What is the trade lifecycle?
The full process from pre-trade decision-making through execution, clearing, settlement, and post-trade servicing.
What are the major stages of the trade lifecycle?
Pre-trade, order creation, execution, clearing, settlement, and post-trade.
What happens in pre-trade?
Research, market data analysis, signal generation, portfolio decisions, and risk checks.
What is an order?
An instruction to buy or sell a specific quantity of an instrument.
What is order creation?
The process of generating a trade instruction from an investment decision.
What is execution?
The process of placing and matching an order in the market.
What is a fill?
A completed execution, in full or in part, of an order.
What is partial fill?
When only part of an order is executed initially.
What is trade confirmation?
A record that the trade details have been agreed between parties.
What is clearing?
The process of validating trade obligations and managing post-trade counterparty exposure.
What is netting?
Offsetting obligations so only the net amount needs to be settled.
What is novation?
When a CCP steps between buyer and seller and becomes the legal counterparty to each.
What is settlement?
The final transfer of securities and cash.
What does post-trade mean?
All processing after execution, including confirmations, allocations, reconciliations, and reporting.
What is allocation in post-trade?
Assigning executed trades to funds, accounts, or portfolios.
What is reconciliation?
Comparing records across systems or counterparties to detect breaks or mismatches.
What is a break in reconciliation?
A mismatch between two records that should agree.
Why is reconciliation important?
It helps ensure books, records, positions, and cash are correct.
What is failed settlement?
When cash or securities do not transfer as expected on settlement date.
What is settlement risk?
The risk that one side of a transaction fails to deliver cash or securities.
What is counterparty risk?
The risk that the other party in a trade fails to meet its obligations.
What is operational risk in trade processing?
Risk caused by process failures, bad data, or system issues.
What are corporate actions?
Events such as dividends, splits, mergers, spin-offs, and coupon payments that affect securities.
Why are corporate actions difficult for data systems?
They change positions, prices, entitlements, and historical comparability.
