Fixed Income Trade Lifecycle: Introduction, Example, Process & Functions

In this article, we will explain the Fixed Income Trade Lifecycle. All topics, examples, introductions, steps and processes involved in Fixed Income Trade Lifecycle are explained.

Related: Fixed Income Securities Market: Introduction & Example
-- Fixed Income Products of Fixed income Market : What makes up a particular market? It's the assets that are traded (bought or sold) in that market. Hence, a good starting point for Fixed income Market Introduction will be the Fixed income Security types. Let's begin with the introduction of the assets traded in the Fixed Income Security Markets. Here is the list:

-- US Government Fixed Income Securities

-- Municipal Fixed Income Securities

-- Corporate Fixed Income Securities

-- MBS Fixed Income Securities

-- CMO Fixed Income Securities

-- ABS Fixed Income Securities

-- Participant of Fixed income Market :

-- Buy-side Fixed Income Market Participants: These are the typical big investors, which may include Insurance Companies, Investment firms, Portfolio Management companies, func houses, etc.

-- Sell-side Fixed Income Market Participants: These are the typical market makers. They act as broker dealers and maintain required liquidity in the market.

-- Industry Utilities Fixed Income Market Participants

-- Industry Service Organizations Fixed Income Market Participants

-- Fixed income Markets : Different products are traded differently. For e.g. though these is a lot of online shopping, but people still prefer to purchase fresh vegetables from the farmers in the local vegetable market. Similarly, most of the Fixed Income Securities being the OTC (Over the Counter) Securitites, are having different kinds of markets for them.

-- Marketplaces for Trading Fixed Income Market

-- Electronic Trading for Fixed Income Market

-- Telephonic Trading for Fixed Income Market

-- Inter-dealer Brokers Trading for Fixed Income Market, where trading is done between 2 brokers or dealers

-- Order Processing & Execution of Fixed income Market :

-- Order Receipt & acknowledgement

-- Routing to the clearing & settlement agency

-- Middle Office Functions of Fixed income Market :

-- Trade Entry into the system for enrichment and validatiopns

-- Trade Reporting to counterparty, custodian, regulators, etc.

-- Inventory Management - involves book keeping, margin requirements, etc.

-- Confirmation/Affirmation - Instructions sent electronically or snail mail for confirmation of trades and acknowledgements.

-- Trade Comparison in Fixed income Market :

-- Real Time Trade Matching

-- Industry Utility

-- Processing of Trade

-- Clearance Function in Fixed income Market :

-- Trade Guarantee

-- Central Counterparty

-- Novation

-- Industry Utility

-- Settlement in Fixed income Market :

-- Environments

-- Exchange of Value

-- Federal Reserve/Clearing Banks

-- Depository Trust Company

-- Fail Control & Financing Opportunities in Fixed income Market :

-- Fails

-- Financing

-- Securities Borrow/Loan

-- Inventory Control in Fixed income Market :

-- Depository Trust Company

-- Federal Reserve/Clearing Banks

-- Physical Securities

-- Stock Record in Fixed income Market :

-- Books & Records

-- Income or Money Collection & Income Distribution in Fixed income Market :

-- Interest

-- Principal Repayments

-- Corporate Action Processing of Fixed income Securities Market :

-- Types of Events

-- Event Processes

-- Trends Identifiers of Fixed income Market Trading:

-- Fixed Income Trading – On an Exchange?

-- The Impact of Credit Rating Agency Optimism