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Transaction Execution Processes Overview

Execute transaction is the process where a trade related transaction have been agreed between the buyer and seller. Transaction can be segregated into common transaction which can be performed on all product types and product specific transaction which can only be performed on specific product type

Common Transaction Product Specific Transaction
Booking Fixing
Amendment Utilization
Cancellation Exercise
Termination Clearing
Allocation
Extension
Novation

A very important thing to note, each of this transaction will trigger a list of subsequent actions across multiple functional team. The detail elaboration and implication will be discussed in the product section which would be coming up in future installments.

Process Flow

Execute Transaction flow

graph LR TradeBooking[Trade Booking] --> TradeAmendment[Trade Amendment] click TradeBooking "/processes/frontoffice/TransactionExecution/trade_booking" "Exclusive for Subscriber" click TradeAmendment "processes/frontoffice/TransactionExecution/trade_amendment" "Exclusive for Subscriber" TradeBooking --> TradeCancellation[Trade Cancellation] click TradeCancellation "processes/frontoffice/TransactionExecution/trade_cancellation" "Exclusive for Subscriber"

Execute Transaction in the big picture

graph LR Pricing[Pricing] --> PDC[Pre-deal Checks] click Pricing "/processes/frontoffice/Pricing/" "Free Resource" click PDC "/processes/frontoffice/PreDealChecks/" "Free Resource" PDC --> TE[Transaction Execution] click TE "/processes/frontoffice/TransactionExecution/" "Free Resource" style TE fill:#ff784e TE --> CRU[Credit Risk Control] click CRU "/processes/credit_risk/credit_risk_control/" "Free Resource" TE --> MRU[Market Risk Control] click MRU "/processes/market_risk/market_risk_control/" "Free Resource" TE --> ACC[Accounting] click ACC "/processes/finance/accounting/" "Free Resource" TE --> CONF[Confirmation] click CONF "/processes/operations/confirmations/" "Free Resource" CONF --> SETT(Settlement) click SETT "/processes/operations/settlements/" "Free Resource" SETT --> ACC

Impacts of Transaction Execution

Issue in the Transaction Execution space would lead to below potential issues.

  • Implication on confirmation, settlements, accounting, market risk and credit risk utilization.
  • Incorrect risk being managed resulting in P&L impact
  • Erroneous booking resulting in processing issues.

People

This is a process owned by sales and trading with the help of middle office or so call trading assistants

Systems

Transaction execution Systems Flow

Execution takes place in various systems, both internal and external. In some cases the transactions are STP from one system into another. In some other instances they are manually booked into 2 or more systems, a concepts also know as double booking or dual booking.

Concepts

  • Double Booking