The Trade Lifecycle: Behind the Scenes of the Trading Process


  • Format: PDF
  • Pages: 415
  • Published Date: 2015


The Trade Lifecycle: Behind the Scenes of the Trading Process is a guide to the trade lifecycle and it inherent risks and weaknesses. The book dissects a trade into its component parts, tracking it from pre-conception to maturity, and examines how the trade affects each business function of a financial institution.

As well as illustrating each part of the trade process it highlights the legal, operational, liquidity, credit and market risks to which the trade is exposed. Readers will benefit from a full understanding of all parts of the trade process, including derivative and credit derivative trades and will also see, with examples where appropriate, how the mismanagement of these risks led to the recent financial crisis.


This book is divided into five parts. Part I is entitled ‘Products and the background to trading’. It starts with achapter on trading giving an overview of trading in general as well as that related to the financial services industry. The next chapter is a background to risk which is another important theme of the book. We then look into specific trades by examining the cashflows associated with each. Chapters follow on asset classes and derivative products. Part I concludes with a look at three important aspects of trading – liquidity, price and leverage.

Part II is ‘The trade lifecycle’. It starts with an anatomy of the trade which is the core element of the lifecycle. Then the lifecycle is analysed in detail followed by a chapter on cashflows and asset holdings which are directly influenced by the lifecycle. We then move on to four methods of direct monitoring of trades throughout their life-time: risk management, market risk control, counterparty risk control and accounting. There is a discussion of P&L attribution followed by a full description of the busi-ness functions in the lifecycle (i.e. the people). Then there is a chapter on regulation including Credit Value Adjustment (CVA) – a subject growing in importance.

Part III ‘What really happens’ lifts the lid on the trading floor with chapters on insights into the real world of capital markets – here be dragons, case studies of real projects, the ‘IT divide’ and quants in capital markets. Part IV ‘Behind the scenes’ looks into processes, new products, testing, data, reports and calculations.Finally, in Part V, the Appendix summarises the risks arising from the trade lifecycle.


  • Trading
  • Risk
  • Understanding Traded Products – Follow the Money
  • Asset Classes
  • Derivatives, Structures and Hybrids
  • Liquidity, Price and Leverage
  • Anatomy of a Trade
  • Trade Lifecycle
  • Cashflows and Asset Holdings
  • Risk Management
  • Market Risk Control
  • Counterparty Risk Control
  • Accounting
  • P&L Attribution
  • Regulation
  • nsights into the Real World of Capital Markets – Here be Dragons!
  • Case Studies
  • The IT Divide
  • The Role of the Quantitative Analyst
  • Developing Processes for New Products
  • New Products
  • Testing
  • Data
  • Reports
  • Calculation