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Wipro Partners with London Stock Exchange to Launch Hosted Multi-Tenant Reconciliation Utility: The First of its Kind

Wipro has partnered with the London Stock Exchange Group (LSE) to launch a hosted multi-tenant reconciliation utility. Each partner will provide: 

  • LSE:
    • UnaVista platform (proprietary platform which provides transactions, reconciliations, reporting, etc.) The platform overs all instrument types and is used by ~1,000 financial institutions 
    • Data center hosting of application in London based data center
    • Processing in an FCA regulated entity (the data center)
    • Data archives for ten years
  • Wipro: 
    • Staffing and Infrastructure for reconciliation analytics, and automation tools
    • Access on a pay per transaction basis
    • Customization of reconciliation services
    • Third party support of reconciliation processing, including access to LSE instrument data files.

Key benefits that Wipro believes the utility can deliver to clients include: 

  • 30-40% savings over internal reconciliation costs, from automation, pricing of data center capacity at spare capacity rates, and accuracy of static instrument data from LSE data feeds
  • Conversion of CAPEX to OPEX, with fee per transaction pricing 
  • Direct access to static instrument data for validation purposes
  • Ability to scale volumes, based on Wipro staffing and delivery center infrastructure. 

Wipro is in conversations with some existing clients to roll out this service, and anticipates around four clients will commence operations in Q4 2014.

Many vendors are talking about setting up multi-tenant reconciliation utilities - and many have set up single tenant reconciliation services delivery units. But the biggest cost savings come from multi-tenant utilities. There are, however, significant impediments in their adoption: 

  • Data custody: capital markets firms do not want competitors to have any chance of access to their data. Finding third parties with the requisite skills and domain experience, who are not competitors, has been a major inhibitor. Wipro and LSE are both third parties that would not become competitors to clients of this service
  • Speed: reconciliation has been primarily manual labor-driven to date, with firms using an independent delivery model. With an automated delivery model, based on a common industry platform, the shared services model will be able to delivery faster TAT than is possible with independent delivery
  • Transparency: member firms need to report to regulators the status of reconciliations (which have a high capital charge). Third party vendors have been unable to provide a regulated entity for reporting purposes, which means lower levels of transparency when TAT lengthens
  • Standards across multiple platforms: proprietary platforms usually work within a small ecosystem of platforms only. The UnaVista platform works across all platforms, and is already in use (at least in part) by LSE market participants. 

Wipro anticipates very different adoption by client type: 

  • Tier one firms adopting the reconciliation utility as a part of their overall reconciliation operations, focused on the European market
  • Mid and lower tier firms adopting the service as a comprehensive reconciliation operations capability

Capital markets firms are looking for a service that addresses these inhibitors and provides lower cost. The service is offered on a transaction cost basis, which will allow clients to test the service. If execution is successful, take up is likely to be very high.

Critical to the success of this utility is the access to the exchange's core static data warehouse, feeds and platform. In this case, the exchange is the London Stock Exchange, a world premier exchange. Other vendors are likely to look to follow this model with other exchanges. However, only one vendor will succeed with each exchange. 

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