conceptual, pending feedback; advanced

1. Securities Operations Cross
Mapping Financial Services in Securities Operations

2. Introduction
As financial services increasingly becomes
interdependent and innovative, a holistic
understanding is needed to face this complexity
Assumption: New joiners into Securities Operations,
have little awareness of the entire landscape. Even
mid-level practitioners tend to focus on their area.
This proposed diagram maps Securities Operations
and aims to visualize the relationship of different
functions.

3. The Cross
Instrument
Creation &
Private
Placement
Position
Management
Pre-trade
Trade
Post-trade &
Settlement
Instrument
Maturity

4. The Cross explained
The diagram is based on two life cycles: a security life cycle and a
trade life cycle.
Security Life cycle
The horizontal divides the life of an instrument in four parts:
Instrument Creation & Private Placement, Position Management,
Pre-trade and Instrument Maturity.
Trade Life cycle
The vertical divides the trade cycle also in four parts: Position
Management, Pre-trade, Trade and Post-trade & Settlement
Another way to interpret the two axes is as an “issuer’s view”
and a “trader’s view”; as such, a fund traverses both the
horizontal and vertical.

5. Mapping the Horizontal

6. Instrument creation and Private
Placement
Creating equity, debt, commodity, and derivative
instruments is largely based on Corporate Finance
and Financial Engineering.
Private Placement is also included in this section
before intersecting with the vertical, to distinguish
the public trade of securities.
After private funding, an organization may release
securities to the public; if allowed.

7. Pre-trade- Horizontal
Relative to the horizontal, pre-trade relates to
activities prior releasing instruments to the public.
This could be road shows before an IPO or a
government statement for new debt.
This includes the creation of a prospectus

8. Position Management- Horizontal
For Equity and Debt, this relates to investor relations
and corporate actions.
For Derivatives, there is an overlap between the
vertical and horizontal in collateral management,
given that both issuer and trader participate in the
activity.

9. Instrument Maturity
This is the completion or termination of an
instrument.
Debt and Derivatives usually have a contract period
For equities, maturity happens when it is converted to
another form or when the issuer closes.

10. Mapping the vertical

11. Pre-trade- Vertical
Relative to the vertical, pre-trade relates to activities
prior execution
This covers research, risk measures and pre-trade
strategies.
Recalibrating, optimization and reviewing execution,
(like back testing) is part of pre-trade.

12. Trade
This is focused on execution covering algo-trading
and arbitrage.
Although not done on an exchange, if a Fund-of-funds
invests in a hedge fund, we’ll classify it in this area.

13. Post-trade & Settlement
This encompasses middle and back-office functions.
Audits and compliance reviews are also placed here, if
done after the trade.
Activities in Clearing and Depositories (like STP and
T+2 settlement) are placed here, except for collateral
management; since it requires active participation
and is usually done with a central counter party.

14. Position Management- Vertical
Portfolio Rebalancing is included in this area
Other services can also be classified here such as:
Securities Lending, Fund Accounting, Product Control