Sunday, September 15, 2013

Trade Lifecycle

Thousands of people in financial industry are explicitly involved in financial trading all over the world. Hundreds of thousands are involved implicitly. Based on my experience the percentage of people consciously doing their job is not high. Nevertheless it is highly important to understand at least the high level principles of process happening behind the scenes of financial institution when a trade is done.

Who Works on the Trade?

First, it is necessary to understand what stakeholders work with the trade during its life.

Trade Info Structure

Below you can find a sample of trade attributes structured into different categories (the trade is not real):

  • General
    • Identifier: E54123
    • Asset class: Equity
    • Type: Spot
    • Status: Awaiting confirmation
    • Trade date: 3 June 2009
    • Transaction time: 11:09 GMT+1
    • Transaction location: London
  • Economic
    • Buy or Sell: Buy
    • Notional: 20 000
    • Ticker: CAD
    • Exchange: LSE
    • Currency: GBP
    • Price: 15.27p 
  • Sales
    • Salesperson: Elizabeth Smith
    • Sales credits: 150 
  • Legal
    • Jurisdiction: UK 
  • Booking
    • Desk: Equity trading
    • Trader: John Baker
    • Assistant: Mark Eton
    • Trading book: GBP Equity trading 
  • Counterparty
    • Counterparty: The Bank Address: Liverpool st, London
    • Payment Type: SWIFT
    • Payment Code: UIT TRY XXX
    • Counterparty reference: LCE1985-04B
    • Settlement Date: 5 June 2009 
  • Timeline
    • Trade date: 15 June 2009
    • Settlement date: 17 June 2009
    • Maturity date: 15 Sep 2009

Life cycle

Different stakeholders work with the trade at different time. This is similar to a conveyor at a plant.

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