SAM enables highly efficient middle and back-office processing for domestic and international securities transactions.
It is important to reinforce the message that not all electronic settlement systems are the same. What sets SAM apart is the quality and breadth of the stock and cash accounting, the audit controls, the variety and flexibility of reporting and the ease of communication with external systems. These fundamental attributes provide many benefits. Examples include; low levels of manual intervention, reducing cost in the settlement process, the ease with which operational risk requirements can be satisfied and the speed with which SAM can be enhanced to support new functions.
SAM has been designed to be used by any firm that trades, settles or maintains securities, including equities, gilts, bonds, unit trusts, exchange traded options and futures - whether as principal or on behalf of customers. Users of SAM include retail stockbrokers, institutional stockbrokers, internet stockbrokers, market makers, custodians, banks and niche players.
It was designed from the outset to process electronic STP settlement and custody transactions on both domestic and international markets. SAM’s unique control of STP processing is based around three separate and independent controls: STP Alerts, Exception Reports & Financial Accounting.
On busier days SAM has been responsible for initiating, communicating, matching, settling and reconciling more than £80bn of STP settlements on the domestic and international exchanges.
Almost all settlement systems are based on ledgers, i.e. double entry book-keeping disciplines. Double entry lies at the heart of all corporate record keeping and its use and benefits are well understood. What is generally meant by double entry is that the money part of a transaction is entered twice in an entity’s ledgers, using a methodology that describes the business model well, and supports the exercise of good financial control.
Unlike other businesses, the securities industry is all about the trading and management of cash and stocks, bonds, options etc. The characteristics of the these non-cash instruments are very similar to those of cash, and although additional processes are required to manage corporate changes, the benefits of the double entry discipline routinely applied to cash are equally valid when applied to them. SAM maintains rigorous double entry for stock and although this may be largely invisible to the user it provides many benefits.
A FEW EXAMPLES
- A trial balance can be printed showing the location of a particular stock (or currency) throughout the firm, and show the firm’s position in it
- A firm may quickly assess its exposure (or safe margin) in respect of the aggregate of all instruments held by/ for and due to/from clients, market counterparties, depots etc. because all assets are maintained on the ledgers for reliable evaluation, not just currencies
- Corporate actions can be easily executed with full control over the process. All changes are made by ledger entries and therefore a full audit trial is maintained of those changes. Errors can be simply corrected by unwinding what is in effect a journal entry and re-entering the corrected entry
- Its unlimited hierarchy of sub accounts allows many views to be maintained of concentrations of risk
- A sophisticated user defined Financial Statement provides almost any views of the accounting data held. It can even show the location and quantity of stocks outstanding for delivery to/from market or clients
- Support for Operational Risk
- Double entry for stock - an accurate model of the business
- Straight Through Processing
- STP Alerting
- Exception Reports
- Financial Accounting
- Real Time Transaction Processing
- Full Audit Functionality
- Stock Lending, including automatic revaluation Processing
- Residual Processing
- Automatic Balance Sheet & P/L
- Communications to International Markets, Settlement Agents, Custodians and other Counterparties
- White Label Functionality
- Oracle Relational Database