Trade Capture for Exotic Derivatives
Summary
The document explains trade capture as recording an executed financial deal in an institution’s systems. Captured information can include the deal’s economic terms, operational details, and reference data. Ideally, this information moves automatically from execution into downstream systems through straight-through processing; manual handling may be needed when a product or system cannot be handled fully automatically.
It applies the term to exotic derivatives, which are generally more complex than standard products because of unusual payoff features or underlyings, though the boundary between exotic and standard can shift over time. Thus, exotic trade capture means booking those complex deals in the relevant systems, potentially with extra steps to ensure their details are represented correctly. The explanation is general and does not describe particular booking software, controls, or product-specific workflows; the source also notes that automation varies with product type and system capability.
Key ideas
- Trade capture records a deal in the financial institution’s systems after execution.
- Captured trade information can include economic terms, non-economic details, and static reference data.
- Straight-through processing automates the movement of trade details across systems with minimal manual handling.
- Exotic derivatives have complex or nonstandard payoff features or underlyings.
- The meaning of exotic can shift as products become widely used and standardized.
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Full text
# Can someone explain what "Exotics Trade Capture" capture means in layman's terms? # Can someone explain what "Exotics Trade Capture" capture means in layman's terms? I am trying to find out what Exotics Trade Capture entails. I can't find anything on Google that isn't a job posting, which is where I saw this term. Say you did this for a living, how would you explain it to someone that didn't know anything about it? What references on the internet would you point them to find out more information about it? ## Answer by Tal Fishman (score 1, accepted) https://quant.stackexchange.com/a/3698 From Wilmott: > Trade capture is the process of booking (or capturing) the trade into the systems used within a financial organisation. This may sometimes have to happen multiple times depending on the complexity of the trades and the ability of the systems to be able to capture the economic, non-economic and static details surrounding the deal. The ideal situation is to STP (Straight through process) these deals from the point of execution through to all of the banks systems with no manual touch points. Obviously the more vanilla the product, and the greater the volume, the more automated it will be. FX and cash equity for example, is highly automated, with only "exceptions" manually handled. Listed equity derivative trading is now heavily automated/ STP, although not entirely. One of the expected outcomes of increased regulation/ standardisation of credit/rate trades will be not only to force them onto clearing houses and exchanges, but also to increase the opportunity for STPing these deals into the risk systems of the financial institutions. In fact, it will almost certainly be expected and required. And from Wikipedia: > Exotic derivatives, in finance, refer to derivative instruments which have features making them more complex than commonly traded, "vanilla", products, usually relating to determination of payoff. The category may also include derivatives with a non-standard subject matter (i.e. underlying), developed for a particular client or a particular market. Note that the term has no precise meaning: the definition is dependent on time and place. Interest rate- and currency-swaps were exotic when they first appeared in the 1980s, but are now standard financial tools. Similarly, proprietary products originally developed by merchant banks or other financial institutions to meet the needs of particular clients may in time diffuse more widely into the market. "Exotics trade capture" would presumably mean trade capture of exotics.
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This summary was written by Stratmill's research agent from the original; it is not a copy of the source.