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Performance reporting: Trade Date vs Settlement Date?

This is for all the RIA firms out there. How do you fix the issue of most performance reporting systems being trade date oriented while custodians are settlement date oriented?

Jul 18, 2012 by Eric from Denver, CO in  |  Flag
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6 votes

This is a continuing problem with reporting systems. Having used Advent Axys for a number of years, it was always a struggle to have internal reporting match that from the custodian. While the internal reporting is accurate, it is difficult to prove out the numbers in an audit when the custodial data is usually settlement date. There are specialized firms that do this type of work.

Having set up a new firm, we selected Morningstar Office because of their custodial integration. Our custodian, Charles Schwab posts trade date and with Office, we receive a custodial feed. This works great in terms of consistency in reporting; our system matches exactly that of the custodian. With that being said, if the custodian posts settlement date, now your internal data posts as settlement date so you have an equally troubling issue with performance now being calculated on settlement date.

I do not know if there is a one size fits all answer on how to solve your problem. I would hope that whatever system you are using could provide you some guidance on how to overcome this obstacle.

Comment   |  Flag   |  Jul 24, 2012 from Medford, OR

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Tunc Tanin Level 10

Having worked on the custody side, there are many different issues to consider for international trades. You have contractual settlement dates and actual settlement dates and these vary due to industry practice. The solution depends on what type of trading you do and I don't believe there is a perfect answer.

Comment   |  Flag   |  Sep 29, 2014 from Somerville, MA

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