This two-day program provides an intensive overview of Brokerage Operations in the US securities industry. A detailed picture of operations encompasses the trade lifecycle process for both equity and fixed income products, from order and trade execution through clearance and settlement. Custody and control topics include a description of stock record, margin, stock loan, and asset services.
Participants gain an understanding of the way a typical broker/dealer firm organizes its operation within functional areas. Process flows that support these functional areas are a major focus of the program, but attention is also given to potential gaps and exposures that present operational risk. Highlighted interdependencies in brokerage operations among entities such as investment managers, custodians, clearing houses and depositories are included.
The program content promotes discussion of real-life “war stories” involving operational risk indicators, such as trade breaks, fails, suspense entries, DK’s, and cancels/corrects. Participants will learn how these events, if not properly managed and reported, can have a negative impact on broker/dealer firms, customers, counterparties, and marketplaces.
By the end of the course, participants will be able to:
- Identify mission-critical functions within the lifecycle of a trade, from the inception of an order through settlement, as well as the follow-up required for the effective management of failed trades
- Explain the critical functions of new account and product reference or (static) data set-up
- Gain perspective on the interactions between the operation of a brokerage firm and the industry infrastructure, including confirmation/affirmation service providers, clearing houses and the depository
- Analyze metrics related to the control of trade activity, including fails, breaks, cancels/corrects, STP levels, and the cost per trade
- Compare the roles of broker/dealers, clearing firms, prime brokers and custodians
- Describe the impact of operational risk on Corporate Action processing
- Evaluate the importance of books and records, including how a stock record is used to demonstrate possession and control of both firm and client assets
- Distinguish the areas of operational support for margin and stock loan businesses within broker/dealers
NOTE: A one-day version of this program, which covers the events in the Lifecycle of a Trade, with a particular focus on the post-execution (i.e., Middle-, Back-Office and Operations) functions is also available in the “Lifecycle of a Trade” class.