Trade is the exchange of financial securities and products for cash. The trade life cycle involves several steps from initiating the trade through settlement. It includes: (1) trade initiation and execution by placing an order on an exchange, (2) trade capture by internally booking the trade, (3) trade validation and enrichment by verifying trade details, and (4) trade confirmation and settlement by exchanging cash for securities on the settlement date. Reconciliation also matches ledgers to ensure correct accounting of all trades.

1. Trade Life Cycle
Trade is exchange of financial securities and products stock, bonds, commodities, currencies and derivatives or any other valuable instrument for cash as a promise to pay the stated currency
in the respective country of exchange
Introduction
What is Trade life cycle ?
In the financial market, “trade” means to buy and/or sell securities/financial products. To explain it further, a trade is the conversion of an order
placed on the exchange which results in pay-in and pay-out of funds and securities. The trade ends with the settlement of the order placed. All the
steps involved in a trade, from the point of order receipt (where relevant) and trade execution through to settlement of the trade, are commonly
referred to as the ‘trade lifecycle’.
What are the steps involved in trade life cycle?
Sales
Trade Initiation &
Execution
Trade Capture
Trade Validation &
Enrichment
Trade confirmation
Trade Settlement
Reconciliation
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.
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.
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)
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
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
This is the process of simultaneous exchange of cash versus securities for a security trade or cash versus cash for a Derivative trade
Reconciliation involves matching ledgers against statements to ensure correct accounting of all trade booked.