Principles of Quantitative Development

4.8 OTHER PERSPECTIVES

When a trade comes to the finance department, it is no longer in the booking system. The finance professionals manage trading desks and asset classes as profit and cost centres. This notion of profit and cost centres, which we can implement using a flexible portfolio structure, may impose other constraints on the platform design. In order to come up with a robust design, we need to understand the accounting structure well enough to respond to the specific requirements coming from the finance and accounting departments as well.

Some aspects of the trade data come under the purview of regulatory bodies and secrecy laws. Since financial data contains sensitive information, access to it is understandably highly regulated. Since a trading platform operates over international boundaries in today's globalized financial markets, it has to cater to multiple, disparate regulatory requirements related to banking secrecy and privileged data. The very definition of what ‘privileged data’ means is different in different countries. In some countries, the fact that the bank has business dealings with a specific counterparty is already privileged information, while in others, it is only the trade details (like the notional or exposure) that are confidential.

Some countries may have geographic constraints on the physical location of the databases – South Korea, for instance, demands that all trade-related data involving entities on their land be housed domestically. Even a ...