigates and resolves breaks on Fund Accounts by matching
various parameters like Holdings, Coupon Rate, Tax Rate, Currency and Amount on Pay
Date itself i.e. on Event Level between Custody and Fund Accounts to maintain continuity
in Cash flow.
e) Securities processed in this division are Income Based Securities like Equity and Bonds
 Workflow Unrec
Overdue TLM
Fund
Custody
Accounting Breaks
File
Pre
Rec
Covered in
Pre Rec
Event Level
Validation
Event Level
Validation

Fund Level
Validation Fund Level
Validation

Shared
Process
Drive
Key Challenges (T1)

• Since, the Breaks team works on multiple

days, it was time consuming & tedious to fetch
info from multiple Pre Reconciliation Files
• Payments that were reconciled/overdue
required additional time.

(Note: Please leave space here. Will be adding

more content here)
Key Challenges (T2)
• Since, Actual vs Pre Rec comparison was not being performed (due to paucity of
time), the teamw as unaware of breaks that were not captured.
• Benefits:
a) Manual investigation of “Unexpected breaks” can help the team to find areas of
scope of expansion.
b) Automation of entire process will result in time reduction.
• Remedial Actions taken:
MIS to compare ZeroActual vs Prewith
day breaks RecPreComparison Results categorize
Rec file and subsequently
them to assess strike rate of team.

Timing - FX
In Scope
Timing - Pre Rec
Unrec - Overdue
Unidentifed Breaks
Not in Scope
Opportunities