“Trade Life Cycle” – Process of Buying and Selling goods/services.

What is a trade?

Trade is a process of buying and selling any financial instrument.

What are the Steps involved in a Trade Life Cycle?

Overview of the Process

1. Sale –
 This is a process of client acquisition in which HNIs or Institutional
clients are introduced to various investment products or vehicles.
 These vehicles or products are available with an Investment Manager
or Bank by whom the client’s investments are managed.
 The investments are collectively called a Mutual or a Hedge fund.

2. Trade Initiation and Execution –

 This is the process of placing an order in the market.
 Trade Initiation and Execution can be done both in Order and Quote-
driven markets.
 This depends on the choice of a marketplace and on the external
platform.
 Once the order is placed and it gets matched, the trade is said to
be executed.

3. Trade Capture –
 Trades are then booked internally in an FO system for it
to flow down to the operating systems.
 It is booked in a Risk Management System (RMS)

4. Trade Validation and Enrichment – Reference data team set up the

static and dynamic details which help middle office teams to validate
the trade, before releasing instructions into the market.

Repository for data management

5. Trade Confirmation –
 This is an extremely critical step for the trade settlement.
 Trade details and SSIs are agreed with the counterparty at least a
day prior to settlement date.
Confirmation via depositories like Euro clear/DTCC
6. Trade Settlement – This is the process of simultaneous exchange
of cash versus securities for a security trade or cash versus cash for
a Derivative trade.

7. Reconciliation – Reconciliation involves matching ledgers against

statements to ensure correct accounting of all trade booked.

A pictorial representation of the steps.