In an ibank equity trading system, every (partial or full) fill seems to be booked twice
- as a trade against a client
- as a trade against an exchange
I think this is because the ibank, not the client, is a member of the exchange, even though the client is typically a big buy-side like a hedge fund or asset manager.
The booking system must be reconciled with the exchange. The exchange’s booking only shows the ibank as the counterparty (the opposite counterparty is the exchange itself.) Therefore the ibank must record one trade as “ibank vs exchange”
That means the “ibank vs client” trade has to be booked separately.
Q: how about bonds?
A: I believe the ibank is a dealer rather than a broker. Using internal inventory, the ibank can execute a trade against client, without a corresponding trade on ECN.
Q: how about forex?
A: I think there’s less standardization here. No forex ECN “takes the opposite side of every single trade” as exchanges do. Forex is typically a dealer’s market, similar to bonds. However for spot FX, dealers usually maintain low inventory and executes an ECN trade for every client trade. Biggest FX dealers are banks with huge inventory, but still relative small compared to the daily trade volume.