Choosing Product, Instrument, and Leg Names Across Markets
Summary
The document compares terminology for financial objects in software that supports currencies, equities, and futures. It favors “instrument” as a broad term that can cover both cash assets and derivatives, while “product” can distinguish exchange-specific offerings that reference the same fungible asset but have different trading conditions. It also explains why base and quote currency are specific to currency pairs rather than universal fields. For markets with multiple components, a more general representation is a set of legs with quantities; EUR/USD can be viewed as positions in EUR and USD. Another answer describes an asset priced in a numeraire, while noting that futures complicate the asset label because they are derivatives and may represent either an asset or liability. The discussion is conceptual and focused on naming and data modeling; it does not prescribe a standard schema or cover implementation details.
Key ideas
- Instrument is a broad term for tradable assets and derivatives across market types.
- Product can refer to an exchange-specific offering with distinct trading fees or conditions.
- Base and quote currencies are specific to currency pairs rather than universal market concepts.
- Multi-leg products can be described through component legs and their quantities.
- Asset and numeraire terminology is useful in pricing, though derivatives complicate the asset label.
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Full text
# Group name for currencies, equities and other financial products # Group name for currencies, equities and other financial products I am working on a financial software system that deals with crypto currencies. This system has a model called 'Currency' that describes for example 'BTC' and market for which there is a 'base' and 'quote' currency. This system is now being expanded for other types of markets, such as bitcoin futures. These products tend to have their own symbols. I'm wondering that if I were to refactor my system to use better naming convention, what would be the most recognizable / obvious way to describe the following concepts: - Currency (or other financial product) - Base currency (or underlying? if I got that correctly?) - Quote currency ## Answer by madilyn (score 6, accepted) https://quant.stackexchange.com/a/44168 The most universal name that any "currency (pair)", "equities" or "futures" falls under is either a product or an instrument. In some ways I prefer product because you can have 2 exchanges allowing you to trade BTC-USD or AAPL, these are fundamentally the same fungible instrument, but these are 2 different products because they have different trading fees. Base and quote currency are constructs specific to currency pairs. They don't exist in other markets. A generalization of this is a spread, where you'd simply call them leg1 or leg2 and have some notation for quantities in either leg. This generalizes to currency pairs since for example, the constituent legs of EUR/USD are EUR and USD respectively, and your quantities in leg1 and leg2 are +1 and -1.13 respectively for an exchange rate of 1.13. See also my answer here which may be relevant. ## Answer by ir7 (score 2) https://quant.stackexchange.com/a/44173 I like asset. Its price (rate) would then be quoted in terms of a numeraire. In FX markets, EURUSD rate represents the number of shares (units) of numeraire USD needed to buy one share (unit) of asset EUR (note the asset goes first). In equity markets, well, the stock is literally an asset. It’s numeraire is the currency in which it is quoted. It gets tricky with futures, because it can be both asset and liability (it’s technically a derivative). Instrument makes more sense (as said in the other answer). Perhaps instrument is the most generic. You can then subclass it to get more precise naming and features.
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