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As firms rush to the Private Markets boom, they will have to confront the limitations of rigid Ops systems.
FTF News recently got time with Sarva Srinivasan, Global Head of Strategy and Managing Director for NeoXam Americas, to talk about how the NeoXam Aro offering is addressing the challenges of Private Markets.
Q: Is it fair to say that the complex Back-Office operations — with Reconciliation being the most important one — needed to support syndicated loans, Private Credit instruments, structured products, and customized contracts is holding firms back from diving into these challenging instruments? Or are firms investing anyways?
A: Investments in complex assets beyond traditional equities and bonds have risen significantly over recent years, as firms look to diversify portfolios, enhance returns, and manage risk amid market volatility and economic uncertainty. Private Credit in particular has grown rapidly over the past two decades, now representing an estimated $2.5 trillion industry. This growth suggests firms are rushing to participate in the Private Markets boom, despite the challenges it entails. Yet entering these markets without the right tools can quickly become a liability rather than an advantage. Having access to Quality Data and the operational infrastructure to process and disseminate it is foundational for success in this space.
Q: In the report, NeoXam makes a strong case for firms to move beyond Excel spreadsheets for complex Reconciliation. Has NeoXam seen any movement away from Excel among its clients? If so, which areas and what kinds of firms are making the move?
A: We are seeing growing demand from Asset Managers, Banks, and Service Providers for solutions that can effectively manage alternative Markets Data, as they start to grapple with the limitations of Excel spreadsheets and the real and rising costs of operationally rigid systems. Specifically, the shift is seen among Asset Managers who have grown their AUM [Assets Under Management] rapidly, especially hedge funds and Private Equity funds, as well as among Banks and financial institutions that are under Regulatory mandates to improve their operational processes to have auditability and compliance with internal as well as external regulations.
Q: Is there a process for extracting Data and related Ops instructions from spreadsheets and using that information for NeoXam Aro?
A: Yes, we use our Data Modeler feature to extract Data from Excel or CSV [Comma-Separated Values] using a self-service UI [User Interface] and a rules-driven framework. NeoXam Aro also has the ability to extract Data from PDFs, emails (where attachments may be password-protected or encrypted), and by interfacing with APIs [Application Programming Interfaces].
Q: What kind of event — major trade breaks, lost opportunities caused by snags in operations, etc. — would cause firms to justify a move to Automation?
A: The appeal of Automation often derives from the failure of legacy systems. When manual and outdated processes become a barrier to accurately and promptly meeting Service Level Agreements (SLAs), the cost and penalties become too big to ignore. For instance, we recently worked with a Global Bank processing millions of transactions daily, which suffered recurring downstream failures due to flawed trade inputs. Its incumbent system was creating a host of operational dysfunctions that stemmed from a lack of front-to-end controls, errors in secondary Trade Data, and frequent T+1 breaks. By replacing its legacy systems with NeoXam Aro, the A.I.-enabled and self-service features were able to reduce settlement and trade Reconciliation breaks by over 50 percent. Not only did this enhance our client’s SLA Compliance rates, but it freed up resources in its trading desks and operations that can now be put to better use.
Q: Are there any manual steps for any of the aspects of NeoXam’s enterprise-wide approach? Does it depend upon each individual implementation?
A: Each implementation, while different, has a lot of common features. All implementations address the Five Rs of Recon (Data – Reorganization, Reconciliation, Research, Remediation, and Reporting). Over the years, we have built out-of-the-box connectors to Brokers, Custodians, Trustees, Accounting, and Portfolio Management systems. This has eased the effort clients have to take to handle acquiring and reorganizing Data. Reconciliation rules may be similar in about 80 percent of the cases, while the remaining 20 percent is driven by the quality and complexity of Data. Research involves identifying the reasons for the break, most of which are common across clients. Remediation depends on internal teams and data sources, so it can vary across clients; however, these are not custom-built solutions, but configurations that support specific business processes and flows. In summary, while cash, trade, or position recons are the common recons performed by financial institutions, the configurations can vary depending on the dataset and internal processes.
Q: What more can you say about the future development of NeoXam Aro for the rest of this year and for 2026?
A: Solving operational and data challenges across the Investment Management value chain is central to NeoXam’s mission. To achieve this, we continue to innovate, delivering best-in-class technology that gives firms the ability to stay ahead of the Operational and Regulatory challenges they face. We’re making significant investments in leveraging A.I. and are working with our clients on an agentic recon framework that leverages LLMs and agents to handle the 5Rs of Reconciliation. We are also working on providing deeper integration across our product suite to enable seamless connectivity between NeoXam Aro, NeoXam DataHub, and NeoXam Impress, ensuring clients benefit from a fully integrated Data Management, Reconciliation, and Reporting ecosystem.
