Accounting, Legal and Infrastructure
Market Infrastructure
The infrastructure behind trading: CCPs, trade repositories, compression, electronic trading platforms and portfolio reconciliation.
Introductory2 pagesPractitioner7 pagesAdvanced1 page
1Market Infrastructure
- IntroductoryOverview of Market InfrastructureFinancial market infrastructure clears, settles, and records transactions in one place. This makes participants' risk management more efficient, but it also concentrates risk.
- IntroductoryCentral Counterparties: JSCC, LCH, CME and OthersWhen a CCP becomes the counterparty to trades, the effects of a counterparty default are concentrated in the CCP, so it covers its credit risk to participants with pre-funded resources.
- PractitionerTrade RepositoriesTrade repositories exist so that authorities can see the whole over-the-counter derivatives market.
- PractitionerPortfolio CompressionIf you hold two trades whose positions offset each other, the total notional amount is larger than the net position.
- AdvancedCCP Default ManagementJSCC processes a defaulting clearing member's positions through hedging and auctions, among other methods, to fix the loss.
- PractitionerElectronic Trading Platforms such as SEFsThe aims of the rules differ by country. The US states pre-trade price transparency, and Japan states disclosure of the outline of trades to ensure fair trading.
- PractitionerPortfolio ReconciliationReconciliation exchanges the material terms of trades and their valuations as of the close of business on the previous business day, and resolves any discrepancies.
- PractitionerMajor Electronic Trading PlatformsProviders are told apart by the registration or authorization category and its holder, the products, and the execution method.
- PractitionerPost-Trade Confirmation and Matching ServicesIn electronic confirmation, the confirmation is established when the terms agree or the parties accept them.
- PractitionerPost-Trade Efficiency ServicesOutside providers offer services for four roles, from allocation and give-up to reconciliation, margin exchange, and compression.