Glossary · Operations
Position Reconciliation
Position reconciliation compares the quantities of each security or contract held in a fund’s books with the holdings reported by custodians, prime brokers and counterparties.
Each position is matched by identifier (ISIN, CUSIP, ticker or internal ID), account and quantity, and often also by cost, price and market value. Sources include custodian and prime broker statements, FCM statements for futures, counterparty confirmations for OTC derivatives, agent statements for loans, and transfer agent or registrar records for private holdings.
Differences typically arise from trades booked in the fund’s system but not yet settled or reported, missed corporate actions, incorrect allocations, identifier mismatches in the security master, and loan or mortgage factor updates. Each break is categorized, owned and tracked until resolved.
Where the fund also has an administrator and an internal IBOR, managers often run a three-way reconciliation between the manager’s books, the administrator’s books and the street. Daily position reconciliation is a prerequisite for accurate P&L, risk reporting and a clean NAV; unresolved position breaks carried into month-end are a common audit finding.
Related terms
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