Kristoffer FürstSenior Vice President, Product Management, Arcesium · Limina Founder

Start-of-day (SOD) Positions are dead

Name: Start-of-day (SOD) Positions are dead
Uploaded: 2025-01-30T05:47:37+00:00
Duration: 2 min 5 s
Channel: Kristoffer Fürst
Description: Kristoffer Fürst argues that traditional start-of-day (SOD) position workflows—where front-office systems ingest an opening position from an…

30 Jan 2025 · 2 min

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2:05

Kristoffer Fürst argues that traditional start-of-day (SOD) position workflows—where front-office systems ingest an opening position from an administrator/accounting "CashView" and then apply intraday adjustments—are no longer necessary. He traces why SOD arose (ease of implementing position/cash views) and explains how front-office systems evolved to hold nearly all movement data (cash ladders, corporate actions). He highlights two core downsides of relying on SOD/flush-and-fill: (1) failures or missing settlements become invisible, and (2) the lack of a duality check versus accounting/administrator views. His claim: if front-office systems rebuild positions intraday anyway, they should also retain the visibility and reconciliation benefits (i.e., SOD is unnecessary).

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Start of day positions are dead. So let me walk you through why I claim that. So the start of day positions, they came to be because the front office systems of the last, well, the past decade, they took a position in CashView from the, for example, the administrator or an accounting system. And then during the day they made adjustments, they took a trade and they adjusted position positions and cash from that trade. And they did that because it was easier. Building position and cash views is really difficult. Taking all movements that goes into it is really difficult. It was a lot easier to just take that and make the intraday adjustments. And then requirements in the front office became more sophisticated and complex. So you now needed to see your cash ladder, for example, including corporate actions, upcoming projected corporate actions. So these front office systems, they had to build support for more adjustments over time. And that essentially meant that now almost all data actually resides in them. But the two biggest downsides with the sort of day position view or flush and fill approach still remain in this system. So one is that if something goes wrong, if a settlement isn't a settlement failure, you can't see that because it should have been in, but it's not in. And then the other problem that arises, you don't have a duality check. So you're now capturing all of these movements and transactions that are happening. But you're not benefiting from the duality check. So you're not comparing to what the accounting system or the administrator is doing. You're actually just reading their view. So you're missing out on that duality check. So start of day positions might not be dead, but it's unnecessary. If you're doing all that work, you should have those two benefits as well.