Beyond the Trade Lifecycle – Operations Uncovered

This one-day program provides an overview of critical areas in Operations that support stock record, margin, securities lending and corporate actions. The assumption is that the participant has already taken the Lifecycle of a Trade course, which covers confirmation, clearance and settlement. 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. For example, the mishandling of corporate action events costs the industry millions of dollars each year in the form of direct losses because of operational errors, as well as sub-optimal trading decisions. This can result in a negative financial impact for investors and the service providers, whether brokers or custodians. Securities lending transactions and repo activity are discussed, not only in light of revenue generated, but also, identifying what can go wrong. Reg T margin is another important component of operations and this program provides an overview of how this activity is managed by the Broker/Dealer. Interdependencies in operations among entities such as investment managers, custodians, clearing houses and depositories are evaluated in light of recent trends in industry automation. Besides providing an overview of how these businesses are normally supported, the program content promotes discussion of real-life “war stories” that provide examples of how these events, if not properly managed and reported, can have a negative impact on broker/dealers, investors, custodians, and the financial markets.

Course Objectives

By the end of the course, participants will be able to:

• Identify mission-critical functions within the Operations area that support Stock Record, Securities Lending, Margin Lending, and Corporate Actions
• Compare the roles of broker/dealers, clearing firms, prime brokers and custodians and their interdependencies in supporting these areas
• Describe the events and processes that occur because of both mandatory and voluntary Corporate Actions, such as mergers and acquisitions and tender offers
• Evaluate the importance of how a stock record is used to demonstrate possession and control of both firm and client assets
• Distinguish the areas of operational support needed for Reg T Margin processing
• Analyze the process flows related to both stock loan and repo and the associated risks

Suggested Prerequisites:

• Lifecycle of a Trade or equivalent knowledge

Program Level:Foundational

Advance Preparation: None

Computers and Financial Calculators: N/A

Recommended CPE Credits: 7