The Knowledge Base is the reference data component of the Framework. There are two primary classes of entities in the Knowledge Base:

• Standard static data such as securities, accounts, and currencies.
• Metadata structures that direct and control the processing within the system: transactions, events, accruals, and the like.

The only parts of the Framework that are built-in are the concepts of the Register and Association tables (and the derived data in the Positions and Balances area). For instance, there are no built-in transactions, such as the Buy of a Treasury security. The transactions and other application items are set up in the Knowledge Base. For a Buy of a Treasury an entry is created in the Register Type table. Parameters there determine all the associated processing: quantity and money fields and their distributions, required/optional/forbidden fields, and the like.

It is through the Knowledge Base that the investment products, transactions, and processing described under Areas of Expertise can be handled within a single framework, without reprogramming.

The full Knowledge Base is quite extensive, so we will present only the components most relevant to transaction, positions, and balances processing. In particular we will not address the security master or the counterparty components.

Some components of the Knowledge Base are true metadata, controlling many aspects of the processing at a very detailed level (Register Type and Association Type are the most important of these). Others serve primarily as static reference data.

The Knowledge Base stores the information on the application-specific processing. Much of the associated processing itself is managed through the Processing Rules component of the Framework. The Data Structures component includes a model of the Knowledge Base entities.

The Knowledge Base is key to the reuse of the Framework for new situations, such as additional securities classes, settlement methods, and transaction types. For a discussion, see Extending the Framework.

Amount Type

The purpose of this entity is to recognize and promote the commonness in the processing of quantity and money amounts. Quantity accounting is common to all inventory applications, but the presence of a well-established, self-balancing framework with commonly understood accounts (the stock record) leads naturally to a unified, standard handling of quantity and money amounts.

Though the Framework supports any number of Amount Types, we have not encountered any other than the two listed here.

Within the Framework this is more static data than true metadata as no processing is driven by the value.

As implied by the Register, Association, and PandB entities, it is not possible to have a given amount distributed to two different Amount Types; the distribution is always to a single Amount Type.

Code	Long Name
M	Money
Q	Quantity

Book Type

The concept of multiple sets of books is common in accounting systems: the "official" books, audit books, tax books, cash books (vs. accrual). There are a number of uses of this concept in securities accounting.

Code	Long Name	Description
BUD	Budget	Approved budget amount.
BUDR	Budget - revised	Revised budget amount.
MEMO	Memorandum	These are memorandum amounts (not memorandum accounts).
MSEG	Segregation memo	One approach to segregating customer positions on the stock record (the other is to use a different location account).
NOTN	Notional	These are off-balance amounts that are useful for accruing P&L.
PRIM	Primary	Official books and records; on balance sheet.

The great majority of postings are to PRIM. The structure is designed to support postings in multiple Book Types to the same account, as implied by the list.

Distribution Accounts

The Register records all information for updating positions and balances, which are kept in the PandB entity. There are two charts of accounts, one for each Amount Type (money and quantity).

Money (General Ledger) Accounts

Monetary values (principal, interest, realized P&L, etc.) are tracked at various levels of details in systems maintaining account information. Identification can include combinations of the trading account (or desk), security (or security class), counterparty account, and the like. Typically a trading system will have the greatest detail, books and records an intermediate level, and the firm general ledger will have the least.

The most basic level, common to all, is the ledger account portion. This identifies the account as being principal rather interest, for instance. Being precise, the ledger account is any device for accumulating additions and subtractions relating to a single element of the financial statements. See "account" in [AcctLangBus05] and ¶1 - 7 of [FASBCon6].

Within the Framework there are two classes of ledger accounts:

• Counterparty receivables/payables. These are represented by sub-ledgers for each counterparty. In the Knowledge Base these are identified by "C", followed by the counterparty identifier.
• General ledger accounts. These are identified by "G", followed by an account.

The following table lists the ledger codes (type "G") we will use in discussing transaction processing.

Code	Long Name	Short Name	StType
BUA	Long - Accrued Coupon Interest Inc	Long-Int I	PL
BUI	Buys - Interest	Buys - Int	BS
BUP	Buys - Principal	Buys - Prn	BS
CPC	Coupon Clearing	Cpn Clear	BS
CPP	Coupon Payable	Coupon Pay	BS
CPR	Coupon Receivable	Coupon Rec	BS
CSH	Cash	Cash	BS
CUP	Customer Payable	Cust Pay	BS
CUR	Customer Receivable	Cust Rec	BS
DVC	Dividend Clearing	Div Clear	BS
DVI	Dividend Income	Div Inc	PL
DVX	Dividend Expense	Div Exp	PL
LOA	Loans - Interest Expense (accrued)	Loan I/Exp	PL
LOI	Loans - Interest Payable	Loan I/Pay	BS
LOP	Loans - Principal	Loan Prin	BS
PLR	Profit & Loss - Realized	P&L - Real	PL
PLU	Profit & Loss - Unrealized	P&L - UnRe	PL
PLX	P&L Accounts -- Realized / Unreal		PL
RET	Retained Earnings	Ret Earngs	BS
RPA	Repos - Interest Expense Accrual	RP - Int X	PL
RPI	Repos - Interest Payable	RP - Int P	BS
RPP	Repos - Principal	RP's Prn	BS
RVA	Reve RPs - Interest Income Accrual	RV - Int I	PL
RVI	Reverse Repos - Interest Receivable	Rev RP IR	BS
RVP	Reverse Repos - Principal	Rev RP Prn	BS
SEA	Short - Accrued Coupon Interest Ex	Short Int	PL
SEI	Sells - Interest	Sells- Int	BS
SEP	Sells - Principal	Sells- Prn	BS
SOA	Sold F - Interest Income (accrued)	Sold I/Inc	PL
SOI	Sold Funds - Interest Receivable	Sold I/Rec	BS
SOP	Sold Funds - Principal	Sold Prin	BS
ZBB	Suspense - Beginning Balances	Susp-BBLS	BS

The columns:

Code	3-character identifier that will be used in discussing transactions and processing.
Long Name	Text description of the ledger code.
Short Name	Shorter description of the ledger code.
StType	Statement type: PL = P&L, BS = Balance Sheet. This field is solely informational; it doesn't affect any processing.

Quantity Accounts

The financial industry has a standard double-entry, self-balancing bookkeeping system for tracking the inventory of securities: stocks, bonds, contracts, and the like. Like other inventory control systems, it focuses on where items of inventory are and who has claims on them.

As with the money accounts, we keep customer due to/due from information at the detail customer account level. These accounts are prefixed with a type of "C". The other types are discussed after the list of accounts.

Type	Sub	Long Name
C		Counterparty Receivable/Payable
T		Trading Account (Proprietary Position)
T	BBOR	Trading Account -- Bond Borrow
T	BLON	Trading Account -- Bond Loan
T	FDEL	Trading Account -- Free Deliver
T	FREC	Trading Account -- Free Receive
T	REPO	Trading Account -- Repo'd Out
T	FREC	Trading Account -- Reversed In
T	SBOR	Trading Account -- Stock Borrow
T	SLON	Trading Account -- Stock Loan
L	BOX	In the box
L	SEG	Segregated, apart from the Box

The columns:

Type	1-character identifier identifying the general type: C = Counterparty, T = Trading Account, L = Other Location.
Sub	Specific area within the Type.
Long Name	Text description of the inventory location.

Register Type

The Register entity stores all the information necessary for updating the firm's positions and balances. The primary relevant Knowledge Base entity is the Register Type. This entity contains two types of information:

• Distribution information for the quantity and money fields.
• Processing control information. This information controls the transaction fields (e.g., a Buy does not have the same fields as a repo), closing method (e.g., most journal entries do not have a separate closing step), accrual directions, and the like.

Only the first type will be discussed here. See Processing Rules for further information on process control.

			Quantity Distribution				Principal Dist				Interest Dist
Reg Type	Description	Abbreviation	Lg	Acct	Sh	Acct	Dr	Acct	Cr	Acct	Dr	Acct	Cr	Acct	Book
ACCR-CPNP	Coupon Payable	Coupon Pay	B		B		G	SEI	G	CPP	B		B		PRIM
ACCR-CPNR	Coupon Receivable	Coupon Rec	B		B		G	CPR	G	BUI	B		B		PRIM
ACCR-INTL	Interest on Long Settled Positions	Long Int	B		B		G	BUI	G	BUA	B		B		PRIM
ACCR-INTS	Interest on Short Settled Position	Short Int	B		B		G	SEA	G	SEI	B		B		PRIM
ACCR-LOAN	Bank Loan Accrual	Bank Loans	B		B		G	LOA	G	LOI	B		B		PRIM
ACCR-NPRN	Normalize Principal	Norm Prin	B		B		G	BUP	G	SEP	B		B		PRIM
ACCR-PLRL	Trading P&L - Realized - Loss	P&L-Real-L	B		B		G	PLR	G	SEP	B		B		PRIM
ACCR-PLRP	Trading P&L - Realized - Profit	P&L-Real-P	B		B		G	BUP	G	PLR	B		B		PRIM
ACCR-PLUL	Trading P&L - Unrealized - Loss	P&L-Unrl-L	B		B		G	PLU	G	SEP	B		B		PRIM
ACCR-PLUP	Trading P&L - Unrealized - Profit	P&L-Unrl-P	B		B		G	BUP	G	PLU	B		B		PRIM
ACCR-REPO	Repo Interest Payable Accrual	Repo IPay	B		B		G	RPA	G	RPI	B		B		PRIM
ACCR-REVE	Reverse Interest Receivable Accr	Reve IRec	B		B		G	RVI	G	RVA	B		B		PRIM
ACCR-SBI	Borrowers' Interest Accrual	Borr Int	B		B		G	SBI	G	SIA	B		B		PRIM
ACCR-SIA	Interest Income/Fee Income Accrual	IntInc/Fee	B		B		G	SIA	G	SFA	B		B		PRIM
ACCR-SOLD	Sold Funds Accrual	Sold Funds	B		B		G	SOI	G	SOA	B		B		PRIM
ACCR-SPI	Participants' Interest Accrual	Part Int	B		B		G	SIA	G	SPI	B		B		PRIM
BBOR-CLOS	Bond Borrowing - Closing Side	BBOR-Close	C		T	-BBOR	C		G	RVP	C		G	RVI	PRIM
BBOR-OPEN	Bond Borrowing - Opening Side	BBOR-Open	T	-BBOR	C		G	RPV	C		G		C		PRIM
BLON-CLOS	Bond Loan - Closing Side	BLon-Close	T	-BLON	C		G	RPP	C		G	RPI	C		PRIM
BLON-OPEN	Bond Loan - Opening Side	BLon-Open	C		T	-BLON	C		G	RPP	C		G		PRIM
BUY -	Buy	Bought	T		C		G	BUP	C		G	BUI	C		PRIM
COLL-SWAP	Collateral Swap	Coll Swap	V		V		V		V		V		V		PRIM
CPN -PAY	Coupon Payable	Cpn Pay	B		B		G	CPC	C		B		B		PRIM
CPN -REC	Coupon Receivable	Cpn Rec	B		B		C		G	CPC	B		B		PRIM
CXL -	Cancellation	Cancel	V		V		V		V		V		V
DEL -	Deliver	Deliver	L	BOX	C		G	CSH	C		G	CSH	C		PRIM
DIV -PAY	Dividend Payable	Div Pay	B		B		G	DVC	C		B		B		PRIM
DIV -REC	Dividend Receivable	Div Rec	B		B		C		G	DVC	B		B		PRIM
FDEL-CLOS	Free Deliver of Collateral - Close	F/D-Close	T	-FDEL	C		G		C		G		C		PRIM
FDEL-OPEN	Free Deliver of Collateral - Open	F/D-Open	C		T	-FDEL	C		G		C		G		PRIM
FREC-CLOS	Free Receive Collateral - Closing	F/R - Clos	C		T	-FREC	C		G		C		G		PRIM
FREC-OPEN	Free Receive Collateral - Opening	F/R - Open	T	-FREC	C		G		C		G		C		PRIM
JNL -AUTC	Cash for clearance (auto-gen'd)	Auto-Cash	C		L		C		G	CSH	C		G		PRIM
JNL -BUI	Coupon Long	Cpn Long	B		B		G	CPC	G	BUI	B		B		PRIM
JNL -COUP	Coupon Payments	Coupons	B		B		V		V		B		B		PRIM
JNL -DVI	Dividend Income	Div Inc	B		B		G	DVC	G	DVI	B		B		PRIM
JNL -DVX	Dividend Expense	Div Exp	B		B		G	DVX	G	DVC	B		B		PRIM
JNL -LOCC	Location Change	Loc Change	V		V		B		B		B		B		PRIM
JNL -OFRL	Expirations - Opts & Futs - Long	Exp O&F Lg	C		T		G		G		G		G		PRIM
JNL -OFRS	Expirations - Opts & Futs - Short	Exp O&F Sh	T		C		G		G		G		G		PRIM
JNL -OPCR	Opening Positions - Credit	Op Pos CR	L	BOX	T		G	CSH	G	SEP	G		G		PRIM
JNL -OPDR	Opening Positions - Debit	Op Pos DR	T		L	BOX	G	BUP	G	CSH	G		G		PRIM
JNL -OTHR	Other	Other	V		V		V		V		G		G		PRIM
JNL -PODF	Pair-off Differences	P/O Diff	C		L		C		G		C		G		PRIM
JNL -REDM	Redemptions	Redemption	V		V		V		V		V		V		PRIM
JNL -RELO	Redemption of Long Position	Redemption	L	BOX	T		G	CSH	G	BUP	G	CSH	G	BUI	PRIM
JNL -REPR	Repricing	Repricing	V		V		V		V		V		V		PRIM
JNL -RESH	Redemption of Short Position	Redemption	T		L	BOX	G	SEP	G	CSH	G	SEI	G	CSH	PRIM
JNL -RPRO	Repricing - Money Difference	Repricing	V		V		V		V		V		V		PRIM
JNL -SEI	Coupon Short	Cpn Shrt	B		B		G	SEI	G	CPC	B		B		PRIM
LOAN-CLOS	Bank Loans - Closing Piece	BL-Close	L		C		G	LOP	C		G	LOI	C		PRIM
LOAN-OPEN	Bank Loans - Opening Piece	BL-Open	C		L		C		G	LOP	C		G		PRIM
LOCC-SEGI	Placing into segregation	Into Seg	L	BOX	L	SEG	G		G		G		G		PRIM
LOCC-SEGO	Taking out of segregation	Out of Seg	L	SEG	L	BOX	G		G		G		G		PRIM
LOCM-SEGI	Placing into Seg memo	Seg Memo I	C		L	SEG	G		G		G		G		MSEG
LOCM-SEGO	Taking out of Seg memo	Seg Memo O	L	SEG	C		G		G		G		G		MSEG
MRGN-IN	Margin - Cash Received	Margin-IN	B		B		G	CSH	C		B		B		PRIM
MRGN-OUT	Margin - Cash wired out	Margin-Out	B		B		C		G	CSH	B		B		PRIM
REC -	Receive	Receive	C		L	BOX	C		G	CSH	C		G	CSH	PRIM
REPO-CLOS	Repurchase - Closing Piece	Repo/Close	T	-REPO	C		G	RPP	C		G	RPI	C		PRIM
REPO-OPEN	Repurchase - Opening Piece	Repo/Open	C		T	-REPO	C		G	RPP	C		G		PRIM
REV -	Reversal	Reversal	V		V		V		V		V		V
REVE-CLOS	Reverse Repurchase - Closing Piece	Repo/Close	C		T	-REVE	C		G	RVP	C		G	RVI	PRIM
REVE-OPEN	Reverse Repurchase - Opening Piece	Repo/Open	T	-REVE	C		G	RVP	C		G		C		PRIM
REVR-DEL	Customer Reversal - Deliver	Revr Del	L	BOX	C		G	CSH	C		G		C		PRIM
REVR-REC	Customer Reversal - Receive	Revr Rec	C		L	BOX	C		G	CSH	C		G		PRIM
SELL-	Sell	Sold	C		T		C		G	SEP	C		G	SEI	PRIM
SOLD-CLOS	Sold Funds - Opening Piece	S/F-Open	C		L		C		G	SOP	C		G	SOI	PRIM
SOLD-OPEN	Sold Funds - Opening Piece	S/F-Open	L		C		G	SOP	C		G		C		PRIM
UNCL-DEL	UNCL Loan - Deliver	UNCL Del	L	BOX	C		G	CSH	C		G		G		PRIM
UNCL-REC	UNCL Loan - Receive	UNCL Rec	C		L	BOX	C		G	CSH	C		G		PRIM
WIRE-IN	Money wired in	Money in	B		B		G	CSH	C		B		B		PRIM
WIRE-OUT	Funds Wired - Sent	Funds Out	B		B		C		G	CSH					PRIM

The columns:

Reg Type	Identifies business transactions (e.g., BUY, SELL, WIRE), settlements (REC, DEL), system-generated journals (ACCR-CPNR, ACCR-PLRP), bookkeeping journals (JNL-COUP, JNL-REDM), audit history (CXL, REV): anything that can affect the books and records.
Description	Text description of the register type.
Abbreviation	Shorter description of the register type.
Quantity Distribution	Four columns: the first two give the type and account of the long side of the distribution, and the next two pertain to the short side. The type values and associated accounts are: B Blank This transaction has no quantity distribution. V Variable Distribution may either be entered by the user (e.g., a journal entry) or dependent on another entry (e.g, a CXL reverses the distribution of the original Register entry). C Counterparty Account is a counterparty number. L Location Stock record location. See Quantity Accounts for the list. T Trading Account The trading account is the distribution account. If the value is preceded with a "-", the distribution account has the text appended (e.g., a repo for trading account 9161 will have a distribution of 9161-REPO).
Principal Distribution	The distribution for the first money field on the transaction (typically principal). The structure parallels the Quantity Distribution. The type values and associated accounts are: B Blank This transaction has no quantity distribution. V Variable Distribution may either be entered by the user (e.g., a journal entry) or dependent on another entry (e.g, a CXL reverses the distribution of the original Register entry. C Counterparty Account is a counterparty number (customer receivable/payable). G General Ledger account The account is typically a code (see Money Accounts below), which will go through a translation step to result in a GL account number.
Book	Usually PRIM, for books and records. See Book Type. Each amount being distributed can have its own Book Type, of course, but we have just shown one here for simplicity.

This presentation mirrors the generalized model of the Framework. It shows one quantity distribution and two money distributions (principal and interest). This is for convenience only. Transactions can have any number of distributions of either type.

We repeat that the table given above contains sample entries made into the Register Type repository. They reflect the particular needs of an individual firm. The number and type of entries that can be set up are essentially unlimited.

Association Type

The Register and Association Types are the primary process control entities of the Knowledge Base. For this discussion we are concerned with the final representation in the data tables, and how that information is used to manage positions and balances.

For details on the processing that results in association entries see Processing Rules.

Association Type	Description	Abbreviation
ADD	Add (enter) a transaction	Add
AFCL	Clear out accrued interest	Clear AF
BBCL	Closeout of a RP/RV Buyback	RP/RV Clos
BBCO	Correction of a RP/RV Buyback	RP/RV Corr
BKO	Back out an association	Backout
CLR	Clearance	Clearance
CORR	Correction	Correction
CSWP	Collateral Swap	Coll Swap
CVWI	WI Conversion	WI Convert
CXL	Cancellation	Cancel
CXRN	Cancel & Re-instate New	CXL/R-New
CXRO	Cancel & Re-instate Old	Correction
FRAC	Split one trade into two	Split
FRCL	Closeout of a Free Receive/Deliver	Free Clos
KO-R	Keyoff Reversal (leave item)	KO-Reverse
KOR	Keyoff Reversal (leave item) - Any	KO-Rev Any
LO-S	Bank Loans - Settling	Loan-Settl
MD-G	Generate a Money Difference	Gen MoneyD
MD-S	Money Difference - Settling	MD-Settle
MODS	Modification not affecting sttlmnt	Mod/Settle
P/O	Pairoff	Pairoff
PD-S	P/O Difference - Settling	PO-Settle
PO-E	Early Pair-offs	Early P/Os
PO-L	Late Pair-offs	Late P/Os
PO-P	Partial Pair-offs	Part. P/Os
RCXL	Re-cancel	Re-cancel
REVR	Reverse Settlement	Rev Settle
RPRN	Re-price & Re-instate New	ReP&R-New
RPRO	Re-Price & Re-instate old Item	Reprice
RSTL	Re-settle	Re-settle
S-F	FSU/D: Settle to Fail (w/delete)	Fail
SETL	Settlement	Settle
UNCL	UNCL Settlement	UNCLSettle
UNDO	Undo Settlement & Delete Item	Undo&Delet
VART	Variable Rate Change	Rate Chge
WIRE	Funds Wiring	Funds Wire

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