Post-Allocation refers to the critical process in institutional trading where a large executed block trade, initially filled as a single order, is subsequently distributed among multiple client accounts or sub-accounts. This operation occurs after the trade has been executed and confirmed on the market. In the crypto Request for Quote (RFQ) ecosystem, post-allocation ensures that the aggregated trade quantity and price are accurately apportioned according to predefined client instructions or proportional shares. It is a vital step for proper client accounting, settlement, and compliance.
Mechanism
The operational mechanism for post-allocation involves an order management system (OMS) or an execution management system (EMS) that stores client allocation instructions. After receiving the fill confirmation for the block trade, the system programmatically assigns specific quantities and average prices to each designated client account. This process often includes calculating commissions and fees for each allocation. Robust reconciliation modules ensure that the sum of individual client allocations precisely matches the original block trade execution details, preventing discrepancies.
Methodology
The strategic approach behind post-allocation emphasizes accuracy, auditability, and efficient settlement. Its methodology includes maintaining a clear audit trail of all allocation decisions and ensuring strict adherence to client directives. Automation is key to reducing operational risk and accelerating the post-trade workflow, especially in fast-moving crypto markets. Compliance principles dictate that allocations are fair, non-discriminatory, and consistent with best execution obligations, reinforcing trust and regulatory adherence in institutional crypto trading.
FIX Protocol standardizes electronic communication, enabling precise, automated block trade allocation across diverse platforms for enhanced efficiency and control.
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