In this paper, we argue that to increase productivity and customer satisfaction, post trade communication metadata should be captured and structured against the relevant transactions.
MiFID II commits market participants to capturing and storing communications relevant to transactions. One of the challenges has been the front office, where the trade capture has generally signalled the ‘start date’ of a transaction, and no pre-trade or enquiry management has been possible. In many companies, changes are in process to cater for this new requirement.
However, once a trade is executed, it moves through the organisation to the ‘back office’ operations, for settlement and payments. Depending on the transaction duration and structure, this may mean long cycles of client contact and various forms of complexity, such as resets. In other cases, the manual client interaction may be generally trivial – until there is a break.
Are back-office communications ‘relevant’?
It’s not immediately clear that back office communications are relevant under the new Directive. Market conduct provisions address the way prices are offered, trading decisions are made or information is distributed. So transaction communications metadata post trade may or may not be ‘relevant’ under current or new regulations, but it is very important for the business.
Breaks make metadata relevant!
Trade breaks or matching problems instantly turn the transaction from low to high touch. Straight through process (STP) has been deployed where possible across most trading and asset environments, however consider for a moment when a transaction isn’t matched with a counterparty -
In the back office, the operators have options; contact trader, contacts sales, contact counterparty. As a result of this various decisions, corrections or amendments are made by various staff at various levels in various organisations.
When these changes are made they are often logged in the systems where the changes are made. The communications traffic tends to be multichannel and includes voice, email and chat and is logged in the systems that handle it – phone logs, email servers, chat servers.
This data – if collected – ends up in data warehouses as unstructured records – becoming a series of artefacts that have no further use to the organisation that owns them.
Linking all this metadata easily and conveniently to transaction will strategically enable the firm to improve strategically enable the firm to improve productivity and customer satisfaction.
In the same way as a ‘tree falling in forest’ makes no noise, matching breaks or other issues are often just dealt with and are not heard by the rest of the organisation.
If the breaks are frequent or regular they need to be ‘heard’ to be attributed to their origin and to be fixed. Productivity and transaction costs cannot be monitored, attributed or lowered if the systemic problem is not isolated. The only way to isolate the problem is to collect and link the metadata.
In this way, business manager can drill down on the true cost filtered by sales teams or product type and fine tune the way they operate their business for maximum gains.
More transparency of costs is generally better than less. Collecting the raw data is a prerequisite (and might already be happening), but it also needs to be linked to transactions to be used strategically.
If the client is not satisfied they will not keep coming back. Back office work – particularly settlement - is normally very important to clients and may be the reason they choice to work with a particular firm.
If matching breaks are systemic and not captured and repaired then this will cause an issue for the client – even if the issue does actually lie with the client. By linking communications data to transactions at all lifecycle stages it is more likely systemic issues around particular clients or particular transaction types are isolated and dealt with.
Furthermore, operations staff having access to communications records at a transaction level will already know the history of contact with the client about the specific transaction.
Customer satisfaction will be increased when communications metadata is collected and linked to transactions, both in the front office and in the back office.
There are many benefits to capturing and linking all communications metadata to transactions at all lifecycle stages in a transaction. There are various areas where efficiencies and productivity can be found and client satisfaction increased, as we have outlined above.
The key tenant of achieving any gains is to collect the data – both the metadata and its relationship to the underlying transaction.
The Revista CCM is the only platform that links communication metadata to enquiries and transactions, and enables this to happen in real time at any stage in the transaction lifecycle.