Do you know exactly what is on your books? Are you sure all of the assets held as custodian by your firm are valid? Have the positions you think moved away really moved? How long has it been since you’ve done a complete reconciliation of the positions, retail or custodial? How many securities are duplicated or described incorrectly?

When a firm hasn’t reconciled their books in over two years, the chances are high that they are holding 10% more or less positions than their books reflect. The longer you wait, that percentage grows! This phenomenon is a much higher rate with respect to annuities. This can be a disaster waiting to happen for a qualified plan making distributions based on holdings, for a firm charging fees based on assets, or for a broker making a portfolio evaluation for a client based on positions. As a custodian, you may have a fiduciary responsibility to be more certain about the positions held in a client account. There could be firm wide unnecessary expenses involved with positions that do not exist, from corporate action processing to valuation services. This may be leaving your firm open to dispute issues.

Are you taking on a new correspondent holding these types of assets? How are their books? Will they contaminate your system with incorrect position information? How are you handling massive conversion or de-conversions and mergers? Have you identified an asset in your system as non-trading and taken steps to avoid the catastrophe of this asset somehow making it to a bulletin board trading system?

Market alternative assets are a special challenge when it comes to tracking security disposition, general treatment, distributions, mergers or name changes. They simply do not fit into the “normal” course of business for firms, their protocol and their software systems.

Prodigious offers a reconciliation/system scrubbing service that can be utilized at any time, at any interval, and with any limits required by your firm. You can request the service be performed quarterly, annually, once, or anything in between – the choice is yours!