Validate trade orders
Overview
If an Open purchase or sell order has an Order validation-Waiting tag, the order can be validated with Validate trade orders (cash and units).
Validated purchase orders ensure that portfolio cash is sufficient to execute the order. You need to have accounts (with Visibility enabled) for your orders to apply this check. If the portfolio has portfolio credit set up (see Provide credit to your clients) with only one credit account, trade orders linked to the credit account are allowed to use the available portfolio credit instead of cash.
Validation of sell orders ensures that the portfolio has a sufficient number of units.
(Optional) Validation of sell orders can also ensure that trade amount based sells (execution method Net trade amount or Gross trade amount) do not exceed a certain percentage of the latest known position market value. You can use this as a safety margin in case the market value would decrease before execution. See the configuration section below for instructions how to set the limit.
If you have defined pre-trade limits for your portfolio, you can check the pre-trade limits for orders with Accepted status with Validate trade orders (limits).
Configuration
You can set or adjust the percentage of the position market value that can be sold at once with trade amount based sells (execution method Net trade amount or Gross trade amount) by following these steps:
Open Tools → Administer → Compliance settings.
Select the tab Trade order validation.
Enter the percentage under Maximum percentage of a position, based on latest market value on the security, that can be sold in trade amount. Enter the number as a percentage without the % sign. For example 90 means 90 %.
Select Use cash and units from unsettled transactions to cover for buys and sells, if you wish to accept orders that will have enough cash or units to cover the trade on their settlement date, even if there isn't enough at the time of validation. Without this selection, only settled cash and units can be traded
Validation flow
Based on your scheduling, Order validation-Waiting orders are validated automatically.
Caution
Note that only the latest validation tag is stored on the trade order! If multiple conditions fail, only the latest one is shown. Tags are applied in the same order as presented below.
If trade orders breach never-have rules (see below), the system adds the Order validation-Failing never have rules tag.
If there is not enough units in the portfolio’s position to execute a sales order, the system adds the Order validation-Insufficient units tag.
If there is not enough cash in the portfolio's account to execute the order but there is positive cash flow that is settled on a future date, the system adds the Order validation-Waiting for cash tag.
If there is not enough cash in the portfolio’s account to execute the purchase order, the system adds the Order validation-Insufficient cash tag.
If you are using pre-trade limits on your portfolios, you can check the limits once the orders reach Accepted status. You can validate orders with the tag Limits-Waiting with Validate trade orders (limits) and they get a tag Limits-Ok or Limits-Fail based on the analysis.
Never-have rules for trade orders
Never-have rules can be used to restrict trading on certain securities based on the security characteristics. They are specified on a portfolio-by-portfolio basis. To specify the rules, open the Never-have rules tab in the Portfolio window.
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Choose Compliance enabled and specify the characteristics based on which you want to restrict trading.
You can use the following security characteristics:
Securities: Restrict trading on individual securities
Security types
Countries
Currencies
Class 1 to 5
Security status
Security subtypes
Marketplaces
Issuers
Validation dashboards
In Order validation dashboard top section you can see the orders that are pending validation (Order validation-waiting) and the ones that had insufficient units during validation (Order validation-Insufficient units) . At the bottom of the screen you will see the orders that had insufficient cash during validation ( Order validation-Insufficient cash). In Pre-trade limit check dashboard you can see the orders pending pre-trade limit check and the ones that breached pre-trade limits.
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Trigger trade order validation manually
To validate orders for cash and units when they are at Open status:
Go to the Order validation dashboard.
Maximize Order validation-Waiting.
In the bottom of the page, select Compliance → Validate trade orders (cash and units) .
System will give feedback about Approved and Rejected orders.
To check orders against pre-trade limits:
Go to the Pre-trade limit check dashboard.
Maximize Pre-trade limit check-Waiting.
In the bottom of the page, select Compliance → Validate trade orders (limits) .
System will give feedback about Approved and Rejected orders.