When most people think about trading bonds, they picture the execution moment—that instant when traders agree to the terms and say “done.” But the truth is, the trade isn’t really over with the meeting of the minds. The real journey has just begun. Although markets are increasingly electronic, it would be shortsighted to ignore the era when brokers physically exchanged paper certificates for cash—a practice now universally regarded as archaic.
I’m Eric Levine, Trading and Operations Lead at OpenYield. My career started on the front lines of the market—voice sales and trading municipal bonds. For years, I lived in the fast-paced world of the front office, where the focus was always on pricing, execution, and moving to the next trade.
Taking on my current role has been eye-opening. Now, I oversee everything from onboarding counterparties to ensuring that every single trade at OpenYield completes its journey smoothly. And in the process, I’ve discovered something the front office often doesn’t fully appreciate: what happens after a trade is executed is just as critical, and challenging, as the execution itself.
In this blog, I want to lift the curtain on that world—the often-overlooked maze of post-trade operations—and share both the challenges and the opportunities abstracted away from practitioners operating in different roles and offices.
What’s Behind the Curtain?
The instant a trade is executed, the real work begins. Every detail has to be captured and sent to various locations for processing — who traded what, at what price, in what size, and for what settlement date are just a few examples. It sounds simple, but in an industry driven predominantly by a hybrid of electronic and manual processes, even the smallest error—one wrong CUSIP, one mis-keyed number—can ripple through the system, creating problems that may go unnoticed until settlement. The root causes of these hiccups often stem from manual processes during account setup, trade booking, or even incorrect security masters and poor data management.
Here’s a simplified example of a trade’s journey: a broker wants to buy 100 ABC Corp. bonds from a counterparty.
- Execution: The trader agrees to buy 100 ABC Corp bonds at $100.00 from a counterparty. The trade is now “done.”
- Booking: The details (security ID / CUSIP, quantity, price, MPID/DTC #, accrued interest, settlement date, ATS MPID, and more) are entered into a booking system.
Post Trade Process Begins: - Matching — “Do we both agree on the same trade?”
Think of matching as the “are we looking at the same thing?” checkpoint. Both sides compare the core fields: security, side (buy/sell), quantity, price, settlement date, accrued interest, and more. Catching mistakes early in this step is critical to smooth settlement, since most matching issues stem from manual workflows and the sheer number of input fields that invite human error.
Example: If one side keyed in 1000 bonds instead of 100, or a price of $101.00 instead of $100.00, or a settlement date of T+2 instead of T+1, the trade fails matching and needs to be reconciled before settlement can occur. - Reporting — “Which reporting facility receives trade details?”
Once matched, trade details are reported to various market-wide facilities for tracking and broad dissemination in the case of Munis and Corps. This ensures transparency, compliance, and accurate record-keeping. The specific reporting requirements depend on the asset class, jurisdiction, and type of participant.
Example: A corporate bond trade would be reported to FINRA’s TRACE system, which is also utilized for reporting UST transactions. The RTRS system is similar to TRACE, but for MSRB trade reporting of municipal bonds. - Clearing — “Who guarantees the trade between now and settlement?”
Clearing is the risk-management layer that ensures trades make it from agreement to final exchange. In a central counterparty (CCP) model, like DTCC’s FICC for Treasuries and repos, the CCP steps in as buyer to every seller and seller to every buyer—netting exposures and guaranteeing settlement with margin and default funds. In a bilateral model, by contrast, your clearing broker processes trades through DTCC for custody and settlement, but the counterparty risk stays between you and the other side. The key distinction is whether a central guarantor stands in the middle or whether credit exposure is between the trading parties.
Example: If a CCP is involved, it essentially becomes the buyer to the seller and the seller to the buyer, guaranteeing the settlement even if one party defaults, otherwise the clearing firm and ultimately the executing firm is liable to ensure good delivery. - Settlement — “Bonds for cash, at the same time”
Settlement is the completion of the trade: the bonds are delivered and cash is paid, usually under delivery-versus-payment (DvP), so neither leg completes unless the other does. When the instruction goes through, ownership transfers, cash is credited, and books and records update to final.
Example: On the settlement date, the broker’s account is debited $100,000, and 100 ABC Corp. bonds are credited.
The process sounds simple enough but that’s only when the rails are clear. Trades certainly don’t always take the easy path—and this is where great trade operations teams become the heroes. If the seller isn’t delivering bonds or the buyer isn’t delivering cash on time — the trade “fails” until it’s fixed. Back office pros are the ones who untangle the knots, chasing down breaks and getting trades over the finish line. They troubleshoot, escalate, and coordinate across firms and systems—often all day and all night—so a trade that’s “done” at execution actually gets done.
Here’s the hard truth: most breaks don’t come from scenarios that most people would imagine such as tech outages or miscommunication of trade terms. They come from manual work causing silent problems that surface days later when a position doesn’t settle. Situations such as incorrect accrued interest, booking the wrong counterparty, missing bonds from security masters, incorrect allocation inputs, and using old settlement instructions, are just some of the many issues that wreak havoc on backoffice teams repeatedly without broad, viable solutions being developed. Eliminating the manual, repetitive, and easy-to-mess-up tasks that hold back operations teams from being “best-in-class” is core to my mission at OpenYield.
At OpenYield, we decided the best way to win that fight was to avoid it. We almost never book trades by hand. Nearly everything is an automated process and when systems are properly configured from the start, automation eliminates the risk of human error: trade details, account numbers, counterparty settlement instructions, SIFMA holidays, routing rules, reporting requirements – everything you can think of to eliminate trade breaks caused by human error, we implement automation as a solution. When a trade prints, a single record of truth is born. Confirmations and trade details are sent to counterparties via FIX or drop copy, allocations hit our clearing broker automatically, and when a partner or client can only accept email, our system drafts and sends a structured message with every field embedded. No copy-paste, no human in the loop errors. We don’t give potential problems a chance to exist.
But OpenYield, as the automated bond marketplace, does not live in a bubble and we understand that many counterparties and legacy systems still rely on manual processes. That’s the present. The future is simpler: fewer breaks, shorter settlement cycles, and overall less time spent on fixing manual errors. The street is moving there, piece by piece. Until every rail is modern, we’ll keep bridging both worlds—automating everything end-to-end inside OpenYield, and leveraging agentic employees at the edges.
The future of AI in fixed income is about precision and efficiency. At OpenYield, AI agents and electronic workflows are not just a nice talking point, they significantly reduce errors that plague the post-trade process. AI makes us more flexible when interacting with customers. Agents can receive allocations in any format—email, spreadsheet, even PDF—and normalize them instantly, so clients don’t need to rewire their systems to connect with us. AI agents help bridge the technological gap. They even monitor every trade for reporting deficiencies, automatically alerting when something doesn’t flow, and notifying the right people to fix the causes before it turns into a late trade. The future of fixed income trading is clear. The more technology we build and cleanly integrate, the more efficient the market becomes—fewer manual errors, fewer breaks, and more cost savings.