Reconciliation

Overview

Monark runs a three layer reconciliation process, plus an additional check for Custodians in the MMM Securities master omnibus, ensuring that every share is accounted for at every level of the stack, from individual tax lots up to the Omnibus Account held at the Fund. This section describes Monark EFO's reconciliation process and the parties involved.

Layer 1: Sub-Accounts to Omnibus Account

The sum of all individual investor positions, plus the correction account (more on this below), must reconcile exactly to the omnibus share balance for each custodian, fund, share class, and distribution election combination. This reconciliation runs continuously, in real time, with discrepancies flagged to Monark's ops team.

Layer 2: Omnibus Account to Transfer Agent

EFO's omnibus account balances must reconcile to the account balances held on the Transfer Agent's books. Transfer Agents deliver position records to Monark on a daily basis, and EFO reconciles its omnibus-level share balances against the TA's records each day. Discrepancies are flagged in real time and breaks are fixed directly with the TA.

Layer 3: Custodian Stock Record to Omnibus Sub-Account Ledger

This is effectively a stock record reconciliation that is coordinated between EFO and the Custodian responsible for holding investor accounts. The purpose here is to ensure that the individual lots that EFO recognizes on our ledger map 1:1 to the individual lots recognized by custodians on their ledgers. This reconciliation is performed daily via EOD files, or in real time via API through our Positions endpoint.

MMM Securities Master Omnibus: Custodian Balances to Omnibus Account and Bank

For Custodians in the MMM Securities master omnibus, MMM Securities LLC, Monark's broker-dealer subsidiary, records each participating Custodian's balance in that Custodian's omnibus account on its own books. Those Custodian balances must reconcile to MMM Securities' master omnibus account balances at the Transfer Agent, and MMM Securities' cash records must reconcile to its bank account. MMM Securities sees only Custodian-level balances; individual investor records stay in Monark's sub-ledger.

The Correction Account

Every omnibus account has a dedicated correction account that absorbs the rounding residuals produced by distribution allocations and fractional-share mechanics. When allocating dividends or redemption proceeds to individual investor sub-accounts, EFO always rounds down, dollars to two decimal places, shares to six decimal places, and any residuals will accrue to the correction account. For example, if the Transfer Agent sends a $10.00 cash dividend for a position held equally across three investors, each investor is allocated $3.33 and the remaining $0.01 will accrue to the correction account. This guarantees that the sum of the individual sub-accounts, plus the correction account, always ties exactly to the omnibus-level activity/balance received from the TA.

CASH omnibus accounts carry a dollar-denominated correction account, and DRIP omnibus accounts carry a share-denominated correction account. Correction account balances are monitored on an ongoing basis, are expected to remain small, and are retained in the audit trail. See the Correction Accounts section within the Dividends and Orders for more detail.

Fixing Breaks

When a break is identified, Monark ops team researches the break and issues a break reason, including the Order or Account ID, tax lot ID, and reason code, to the appropriate counterparty for confirmation. Fixes are managed directly with the Transfer Agent, Fund, or Custodian Ops teams.

Once confirmed, Monark posts a correction to the system. The EFO back office ledger is an append-only system, records are never edited or deleted directly, and every correction is preserved in the audit trail.

Important Note:
Temporary imbalances across layers are expected during certain processing windows. For example, between the Transfer Agent's issuance of DRIP shares at the omnibus level and EFO's downstream allocation of those shares to individual accounts, the Omnibus Account balance will exceed the sum of the underlying lots. To account for this, Monark's omnibus platform applies defined tolerance windows to our reconciliation logic. Discrepancies arising within an expected processing window are suppressed rather than flagged, preventing false breaks while ensuring that any imbalance persisting beyond the window is escalated as a true reconciliation break.