Definition: The monitoring and reconciliation of bank accounts that have slipped into a negative balance. In investment operations, this is a critical control used to identify failed settlements or delayed wire transfers that could lead to significant interest charges or “fails” in the market.
Example: During a daily cash check, the reconciliation system flags a negative balance in a Euro account. The team tracks this back to a trade that was paid for, but the corresponding sell trade failed to deliver cash on time. By tracking this overdraft immediately, the firm can move cash to cover the shortfall and avoid high penalty interest.
Explore the IVP Reconciliation Solution
The IVP Reconciliation Solution provides proactive alerts for any account approaching or exceeding its credit limit. As an integrated service, IVP doesn’t just flag the overdraft. Our team investigates the root cause, such as a failed trade or a delayed dividend, and alerts the treasury desk to take action. This joint approach minimizes unnecessary interest expenses and ensures that the firm maintains optimal relationships with its banking partners.
