Case study: Securities Trading Firm

The company is a broker that provides online trading and investment services to investors across a range of securities and market instruments.

Investors in Asia Pacific were making an increasing amount of payments to their investment accounts through the instant payment systems that had recently launched in those jurisdictions. As a result, there was a growing expectation amongst investors that funds transferred through these instant payment systems would be made available immediately. This compelled the company to seek ways of expediting their receivables reconciliation.

A major outstanding issue stemmed from the fact that the company was not always able to identify the origin of incoming funds. Even though the company received realtime remittance information via SWIFT MT910 messages, transferred funds could not be automatically applied to individual investor investment accounts if their client ID was not quoted on the payment reference field.

In the event of this, the company would have to manually reconcile funds to their respective investment accounts, leading to delays. This meant that the funds would not be immediately available for investment as desired, leading to a poorer customer experience.

The solution devised by HSBC for the company combined the use of Virtual Accounts (VA) Payer ID with the provision of enhanced MT910 messages. The company chose to first make this solution available for its investors in Singapore. Firstly, the company’s investors were provided with unique VA numbers, which they could quote to remit funds to. When remitted to the VA, transferred funds were reconciled automatically and subsequently credited to the investor’s investment account. As a result, funds were now applied to accounts in less than 30 seconds, allowing the company to meet the demand from investors for near-instant availability of funds.

Additionally, the company’s MT910 messages now contained full remitter details, as well as the VA number for incoming cross-border payments, local domestic payments and book transfers. This helped improve visibility on received funds, and eliminated the need for manual reconciliation.

The solution helped to realise the instant application of funds to investment accounts that was sought by investors in the company’s markets of operation. The entire process for funding accounts, from payment initiation to having investable funds, typically now takes less than 30 seconds, helping to improve the quality of the company’s user experience.

All payments sent through the implemented channels are now automatically reconciled at a straight-through-processing (STP) rate of over 95%. Additionally, STP rates through all channels have increased threefold from their previous rate as a result of the VA solution. The VA solution’s expeditious reconciliation of investor remittances could also be easily scaled to match the expansion of the company’s business operations. The solution is currently being considered for rollout in other markets in Asia Pacific.