The Trade Lifecycle: Behind the Scenes of the Trading Process

by Robert P. Baker

The lifecycle of a trade is the fundamental activity of investment banks, hedge funds, pension funds and many other financial companies. There is no better way to understand the working s of a financial institution than to follow the progress of a trade through all of its various stages and all the activities performed upon it. The Trade 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.The book is divided in to 4 parts. Part 1 covers products and the background to trading trading risk; asset classes; derivatives, structures and hybrids; credit derivatives; liquidity, price and leverage. Part 2 covers the trade lifecycle the anatomy of a trade; the lifecycle of a trade; cashflows and asset holdings; risk management; market risk control; counterparty risk control; accounting and P&L attribution. Part 3 covers systems and procedures including; the people; developing processes for new products; new products; systems; testing; data; reports; calculation; mathematical model and systems validation; regulatory, legal and compliance issues and business continuity planning. Finally Part 4 covers what can go wrong, discussing credit derivatives and the financial crisis.In the aftermath of the financial crisis emphasis had moved to transparency and due diligence involving closer scrutiny of all forms of risk. In this new world order, there is a much greater analysis of every trade and all market participants will need to have a better understanding of the impact of their work on the whole trade cycle - this book provides a one stop comprehensive guide to the lifecycle of a trade.

Genres: Finance, Business, Reference

320 pages, Kindle Edition

First published December 3, 2010

Reviews

[Stamatios Mantzouranis · Rating 3 out of 5]

Working in the IT department of an investment bank, I wanted a book that would add to my knowledge of financials without being too difficult to crack through. And the first half of The Trade Lifecycle certainly achieved that, even though certain chapters were less helpful and, in my opinion, could use more examples. The problems start with the second half, which focuses on the technological side of things. Needless to say, I skipped it entirely, but from a quick browsing through it, I found it very unstructured and too shallow. I wonder if the first part looks the same to a trader. All in all, it's difficult to imagine what the book's target audience is, as it tries to be all things to all people, but never quite succeeds on any accounts.

[Simon Lee · Rating 1 out of 5]

The Contents section totals 15 pages.

Reading it, you would think this is the most amazing book related to the trading lifecyle ever written.

Unfortunatly there is nothing at all on the 'trade lifecyle', its more like a list of job descriptions for finance workers.

[Pawan Gupta · Rating 4 out of 5]

Read this book to understand parts of the lifecycle you don't understand. For example, if you know that you don't know valuation well, then this is a decent book for you. Also, use the book as a reference i.e. you get introduced to a topic through the book and then you Google the topic in more detail. Don't read this book to understand the trade lifecycle from scratch as it's not well organized and may leave you confused.

[Malek Atia · Rating 5 out of 5]

A great book if your working in a support role for an investment bank.

[Kenji Li · Rating 2 out of 5]

A really brief overview of what goes on. Good bedtime read.