Derivatives Systems Architecture

Derivatives Exchanges in US and Europe are:


Architecture of Derivatives System

In this post I will explore the high level architecture of my imaginary derivatives system. Again, please keep in mind that these posts are to give some idea about derivatives sytems and directly related to any perfect solution. You can get some pointers from these posts but may not be the total solution.

:High Level Architecture Picture:

Lets us different modules based on the user base.

* Front Office
* Middle Office
* Back Office
* Servicing Firms
* Exchanges

Front Office

Mostly Traders and Portfolio managers are the front-office users. The key functions of front-office module are:

* Pricing and Valuation of products
* Trade Capture
* P&L Analysis
* Simulation
* Stress Testing
* Front-office Reports
* Market Data Access

Also keep in mind that, it is not necessary to all of these just through one module of the system or one system alone. In real world, things quite complex. So you mihgt see different systems or if you are building a system, it is not bad idea to be open to options.

Middle Office

Typical middle office users are:

* Risk Analysts
* Risk Managers
* Operations Team
* Compliance and Regulations Team


Back-office operations include:

* Accouting and Finance
* Trade Settlements

Servicing Firms and Exchanges

* Custodian Services