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Synopsis

The lifecycle of a trade is the fundamental activity of investmentbanks, hedge funds, pension funds and many other financialcompanies. There is no better way to understand the working s of afinancial institution than to follow the progress of a tradethrough all of its various stages and all the activities performedupon it.

The Trade Lifecycle: Behind the Scenes of the TradingProcess is a guide to the trade lifecycle and it inherent risksand weaknesses. The book dissects a trade into its component parts,tracking it from pre-conception to maturity, and examines how thetrade affects each business function of a financial institution. Aswell as illustrating each part of the trade process it highlightsthe legal, operational, liquidity, credit and market risks to whichthe trade is exposed. Readers will benefit from a fullunderstanding of all parts of the trade process, includingderivative and credit derivative trades and will also see, withexamples where appropriate, how the mismanagement of these risksled to the recent financial crisis.

The book is divided in to 4 parts. Part 1 covers products andthe background to trading including: trading risk; asset classes;derivatives, structures and hybrids; credit derivatives; liquidity,price and leverage. Part 2 covers the trade lifecycle including:the anatomy of a trade; the lifecycle of a trade; cashflows andasset holdings; risk management; market risk control; counterpartyrisk control; accounting and P&L attribution. Part 3 coverssystems and procedures including;: the people; developing processesfor 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 creditderivatives and the financial crisis.

In the aftermath of the financial crisis emphasis had moved totransparency and due diligence involving closer scrutiny of allforms of risk. In this new world order, there is a much greateranalysis of every trade and all market participants will need tohave a better understanding of the impact of their work on thewhole trade cycle – this book provides a one stopcomprehensive guide to the lifecycle of a trade.

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