ISITC Updates Accounting Reconciliation Holdings Market Practice for Tax Lots and Derivatives

Boston, MA - 2 November 2011

Updated guidelines now include details for tax lots and derivatives

ISITC (International Securities Association for Institutional Trade Communication), the industry trade group focused on standards in transaction processing and related communications, today announced the release of an updated Market Practice for Accounting Reconciliation Holdings. The updates reflect the buy-side’s growing usage of derivatives and the resulting need for better standards for accounting reconciliations.

Developed by the ISITC Reconciliation Working Group, the enhanced Accounting Reconciliation Holdings Market Practice defines and outlines the business requirements and best practices to perform accounting reconciliations for financial services firms. The Reconciliation Working Group works to define best practices and set market practice for electronic messaging using standards. The Market Practice aims to explain the use of different syntax or formats for communicating the required information, particularly as it relates to tax lot reporting and derivatives.

The Market Practice also includes guidelines for currencies, cash equivalents, equities, fixed income, derivatives and other financial instruments and allows for holding data to be reported at the position or tax lot level. Firms can report holdings using accounting data in an industry standard format.

“The Reconciliation Working Group is always looking for ways to improve standards so that across the industry, we’re better able to support the changing communication needs between investment managers, custodians, accounting agents and third party service providers,” comments Ken Ayvazian, Co-Chair of the ISITC Reconciliation Working Group. “What we found was that market participants needed better definitions to support the usage of derivatives as well as tax lot reporting. This Market Practice is a reflection of the valuable feedback from participants across the industry and we encourage people to provide feedback on the guidelines.”

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