Find out about the LUSID allocation entity and how it complements the order entity in the early trade lifecycle.
An allocation is part of the order management process in LUSID and can be created as market orders are filled and converted to transactions within the portfolios they originated from.
An allocation strictly models the result of distributed fills (or executions) between originating orders, but the LUSID implementation is flexible enough to accommodate several post-execution concepts.
The allocation management tab on the website
Once an order in LUSID has been blocked and placed with executing brokers or intermediaries in accordance with its participation, the allocation process distributes returned executions to allocations in line with its ruleset and the originating order's participation. Transactions are then created and booked from the allocations. The italicised entities are forthcoming in LUSID, the transaction, order and allocation entities exist now.
An allocation in LUSID requires association with an instrument and portfolio, and further needs a quantity and an order ID. User defined ‘properties’ can be associated with allocations to extend the entity’s data (e.g. the broker the allocation applies to, the strategy the originating trader applied to the order).
Allocations can be linked back to the original order set using the order IDs; this reconciliation naturally produces the unfilled order set which can be resubmitted for the next open.
For instance, a 'fill' (execution) of 50 units of BP stock is passed back to the fund manager's allocation engine. It is set to allocate all incoming fills 50-50 between the UK Equity Growth and Value funds. Allocations would then be created for 25 lots for each fund, attached to the original order ID (which was to buy 100 lots). The reconciliation would then show as outstanding, 50 lots which can then be placed the following trading session.
Note this is not a transaction in itself; an allocation is the penultimate part of the order lifecycle and a transaction completes the process.