Name: Brokers, Broker Types and Accounts - SAP Broker Reconciliation for Commodity Derivatives
Uploaded: 2023-6-1
Duration: 299 s
Description: In Part One of this series, you will understand the role of a broker in commodity derivatives trading, learn about the difference between a clearing broker and a trading broker and why they are needed, and know what a clearing account is used for.

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<div><div><div><div><div><div><p>In Part One of this series, you will understand the role of a broker in commodity derivatives trading, learn about the difference between a clearing broker and a trading broker and why they are needed, and know what a clearing account is used for.</p></div></div></div></div></div></div>

Brokers, Broker Types and Accounts - SAP Broker Reconciliation for Commodity Derivatives

Hello and welcome to the learning channel for agribusiness industry cloud app, SAP Broker Reconciliation for Commodity Derivatives. My name is Simon Neumann and I'm a solution owner in agribusiness industry. Before we start, I'd like to give you an overview of topics we will cover in this course. The first videos explain most important terms such as brokers, different broker types, and broker accounts. Which derivatives do we cover in our app? And how they are used? And what is matching and why is it needed? After we declared the most important business terms, we will see a demo of the main functions and features of the broker reconciliation application. This will be followed by more technical sessions where we will see what needs to be done to set up the application in your BTP account. Configure the cloud integration to upload your broker statements, and how to configure an S4/HANA system so that it can be connected with the industry cloud app. The last video will be about the master data in S4/HANA and how they are mapped in the application. In this session, we will start with the clarification of different brokers and broker accounts. Why do you need a broker at all? A company or person is not able to buy or sell derivatives or shares directly on an exchange. Only a registered broker can trade at exchanges like the Chicago Board of Trade - C-Board - or the Chicago Mercantile Exchange, CME. If a company wants to trade at an exchange, they need to place an order with a broker to buy or sell derivatives. The broker executes the order with certain parameters such as the price and quantity and then adds the derivatives to your account after the order is fulfilled. In the broker reconciliation app, you will see the terms clearing broker, trading broker and clearing account. Let's have a look on the role a clearing broker has in the derivative trading process. Every company which trades at exchanges needs a clearing broker. This broker takes care of clearing. The company's transactions. Clearing actions can be matching positions, managing margin accounts, or exercise options. These terms will be explained in detail in later sessions. The clearing broker may also act in the function of a trading broker, but mostly takes care of the company's clearing account, which holds all the derivatives. The clearing broker can also perform different actions with the derivatives, like matching long or short positions to close them out and realise gains or losses or option exercises on a daily basis. Clearing brokers will send out so called clearing broker statements to the company to give them the following information, new trades from the reported business day. Performed actions at the business day and current clearing account derivative balance. A clearing broker must handle many more tasks and obligations. But this knowledge helps to understand the role of the clearing broker in terms of our broker reconciliation app. Accordingly, the clearing broker statement contains more information than the mentioned ones, but these are the important ones for our reconciliation process. In addition to the clearing broker, a company can have one or multiple trading brokers, also referred to as executing brokers. These brokers are only taking care of executing the company's transactions with the exchange. The trading brokers must be informed about the company's clearing broker and accounts to administer the positions acquired by the trades they execute for the company. A trading broker also sends statements on a daily, weekly, or monthly basis to the company. These statements only provide information about executed deals since the last statement. You now know the terms clearing broker, clearing account and trading broker and their differences. Understanding specifically that different types and broker statements is important when you're using or setting up the app Broker Reconciliation for Commodity Derivatives. So a trading broker statement and reconciliation focuses on new trades and trading activities. While a clearing broker statement and reconciliation focuses on the position and margin management that is resulting from these trades and that is managed by the clearing broker. Thanks for watching and see you next time.