[doonesbury]

Consider the case of a trader (trading firm) with a custodian bank. What's the best way to reconcile the custodian's view with one's own trading system and its backend? Recall this is important because, as the custodian does settlement, the trader doesn't want to purchase instruments with cash the custodian doesn't think it has nor purchase shares the custodian bank thinks it already has. Keeping these two matched is a real, pressing, daily problem.

Blockchain I think is an impractical, over-hyped solution that has no purchase in Fintech or even classical finance.

[polack]

Generally speaking it's not possible to get the data needed from the custody during the day. In the evenings/nights when they have done all settlements, cleaned up the data and executed their batch jobs they can send you their view of things in the form of positions and transactions.

From there it's easiest to start comparing positions and if they deviate then have the system match everything that has happened in both systems since they last matched in order to find the faulty transaction(s). After that you should be ready for the next business day, where you have to keep track of how the state is affected by your trades and other events during the day.

Then the cycle repeats.

[Galanwe]

Don't forget that there is a third layer of middle office in between.

So actually there is front -> middle -> back that should reconciliate on the current portfolio positions