Investment Operations

Failed Trades Management

Categories Intermediate, Operations

Course Instructor

Course Level

Intermediate

Certification

4.0 CPE Credits

Delivery

Via Zoom

Hours (EST)

1:00 pm​ - 5:00 pm

Description

*This course can also be offered upon request and can be customized to fit your team’s needs

Date: June 11

Under any market conditions (and in particular when there is a financial crisis), the primary responsibility of Operations is that of avoiding unnecessary costs.  Within the world of securities, trades can ‘fail’ to settle on their due date, causing monetary loss to the firm and serious issues with client relationships. The daily and ongoing challenge that Operations management face is that of avoiding such negative impacts caused by delayed settlement of equity and bond trades.  If a high percentage of a firm’s operations personnel have a strong awareness of the causes of failed trades and the rectifying measures that can be taken, the firm will act more efficiently with the impact of reducing the number/size of fails, and losses will reduce as a result.

Learning Objective

The objectives of this half-day virtual training seminar on Failed Trade Management are to:

  1. Identify the point at which failed trades occur within the securities trade lifecycle
  2. Highlight the numerous points of impact of failed trades
  3. Understand how failed trades are identified
  4. Appreciate the various causes of failed trades
  5. Understand how failed trades can be prevented
  6. Appreciate how the impact of failed trades can be minimized
  7. Describe measures to enforce trade settlement
  8. Understand procedures for recovering lost interest

Who Should Attend 

This course is suitable for existing employees that are familiar with the securities trade lifecycle and who would benefit from a deeper understanding of how failed trades arise and what can be done to minimize their impact. The course contains essential concepts that all securities operations personnel should be aware of, such as the impact of failed sales, measures that can be taken to avoid or minimize such impacts, and the ultimate measure of enforcing settlement using the market authority’s rules and regulations. Prerequisite: None

Agenda

Failed Trade Definition

Failed Trade Fundamental Concepts

Failed Trade Impacts on:

  1. Ownership Rights
  2. Purchase Cost & Sale Proceeds
  3. Matched Settlement Instructions

Various Functions & Business Attributes Affected by Failed Trades

  1. Interest on Cash
  2. Client Relationships
  3. Corporate Actions
  4. Counterparty Exposure
  5. Capital Adequacy (Basle II)
  6. Funding
  7. Financial Statements

Markets

  1. Explores the fact that failed trades are common in some markets, but are not tolerated in others, and the underlying reasons

Failed Trade Causes

  1. Highlighting the various ways in which fails can occur, including:
    1. Unmatched Instructions
    2. Insufficient Securities
    3. Insufficient Cash, Collateral and Credit Line

Identifying Failed Trades

  1. How Failed Trades are Recognized
  2. The Earliest Point of Identification
  3. Further Impact of Failure to Identify

Preventing Failed Trades

  1. Pinpoints the trading actions and operational measures that maximize the chances of settling trades on their due date, including:
    1. Working Within Deadlines
    2. Resolution of Non-Matching Instructions
    3. Securities Realignment
    4. Securities Borrowing
    5. Cash and Collateral Management
  2. Minimizing the Impact of Failed Trades Highlights what can be done to minimize the impact of failed trades, via partial settlement
    1. Definition
    2. Identifying Partial Settlement Opportunities
    3. Offering Partial Settlement
    4. Assessing the Offer of Partial Settlement
    5. Effecting Partial Settlement
    6. Reflecting Partial Sett’ in Books & Records
  3. Enforcing Settlement Describes the ultimate course of action available to force settlement of a trade
    1. Definition of Buy-In
    2. Definition of Sell-Out
    3. Timing
    4. Procedure
    5. Mandatory Buy-Ins (CSDR)
  4. Interest Claims Identifies when lost cash interest is (and is not) recoverable from counterparties
    1. Valid Versus Invalid Claims
    2. Claims For and Against You
    3. Cash Calculation
    4. Claiming Procedure

Summary & Questions

In-House Training

Custom Training can help you achieve your corporate training goals while staying on budget and focusing the content on the needs of your group. Email your questions regarding corporate training to training@investmentoperations.net.

2023 Training Calendar

Training Catalogue

Course Instructor

Course Level

Intermediate

Certification

4.0 CPE Credits

Delivery

Via Zoom

Hours (EST)

1:00 pm​ - 5:00 pm

Description

*This course can also be offered upon request and can be customized to fit your team’s needs

Date: June 11

Under any market conditions (and in particular when there is a financial crisis), the primary responsibility of Operations is that of avoiding unnecessary costs.  Within the world of securities, trades can ‘fail’ to settle on their due date, causing monetary loss to the firm and serious issues with client relationships. The daily and ongoing challenge that Operations management face is that of avoiding such negative impacts caused by delayed settlement of equity and bond trades.  If a high percentage of a firm’s operations personnel have a strong awareness of the causes of failed trades and the rectifying measures that can be taken, the firm will act more efficiently with the impact of reducing the number/size of fails, and losses will reduce as a result.

Learning Objective

The objectives of this half-day virtual training seminar on Failed Trade Management are to:

  1. Identify the point at which failed trades occur within the securities trade lifecycle
  2. Highlight the numerous points of impact of failed trades
  3. Understand how failed trades are identified
  4. Appreciate the various causes of failed trades
  5. Understand how failed trades can be prevented
  6. Appreciate how the impact of failed trades can be minimized
  7. Describe measures to enforce trade settlement
  8. Understand procedures for recovering lost interest

Who Should Attend 

This course is suitable for existing employees that are familiar with the securities trade lifecycle and who would benefit from a deeper understanding of how failed trades arise and what can be done to minimize their impact. The course contains essential concepts that all securities operations personnel should be aware of, such as the impact of failed sales, measures that can be taken to avoid or minimize such impacts, and the ultimate measure of enforcing settlement using the market authority’s rules and regulations. Prerequisite: None

Agenda

Failed Trade Definition

Failed Trade Fundamental Concepts

Failed Trade Impacts on:

  1. Ownership Rights
  2. Purchase Cost & Sale Proceeds
  3. Matched Settlement Instructions

Various Functions & Business Attributes Affected by Failed Trades

  1. Interest on Cash
  2. Client Relationships
  3. Corporate Actions
  4. Counterparty Exposure
  5. Capital Adequacy (Basle II)
  6. Funding
  7. Financial Statements

Markets

  1. Explores the fact that failed trades are common in some markets, but are not tolerated in others, and the underlying reasons

Failed Trade Causes

  1. Highlighting the various ways in which fails can occur, including:
    1. Unmatched Instructions
    2. Insufficient Securities
    3. Insufficient Cash, Collateral and Credit Line

Identifying Failed Trades

  1. How Failed Trades are Recognized
  2. The Earliest Point of Identification
  3. Further Impact of Failure to Identify

Preventing Failed Trades

  1. Pinpoints the trading actions and operational measures that maximize the chances of settling trades on their due date, including:
    1. Working Within Deadlines
    2. Resolution of Non-Matching Instructions
    3. Securities Realignment
    4. Securities Borrowing
    5. Cash and Collateral Management
  2. Minimizing the Impact of Failed Trades Highlights what can be done to minimize the impact of failed trades, via partial settlement
    1. Definition
    2. Identifying Partial Settlement Opportunities
    3. Offering Partial Settlement
    4. Assessing the Offer of Partial Settlement
    5. Effecting Partial Settlement
    6. Reflecting Partial Sett’ in Books & Records
  3. Enforcing Settlement Describes the ultimate course of action available to force settlement of a trade
    1. Definition of Buy-In
    2. Definition of Sell-Out
    3. Timing
    4. Procedure
    5. Mandatory Buy-Ins (CSDR)
  4. Interest Claims Identifies when lost cash interest is (and is not) recoverable from counterparties
    1. Valid Versus Invalid Claims
    2. Claims For and Against You
    3. Cash Calculation
    4. Claiming Procedure

Summary & Questions

In-House Training

Custom Training can help you achieve your corporate training goals while staying on budget and focusing the content on the needs of your group. Email your questions regarding corporate training to training@investmentoperations.net.

2023 Training Calendar

Training Catalogue

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