Ask most people what an exchange does and they will describe trading: buyers, sellers, prices moving on a screen. Ask the people who run one and the answer is different. Matching is the visible moment, but the obligations a trade creates last much longer, and they are recorded in the post-trade system.
A post-trade system is the market’s memory. When it is right, nobody notices it. When it is wrong, investors see holdings that do not exist, brokers dispute positions, and a regulator asks questions that nobody can answer quickly.
The full status of the market
The first job is simple to state and hard to do: know the full status of the market at any moment. In practice that means several connected records.
- Trading information: what was traded, when, at what price and between whom.
- Investor assets: what each investor holds after every trade, not just at the end of the day.
- Broker information: which broker acted for which investor, and the broker’s own standing in the market.
- Legal transfers: changes in ownership that happen outside normal trading, such as inheritance or court orders.
- Seized and pledged shares: holdings that cannot be freely sold because they are encumbered.
The last two are where many systems struggle. A share that has been pledged as collateral or seized by a court looks like any other share in a simple holdings table. If the system cannot tell the difference, it may allow a sale that should never have happened.
Many users, one record
Post-trade data does not belong to one institution. The central depository, the regulator, the exchange and every broker need to see parts of it, each with different rights. A modern system gives each group its own access to the same record, rather than copying data into separate databases that slowly drift apart. In the OTS post-trade system, OPT, these users work through a web-based interface on one shared foundation.
Talking to everything else
A post-trade system sits in the middle of the market’s technology. It receives trades from the matching engine and sends information to clearing, to brokers’ back offices and to reporting. That only works reliably with standard messaging. OPT’s integration gateway uses ActiveMQ for message queuing alongside ISO 20022 and FIX, the standards most market participants already speak.
Capacity that matches the market’s ambitions
Markets that are growing retail participation can add investors faster than anyone planned for. A post-trade system sized for today’s shareholder base becomes a constraint within a few years. OPT runs on an Oracle RAC database and is designed for a capacity of 100 million shareholders, which leaves room for that growth.
Exceptions are part of the design
No market runs without exceptions. A trade arrives with missing data, a transfer is disputed, a record needs correction. The question is whether those cases are handled through controlled intervention, with a reason and an audit trail, or through quiet manual edits that nobody can later explain. A post-trade system should make the controlled route the easy one.
A post-trade system is the market’s memory. When it is right, nobody notices it.
Questions worth asking a vendor
- Can the system show the full status of the market at any moment, including encumbered shares?
- Do the depository, regulator, exchange and brokers work from one record, or from copies?
- Which messaging standards does it support out of the box?
- How are exceptions corrected, and is every correction traceable?
- What shareholder capacity is it designed for?
Post-trade work rarely makes headlines, and that is exactly the point. A market whose records are right can focus on growing. One whose records are uncertain spends its energy reconciling them.