We just published a new guide in our knowledgebase at wiki.bricknode.com where we show how customers can use Bricknode Financial Systems (BFS) for managing and keeping track of the holdings of an investment fund. On top of this we also added a new add-on which can generate Net Asset Value break down reports for custodians. First out in our integration is the Swedish bank SEB.
Thanks to the extensive API of BFS we could build this add-on purely by using our own API and nothing else. This project also shows how our customers can create their own code to extend the functionality of BFS themselves and use BFS as a core system for all their financial activities.
Since the wiki article is only open to customers and trial users of BFS let me summarize in short what we did.
In BFS we create two legal entities, one for the fund company who is managing the fund and one for the fund entity which is the fund. The fund entity can then issue its own financial instruments which are the fund shares that investors invests in but that is outside the scope of this blog post. We then create a simple account for the fund entity and a custody account which mirrors the account that the fund entity has with its custodian, the fund entity can also work with multiple custody accounts if that is needed.
We then set up the financial instruments that the fund should invest in and we use some custom fields in BFS to store some ad-hoc values that the custodian would like to get in their report.
Voila! That is all we need to get going and use BFS for fund administration in its simplest form.
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A few weeks ago Bricknode signed a strategic deal with MFEX Mutual Funds Exchange as a customer and partner for offering automated mutual fund trading. Yesterday Bricknode launched its last release into a production environment and we are now looking forward to our next release which will include the first module involving MFEX.
Trading of mutual funds still poses a big problem within the technical aspects of securities processing since the back office process can be demanding together with various types of corporate actions.
By combining the mutual fund exchange developed by MFEX and the back office and customer facing capabilities of Bricknode Financial Systems (“BFS”) this partnership will be able to offer truly automated trading of mutual funds.
The most frequent question we hear from new customers of Bricknode is how the platform manages the fact that money is sent to the fund company before the actual execution report is received. The simple answer is that BFS works with account reservations on the end customer interface while tracking un-settled funds sent to the fund companies pending execution.
Stay tuned for release number 4 of 2014!