There’s a cost that your derivatives desk doesn’t discuss in strategy meetings: the actual expenses associated with confirmation workflows. This isn’t about the spread, hedging costs, or compliance overhead. We are referring to the operational burden incurred every time a forward contract moves from execution to settlement.
Here’s how it typically works in practice: Your NDF desk closes 1,000 contracts monthly across various entities. Each confirmation triggers an email to the counterparty, who then responds with their version of the details. The middle office compares both versions, identifies discrepancies—such as differences in rate decimals or settlement dates—and sends another email for clarification. The counterparty’s back office typically responds eight hours later. Your team then reconciles the information again. Finally, someone manually enters the confirmed details into your treasury system.
This process involves four emails, three versions of Excel sheets, and two manual reconciliation cycles. And that’s assuming everything goes smoothly.
Now, multiply that by 1,000 contracts monthly. Consider the complications: 8% of confirmations don’t match on the first attempt and need escalation. Add in the settlements that miss the cutoff times because reconciliation took too long. Don’t forget the regulatory capital you’re holding against operational risk, as your auditors flagged “manual confirmation dependencies” during the last compliance review.
The financial impact becomes evident quickly.
Each manual confirmation cycle consumes 47 minutes of labor. That translates to $89 per contract in processing costs, not even accounting for error rates, delayed settlements, or the operational risk buffer that regulators are increasingly incorporating into capital requirements.
Each manual confirmation cycle consumes 47 minutes of loaded labor cost. That’s $89 per contract in pure processing expense before you factor in error rates, delayed settlements, or the operational risk buffer your regulators are increasingly pricing into capital requirements. At 1,000 monthly contracts, you’re spending $89,000 on confirmation theater. Annually, that’s $1,068,000 in reconciliation cost that creates zero enterprise value.
But here’s the real issue: scaling your operations becomes financially impossible.
With PUY, you can eliminate the dependencies that make growth impossible under your current cost structure. Grow your operation, increase revenue and value, without any administrative or operational cost increases. Schedule a call!
