Pre-Allocation Logic refers to the computational rules and processes that dictate how a block trade, executed as a single large order, will be distributed among multiple client accounts or sub-accounts prior to final settlement. Its purpose is to ensure fair and compliant allocation according to pre-established mandates.
Mechanism
This system architecture resides within an Order Management System (OMS) or Execution Management System (EMS) and applies a hierarchy of rules, such as pro-rata distribution, time-stamped allocation, or other client-specific instructions, to segment the executed block order. The mechanism generates individual allocations for each target account based on these rules.
Methodology
The methodology involves a systematic framework for post-trade order division, ensuring that allocations align with client mandates, regulatory requirements, and internal fairness policies. This strategic approach enhances operational efficiency by automating a complex, often manual, process and reduces settlement risk while maintaining transparency and auditability.
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