Chapter 15
The Stock Record – Using the Double-entry Convention to Control Positions and Security Quantities
Securities firms need to record stock (including listed futures and options in this context) quantities and balances as well as money amounts and balances. The business principles and software application structures (double-entry bookkeeping, unique accounts and the use of account selection parameter tables and the underlying data used by these tables) that have been used to record money amounts may also be used to record stock quantities.
The stock quantity equivalent of a general ledger is often known as the stock record or stockrecord. The stock record shows both the ownership of securities and the location of the stock. It is often a component of the main settlement system, but may also be a standalone application with interfaces to the main settlement system. Some packaged stock record applications employ the terminology of “long” and “short” as alternatives to “debit” and “credit”, respectively, others use the debit/credit terminology. When they use debit and credit terminology different vendors do not use it consistently, as some applications are based in the premise that:
A purchase of stock is a debit of money and a credit of stock.
While the business logic of other applications is based on the premise that:
A purchase of stock is a debit of money and also a debit of stock.
To avoid ambiguity this book will use the long/short terminology.
Look again at the example ...
