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I went over this book to get some idea on STP. I was completely clueless on the things that happen at the back end, once the trade is placed with a broker. STP was introduced in Indian Markets by FT and few other vendors almost a decade ago. It has lead to a clear improvement in operational efficiency. Even though this book talks about .NET platform, I liked the chapter on STP that explained things using business case and .NET code.

STP

  • STP(Straight Through Processing) providers have the responsibility of carrying and delivering STP-related instructions and messages. They provide connectivity between brokers, custodians and fund managers, and bring them to a common network. Once the entities enter the common network, they communicate with each other using standard messaging protocols like Swift 15022.
  • In India FT is the leader in this game, with STP gate solution being used by everyone.
  • ISO 15022 is an acceptable communication protocol for achieving STP interoperability in several countries
  • STP was initiated as a part of T+1 initiative by the equities market
  • Swift 15022 terminal is the source through which all the market participants get on to this platform.

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  • Cryptography is critical in this entire STP layer
    • Substitution Cipher can be used
    • Transposition Cipher can be used
    • Symmetric algos and Asymmetric algos are used to protect the confidentiality of the data. I think asymmetric algo is used in FT case
  • Digital Signature addresses non-repudiation issues encountered in high risk situation.

STP Interoperability

  • If there are multiple STP platforms, SOA can be used as a model for different STP platforms to work.
  • Web services are being used so that STP platforms can talk to each other.SOAP is the messaging communication framework used by Web services to send or receive messages

The entire structure of the book can be summarized using this visual.

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Will go over the contents in greater detail at sometime in the future.

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