Book description
The only comprehensive account of operational risk in securities settlements
Securities Operations focuses on the settlement aspects of a securities transaction. As financial analysts make a greater effort toward quantifying and managing operational risk, they are paying more attention to securities transactions in general and to the settlement phase in particular. While describing the practical issues, this book enumerates the different "back office" related risks potentially encountered throughout the settlement. Simmons also covers more advanced topics such as derivatives, trade compensation, internal allocation of funding costs, and operational performance measurement.
Michael Simmons (London, UK) is currently Head of Business Consultancy at Wilco International, a major software systems provider to the financial markets.
Over the years, financial professionals around the world have looked to the Wiley Finance series and its wide array of bestselling books for the knowledge, insights, and techniques that are essential to success in financial markets. As the pace of change in financial markets and instruments quickens, Wiley Finance continues to respond. With critically acclaimed books by leading thinkers on value investing, risk management, asset allocation, and many other critical subjects, the Wiley Finance series provides the financial community with information they want. Written to provide professionals and individuals with the most current thinking from the best minds in the industry, it is no wonder that the Wiley Finance series is the first and last stop for financial professionals looking to increase their financial expertise.
Table of contents
- Cover Page
- Title Page
- Copyright
- Dedication
- Disclaimer
- Contents
- Foreword
- Introduction
- Acknowledgements
- 1: Essential Trading and Settlement Concepts
- 2: The Securities Marketplace
- 3: Bringing Securities to the Marketplace
- 4: Structure of a Securities Trading Organisation
- 5: Transaction Types
- 6: Security Forms
- 7: Security Types
- 8: Trade Cash Value Calculation
- 9: Static Data
- 10: The Trade Lifecycle and Straight Through Processing
- 11: Trade Execution and Capture
- 12: Trade Enrichment
- 13: Trade Validation
- 14: Trade Agreement
- 15: Transaction Reporting
-
16: Settlement Instructions
- 16.1 INTRODUCTION
- 16.2 RISKS ASSOCIATED WITH SETTLEMENT INSTRUCTIONS
- 16.3 MAIN SETTLEMENT INSTRUCTION TYPES
- 16.4 CONTENT OF SETTLEMENT INSTRUCTIONS
- 16.5 METHODS OF TRANSMITTING SETTLEMENT INSTRUCTIONS
- 16.6 FORMAT OF SETTLEMENT INSTRUCTIONS
- 16.7 DEADLINES FOR THE RECEIPT OF SETTLEMENT INSTRUCTIONS BY CUSTODIANS
- 16.8 AUTOMATIC GENERATION AND TRANSMISSION OF SETTLEMENT INSTRUCTIONS
- 16.9 SETTLEMENT INSTRUCTION VALIDATION
- 16.10 MANUALLY GENERATED SETTLEMENT INSTRUCTIONS
- 16.11 SAFE CUSTODY RELATED SETTLEMENT INSTRUCTIONS
- 16.12 SETTLEMENT INSTRUCTIONS ISSUED UNDER POWER OF ATTORNEY
- 16.13 MAINTAINING A LINK BETWEEN A TRADE AND ITS SETTLEMENT INSTRUCTION
- 16.14 SUMMARY
- 17: The Role of the Custodian
-
18: Pre-Value Date Settlement Instruction Statuses
- 18.1 INTRODUCTION
- 18.2 TRADE MATCHING AND SETTLEMENT INSTRUCTION MATCHING
- 18.3 SETTLEMENT INSTRUCTION STATUSES (PRE-VALUE DATE)
- 18.4 INVESTIGATION AND RESOLUTION OF UNMATCHED AND ADVISORY STATUSES
- 18.5 SETTLEMENT INSTRUCTION MATCHING TOLERANCES
- 18.6 THE STO'S RISK
- 18.7 METHODS OF COMMUNICATING STATUSES FROM CUSTODIANS
- 18.8 UPDATING THE STO'S BOOKS AND RECORDS
- 18.9 SUMMARY
- 19: Settlement Failure
- 20: Trade Settlement
-
21: Reflecting Trade Settlement Internally
- 21.1 INTRODUCTION
- 21.2 PRE-SETTLEMENT TRADE RECORD
- 21.3 POST-SETTLEMENT TRADE RECORD
- 21.4 WHAT TIMELY AND ACCURATE REFLECTION ENABLES
- 21.5 ACHIEVING TIMELY AND ACCURATE REFLECTION
- 21.6 UPDATE FAILURE
- 21.7 SETTLEMENT INSTRUCTIONS ISSUED UNDER POWER OF ATTORNEY
- 21.8 SETTLEMENT WRITE-OFF
- 21.9 UNSETTLING A SETTLED TRADE INTERNALLY
- 21.10 SUMMARY
- 22: Position and Trade Related Operations
-
23: Funding
- 23.1 INTRODUCTION
- 23.2 FUNDING CHOICES
- 23.3 DO NOTHING
- 23.4 BORROW (AND LEND) CASH UNSECURED
- 23.5 BORROW CASH VIA REPO
- 23.6 CURRENCY MOVEMENT DEADLINES
- 23.7 FUNDING PROJECTION
- 23.8 COLLATERAL MANAGEMENT AT CUSTODIANS
- 23.9 INTERNAL FUNDING ALLOCATION
- 23.10 UPDATING INTERNAL BOOKS AND RECORDS
- 23.11 AUTOMATION
- 23.12 SUMMARY
- 24: Securities Lending and Borrowing
-
25: Safe Custody
- 25.1 INTRODUCTION
- 25.2 BASIC SAFE CUSTODY SERVICES
- 25.3 SAFE CUSTODY LEGAL AGREEMENTS
- 25.4 SAFEKEEPING CLIENTS' SECURITIES AND CASH
- 25.5 SAFE CUSTODY HOLDINGS AT EXTERNAL CUSTODIANS
- 25.6 SAFE CUSTODY BOOKS AND RECORDS
- 25.7 UPDATING HOLDINGS AS A RESULT OF CORPORATE ACTIONS
- 25.8 VALUING CLIENTS' SECURITIES HOLDINGS
- 25.9 STATEMENTS OF SECURITIES AND CASH BALANCES
- 25.10 SAFE CUSTODY MOVEMENT TYPES
- 25.11 AUTHENTICATING INSTRUCTIONS RECEIVED FROM CLIENTS
- 25.12 ADVANCED SAFE CUSTODY SERVICES
- 25.13 SERVICE CHARGES
- 25.14 SUMMARY
- 26: Corporate Actions
-
27: Reconciliation
- 27.1 INTRODUCTION
- 27.2 OVERVIEW OF RECONCILIATION
- 27.3 RECONCILIATION TERMINOLOGY
- 27.4 TYPES OF RECONCILIATION
- 27.5 METHODS OF RECONCILIATION
- 27.6 FREQUENCY OF RECONCILIATION
- 27.7 EXTERNAL MOVEMENTS AFFECTING POSITIONS
- 27.8 MANUAL VERSUS AUTOMATED RECONCILIATION
- 27.9 INDEPENDENCE OF THE RECONCILIATION FUNCTION
- 27.10 BENEFITS DERIVED FROM RECONCILIATION
- 27.11 SUMMARY
-
28: Accounting
- 28.1 INTRODUCTION
- 28.2 GENERIC ACCOUNTING PRINCIPLES
- 28.3 ACCOUNTING FOR SECURITIES TRADES AND POSITIONS
- 28.4 ACCOUNTING ENTRY LIFECYCLE (1)
- 28.5 ACCOUNTING ENTRY LIFECYCLE (2)
- 28.6 MARKING TO MARKET
- 28.7 P&L CALCULATION CONVENTIONS
- 28.8 REALISED P&L
- 28.9 UNREALISED P&L
- 28.10 AUTOMATION OF ACCOUNTING ENTRIES
- 28.11 SUMMARY
- 29: Objectives and Initiatives
- Glossary of Terms
- Recommended Reading
- Index
Product information
- Title: Securities Operations: A Guide to Trade and Position Management
- Author(s):
- Release date: April 2002
- Publisher(s): Wiley
- ISBN: 9780471497585
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