Typical software structure of a Broker-Dealer
Every broker dealer has three departments:
Sometimes, middle-office and back-office are merged into the single department where the functions of middle-office are split between front-office and back-office.
- Trade Ticket
- Orders History
- List of Positions
- Account Balance
the following components can be included for research and analytical purposes:
- Chart with Technical Analysis
- Market Scanner
- Heat Map
In other words, that is a main entry point for retail customers of the brokerage firm where they can find any information related to the account and do a trade.
The main function of middle office can be described as “Order Control”. The order control system verifies accounts and securities while it goes into the execution.
- Client Master Database – contains client information required to process transactions and data, such as SSN, State ID, and account funds.
- Security Master Database – contains specific information about security needed to process transaction, calculate margin requirements, set up dividends and interest payments.
- Orders Matching System – fills the information fields that every order must have.
- Margin – monitoring client accounts to ensure that they are operating within the Regulation T rules, Self-Regulatory organization rules and Brokerage rules (also known as “house” rules)
- Settlement – optimization of the security of the firm and funding resources in the settlement of transaction.
- Accounting – list of all accounts, security movements, positions and funds.
By Leonid Kurguzov, ETNA Software
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