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What happens before the order goes to securities exchange?

Updated: Jul 7, 2022


Interested in The Trade Life Cycle?


From the point a securities order is placed in a digital channel, there are several operations applied on the order and these operations depend on the asset you are trading...


This paper will walk through the operations after the securities are placed in the digital channels.




After the securities brokers accept the order, the Trade stage begins, which includes all operations until the order is sent to various order execution agents for execution.

< Figure 1: Connectivity to various Execution Agents >

Trade

Securities Exchange or ECN will execute exchange-traded products such as equities, exchange-traded options, and exchange-traded funds. Individual securities insurers or brokers execute fixed income instruments or Over-the-Counter derivatives.


Trade Enrichment

Before an order is routed to the order execution agents, it must go through an order enrichment procedure to complete its order attributes and generate execution messages that follow the execution agents' standard and protocol.

When the order is accepted by the brokers, it contains minimal information from the channel and additional data points are required by both the execution agents as well as the securities broker.


< Figure 2: Cost and Fee Model >

An Order Attributes Generation Engine performs the order enrichment process, which consists of a collection of business rules that are performed in various trading scenarios and connects to core banking systems for static data retrieval.

For the completeness of order details, the engine generates these additional order properties. Axisoft's COMPASS Pre-Trade Engine delivers complete order enrichment functions that improve trade processing efficiency. The Cost and Fee model, which offer flexible computation models, are one of the functionalities.


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