what is a trade blotter is a record of trade details for a given period, usually one trading day. It typically includes information such as what security was traded, the time of trade, and the quantity and price of sale or purchase. It also specifies whether the trade was settled appropriately and may include orders that were entered but cancelled before being filled out.
A blotter is an essential tool for traders, brokers, and financial firms to monitor their trading activity, verify accuracy, and manage risk. It is a critical component of compliance checks and audits conducted by regulatory bodies, and it helps address any discrepancies that might emerge.
Trade Details: This includes the date and time of the trade, the security or instrument traded, quantity, price, and direction (buy or sell)
Effective blotter management requires adherence to several best practices. These include establishing clear policies and procedures for data entry standards, review and reconciliation processes, reporting requirements, and security measures. These can help ensure consistency and integrity across departments, and improve the overall effectiveness of blotter management.
There are three primary types of blotters used by wealth and investment managers: trade blotters, position blotters, and cash blotters. Each serves a different purpose in the financial record-keeping and management process. While trade blotters record all executed trades, position blotters summarize an investor’s portfolio holdings, and cash blotters monitor the cash flow within an investment account. Together, they can help wealth and investment managers identify and assess risks to their clients’ portfolios. In addition, blotters can help them demonstrate compliance with trade reporting and anti-money laundering regulations.