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Syprocon’s Error Control System (ECS) is a simple but effective tool for managing a Broker-Dealer’s Error Account, something that can have a dramatic and immediate impact on the bottom line.
The process of buying and selling securities comes down to thousands of individual transactions, many of which are triggered by human interaction. Errors are unavoidable, given the nature of human communication. Financial Consultants may purchase the wrong stock, or the wrong number of shares. They may sell a security instead of buying one. It may not happen often, but it will happen.
Once errors are detected, the company is required by law to process them through a central Error Account. The Error Account represents the net impact of all uncleared errors, and if not managed aggressively can escalate into the millions of dollars.
Companies must maintain an audit trail that can identify the original error, follow it through to its resolution, and demonstrate that each resolution was approved by the appropriate level of management. Without software support, it is labor-intensive, clumsy and extremely difficult to manage.
The Error Control System receives a daily feed of data from a bookkeeping file. It gives managers a window into the details of the Error Account, showing all unresolved errors, as well as the history of errors that have been cleared.
Functionality is controlled by logon, so authorized managers can use ECS to “work” the account. Given the right level of access, managers can select an error, calculate its net cash impact, and generate the transactions that will charge it to the branch involved, to the Financial Consultant responsible, or both.
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ECS doesn’t have rules for assigning charges: it is a tool to help managers better understand the situation, and make informed decisions in the best interests of all concerned. Each clearing transaction provides for a comments field, so that managers can record their rationale, case by case. With ECS, managers can also build a list of standard Error Categories, and create new categories when needed.
ECS provides several standard reports, to show Error Account details, Branch-level statistics and the impact on the firm. For each transaction, the detail report includes trade dates (for the initial error and the resolution), the customer and securities involved, the quantity and price of each security, the cost of the error and the nature of the chargeback.
Finally, ECS can be integrated with other Syprocon products, such as the NSTARS tool for compensation management, so that any fees and charges are linked directly to Financial Consultant payouts.
FEATURES & BENEFITS
Syprocon’s ECS offers obvious benefits for financial services firms:
- Immediate bottom line improvements through a reduction in the size of the Error Account.
- Improved flow-through in the Error Account, so that errors are resolved more quickly.
- Fewer new errors, since costs can be assigned to the parties and branches responsible, a very strong incentive for improvement.
- Faster and more accurate access to historical information, when needed for auditing and government reporting.
- Better control of a complex process, especially if no automation is currently involved.
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