A strategic processing advantage

Financial markets are constantly changing, but market players always have to know, at any given moment, which financial instruments belong to whom in what quantities and who has them when at their disposal. Because of the increasingly international interconnection of the financial markets and the growing importance of derivative products, new requirements for accounting and reporting are regularly generated by portfolio and risk management as well as by the regulatory authorities. At the same time, the progressive development of information and communication technologies and the accompanying globalization of the financial markets are producing great pressure on costs. In this environment, strategic decisions have to be made about the development of modern information systems, such that the systems are able to cope with the constant change. Such systems need a solid foundation, based on a logically consistent and stable data model.

Uniform structuring of positions

The Middle Office Data Model (MODM) is a concept for the uniform structuring of information on positions in financial instruments. The concept is completely unaffected by the demands made by the various accounting standards on bookkeeping. As long as the account system has a suitable definition, it is able to comply with all standards simultaneously. The MODM merely requires the financial instruments to be fully defined in FIDM™. On this basis, complex position structures can be formed, arranged by account structure, accounting or reporting requirements. The MODM also includes the entire customer base, as well as all the requisite information for processing orders and for the automatic posting of commissions, fees and taxes.

Instrument flow approach

The core of the MODM is its instrument flow approach. This starts with the typical flows in financial instruments and derives all positions and evaluations from them. This keeps it untouched by the accounting standards and allows simultaneous evaluation and description of positions by different rules. Rather like FIDM™, this approach makes the model stable, even though requirements are constantly changing.

Bank-wide portfolio and risk management

The MODM was developed to automate procedures in order processing and in the Back Office. In conjunction with FIDM™, it is also possible to prepare reports according to uniform criteria, over the whole range of all financial instruments and all positions. This creates the conditions for a bank-wide portfolio and risk management according to the latest findings of the financial market theory, for example, using value at risk approaches. The use of a uniform data structure for all positions considerably reduces the expenditure for implementing these types of applications. The MODM has been checked and validated in different projects by banks of various sizes; it has proved to be a well thought out, consistent concept.