If reporting and settlements are the lifeblood of daily operations, then accounting and asset class coverage form the backbone of a firm’s long-term resilience. A middle office provider must do more than simply “keep the books”, they must support a wide range of securities, manage complex corporate actions, and ensure accurate valuation across every portfolio.
This is Part 3 of our five-part series on evaluating middle office outsourcing providers. We’ve already covered Reporting & Performance Analytics (Part 1) and Post-Trade Settlement Operations (Part 2). Now, we turn to the critical role accounting systems and asset class coverage play in provider selection.
Start with Internal Questions
The diversity of today’s investment strategies demands clarity on your firm’s specific needs. Before looking at a provider, ask:
Equities (Foreign, Corporate Actions, ADRs, Income Payments)
- Do we have internal expertise to handle global markets (time zones, settlement cycles, FX)?
- Are dividend and income events accurately captured across multiple custodians and markets?
- How confident are we in managing corporate action risk (missed elections, mandatory events)?
- Are we overly reliant on a single vendor or custodian for reference and event data?
Fixed Income (Vendors, Variable Rates, Analytics)
- Do we have consistent vendor coverage across all fixed income types (sovereigns, corporates, municipals, structured)?
- Are variable rate resets (FRNs, CLO tranches) updated and calculated correctly?
- How much manual intervention is required for pricing, analytics, and accruals?
- Do we understand how factor-based securities (MBS, ABS) are processed today?
Derivatives, Futures, and Options (Risk, Efficiency, Controls)
- Do we have transparency into open derivative positions and daily mark-to-market valuations?
- How confident are we in the effectiveness of margin and collateral management?
- Are lifecycle events (resets, expiries, novations, exercises) tracked and processed without gaps?
- Do we understand the impact of derivative exposures on portfolio risk and attribution?
Key Questions for a Potential Provider
Once you’ve defined your internal priorities, shift the focus to what a provider can deliver.
Equities
- How do you process foreign equities across markets and currencies?
- What controls ensure accurate, timely, and documented corporate action elections?
- How do you reconcile ADR income payments and apply withholding tax correctly?
- What is your exception management process for failed settlements, income discrepancies, or missed events?
Fixed Income
- Which market data vendors do you use for pricing, and how are discrepancies resolved?
- How are variable rate resets calculated and validated?
- What analytics do you offer (duration, convexity, risk exposures)?
- How do you manage securities with amortizations, prepayments, or factor-based processing?
Derivatives, Futures & Options
- How do you capture, value, and reconcile derivative trades daily?
- What reporting and controls exist for derivative lifecycle events?
- How do you integrate derivative exposures into overall portfolio reporting and risk analysis?
In today’s markets, asset class diversity is no longer optional, it’s expected. A provider’s ability to support equities, fixed income, and derivatives with equal rigor can determine whether your operations scale with growth or collapse under complexity.
Robust accounting systems and broad asset class coverage mean fewer manual interventions, lower operational risk, and greater confidence for clients and regulators alike. The right partner won’t just keep your books in order; they’ll position your firm to grow across asset classes and global markets with confidence.
Coming next in our series: Part 4: Client Engagement — examining how providers support transparency, communication, and collaboration with investors.