The STP Flow of Foreign Exchange and Money Market Trades

This chapter discusses the straight‐through‐processing (STP) flow of foreign exchange (FX) and money market trades. Orders for foreign exchange trades may be placed by researching the best bid and offer prices and telephoning a bank directly; by researching best bid and offer prices and sending orders through hub and spoke services such as Omgeo Oasys or Autex; by using any number of Reuters pre‐trade services; or by using the services of a money broker. Orders will be executed by the sell‐side firm as principal. Spot deals settle on T + 2 and forward deals settle on a date agreed by the trade parties and trade agreement is based on the “mutual exchange of confirmations” model. All FX trade‐related general ledger postings are passed on value date. It is assumed that settlement will take place in full on contractual value date. Orders in money market may be placed by researching best bid and offer prices and telephoning a bank directly; by researching best bid and offer prices and sending orders through hub and spoke services such as Omgeo Oasys or Autex; by using the services of a money broker; or by using any number of Reuters pre‐trade services. Orders will be executed by the sell‐side firm as principal and trade agreement is based on the “mutual exchange of confirmations.” Regulatory trade reporting is not required for money market transactions.