This article was written by: Jeff McGee, Product & Solutions Manager, AutoRek
Crypto’s 24/7 trading model is exposing the limits of reconciliation systems built for traditional market hours. AutoRek’s Jeff McGee argues that firms need near-real-time, event-driven reconciliation to keep pace with weekend activity, manage collateral and liquidity, and reduce the operational burden waiting for teams on Monday morning. With high transaction volumes and fragile legacy infrastructure, firms may also need to rethink whether building those capabilities in-house can happen quickly enough.
Crypto markets operate continuously through weekends and holidays, while much of the reconciliation infrastructure supporting institutional firms was built around markets with defined trading hours and settlement cycles. That creates an increasingly difficult mismatch between when activity happens and when firms can verify what is happening across their books.
Reconciliation processes built for equities, futures and other traditional asset classes were designed around defined trading hours, settlement windows and batch cycles. For firms trading crypto through the weekend, that can mean starting Monday with days of activity still to reconcile, leaving teams with less certainty around positions, cash and exposures when the week begins.
The issue of weekend trading isn’t just an infrastructure issue; it’s also a staffing issue. Most firms aren’t going to staff over the weekends, leaving things to wait until Monday. Even if firms do staff on weekends, it’s likely a skeleton crew that still leaves teams open to increased operational risk and likely a sizable amount of cleanup to do on Monday. Additionally, while the team is playing catch-up on Monday, the firm is still trading, adding increased stress to the team. This creates even more importance for operational infrastructure. At the bare minimum, firms need a reconciliation platform with robust matching and routing rules to help minimize the number of exceptions and allow teams to focus on true breaks. However, crypto firms face incredible volumes that traditional asset managers do not face, so even a 99% match rate can still leave a sizable number of exceptions.
The alternative is reconciliation that runs as frequently as new data arrives rather than on a fixed daily or weekly cycle, giving firms the ability to check positions continuously, weekends included, instead of accumulating three days of unverified activity before Monday’s open.
This is a scenario where ‘good’ infrastructure is unlikely to be good enough. Continuous trading exposes dependencies across clearing, collateral management, liquidity and operational infrastructure. Firms therefore need near-real-time reconciliation to support effective collateral and liquidity management. Without it, they face a costly trade-off: overcollateralize based on estimates or risk intraday margin calls. The challenge is particularly acute during volatile weekends, when many firms maintain a collateral buffer to reduce margin-call risk at the expense of available liquidity. Adequate collateral and liquidity monitoring is also essential because, in some crypto markets, positions may be automatically liquidated if maintenance margin requirements are not met.
As institutional participation in crypto grows, this becomes more of a baseline operational requirement. Firms that build for continuous reconciliation now will be in a stronger position as volumes rise and regulators pay closer attention to how firms manage risk in a market that never closes.
Most firms are unlikely to adapt quickly enough to meet the operational demands of 24/7 trading. This makes the buy-versus-build decision critical. Firms must evaluate not only the cost of developing internal capabilities, but also how quickly those capabilities can be deployed. One of the biggest worries for many firms is that their existing infrastructure is often a patchwork of custom scripts, APIs and other side-of-desk tools that have several fragile dependencies. This creates a situation where change is very difficult to enact.
It is highly important that firms seek solutions that can seamlessly integrate into their existing infrastructure without disrupting their current workflow.
Trading volume and weekend activity should determine the urgency of that decision. Firms with high transaction volumes and continuous trading are unlikely to build the necessary infrastructure internally in a timely and cost-effective manner. The requirement extends well beyond a reconciliation tool that compares data files on a scheduled batch cycle. A viable 24/7 operating model requires:
• API connectivity to ingest and exchange data continuously;
• Event-driven, near-real-time processing when trades or transactions occur;
• Detailed matching and routing rules to minimize false exceptions; and
• Workflow management to prioritize, assign and resolve genuine breaks.
Firms need to assess where legacy processes are creating risk and invest in reconciliation that can keep pace with the market as trading expands beyond traditional market hours.