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Nostro Calculator

The main purpose of the application is to help the work of the colleagues who are responsible for the liquidity of the nostro accounts. With the Nostro Calculator they are able to make a resolution to manage these nostro accounts several times during the business day. These decisions can be reliable based on the data received and recorded (SWIFT messages), and the reconciliation and balance calculation carried out by the program.

The application records all credits and debits to any value date, in addition to the realized movements. At the realization the possible movements are considered to be factual, and the non-realized ones can be monitored.

The integration of the Nostro Calculator into the bank€™s workflow
The Nostro Calculator should be connected only to the SWIFT CBT (SWIFT Alliance, TurboSwift, Box for Swift, etc.). The program monitors from these SWIFT messages the liquidity, and - if required- the messages can be to this SWIFT system delivered regarding the liquidity analysis. Therefore, the implementation of the Nostro Calculator merely relating to the adequate configuration of the SWIFT CBT.

Services of the Nostro Calculator 

Liquidity management
The liquidity management contains the following features: 

1. Display the value dated and future value dated position of the accounts calculated from the available data
2. Separation of the operating (possible but not yet realized) and the factual balances.

1. ábra

The principles to calculate the most precise value dated balance (operating balance) of the nostro accounts are the following:

  • The calculation is based on the statement sent by the account holding bank, related on the value date-1.This statement will be altered with the factual items (on this statement or entered in the system) which have a greater value date than value date-1. This is the method how we get a so-called operating value dated opening balance.
  • It is possible to enter items manually because at the implementation of the Nostro Calculator it could occur statements with future value dated items which haven€™t been imported, or value dated items which aren€™t on the statement.
  • The system distinguishes factual items and possible items from the point of view of the balance calculation. Factual items are the items on the statements and the transactions. All the other items are marked as possible items.
  • The method how the so-called operating balance is calculated at the end of the value day is the following:
  • Operating value dated opening balance + value dated factual items + value dated possible, not yet matched items.
  • Messages received on the value date can increase or decrease the balance.

3. Decision-making process for the balance optimization in the day / end-of-the day, i.e. the system helps to generate the SWIFT messages for transfer between the accounts. To avoid the accounts falling under the limit, at the balance optimization the min. balance will be taken into consideration. By the optimization offered transfers between accounts, of course, can be overwritten at any time.

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Matching functions

Although the Nostro Calculator is not a reconciliation system and is not intended to become that, it is inevitable to filter out the items from the possible items which are listed in the factual items (reconciliation) or items which are related to the same transaction and would be duplicated in the balance calculation (duplication filtering). The Nostro Calculator offers two types of reconciliation: automatic and manual reconciliations.

The principle of the automatic reconciliation is to build up 1 to 1 pairs. Reconciliation criteria are: Reference ID, amount and value date. Amount of deviation is allowed by configuration.

The system will automatically match the items from the received statements (MT-950, MT900/MT910) with the items of possible items, i.e. trying to build up pairs. If a potential pair has been matched, it will not be counted in the balance hereafter.
If the system receives possible items, then at first it tries to find a factual item pair, if it didn€™t succeed, then it tries to find a possible pair; either from the items already manually entered or from the messages related to the same transaction which is already in the system but with another SWIFT message type (MT103, MT202, MT202-MT3xx, MT4xx v. MT7xx-MT202-MT202). In this case the item gets "duplicated" status and the system doesn€™t count it in the balance calculation.

Manual matching means to build up n-m relations. Here the possible non-matched items will be matched with the items from the statements or with the non-matched MT900/MT910 type items. The item doesn€™t count in the balance calculation after the manual matching.

3. ábra

There is a possibility in the system to filter out duplications, where the decision is left to the user. If the user supposes that it is about the same transaction in two SWIFT messages, then it is possible to change the status of one of the items to duplicate, and it won€™t be counted in the balance hereafter.

Handling the SWIFT messages

  • The Nostro Calculator handles the messages which are important regarding the management of the nostro account€™s liquidity (MT103, MT200, MT300, MT305, MT306, MT320, MT341, MT362, MT450, MT400, MT752, MT900, MT910, MT940, MT 950).
  • Automatic messages import from the SWIFT system sent by the bank or a partner bank or a nostro account leading bank.
  • Possibility of manual entering of the supported messages.
  • Possibility of the completion of the imported messages which are incomplete considering the liquidity management.
  • Wide range of filtering at the item€™s display.

Other Features

  • Administration of accounts.
  • Registering currencies.
  • Treating banking days (and holidays).
  • Cut-off time and related messages / warnings.
  • Displaying itemized statements.
  • Identifying users and their activities (logging), configuring and monitoring their rights (by currencies).
  • Archiving the history of the entries.

Benefits of the Nostro Calculator

  • Quick and easy implementation.
  • Centralized management of the nostro accounts liquidity.
  • The investment of the implementation (ROI) returns in the first year

Technical specifications

Nostro Calculator gets standard SWIFT messages on file level or via MQ Series from a SWIFT terminal.

Using MSSQL Server databases (In order to find the optimal technical solution the expected user number was considered as well.)

Multi-user operating environment in Windows NT, 2000, XP or in Vista operating system.