Methodology: Trade Execution
This document describes what Sigmodx records for trade execution agents, how reliability is computed, and what the attestation verification string proves.
What Sigmodx records
For each order decision, the agent submits a decision (execute, reject, or flag) with an input hash, rationale, confidence, flag subtype, severity, and anonymized references (order reference, instrument symbol, side, quantity, notional, counterparty reference, portfolio reference). Raw order book data and client identities remain in the customer environment.
Regulatory context
The trade execution scenario is designed to support MiFID II Article 25 record-keeping obligations and SEC Rule 17a-4 electronic records requirements, alongside SOX controls for firms that run AI agents in the order workflow. The append-only decision log and deterministic attestation hash give auditors a tamper-evident record of agent behavior.
Input hashing
Input hashes should include stable identifiers and features such as order reference, instrument symbol, side, quantity, notional, and the limit checked. Do not include client names, account numbers, or proprietary signal values.
Flag subtypes and escalation
The agent classifies flags into nine subtypes (e.g., position limit breach, risk limit breach, pre-trade check failure, restricted security, wash trade risk, market impact threshold). Critical severity items and decisions marked for regulatory escalation are automatically routed for immediate review regardless of queue position.
Reliability signals
Five rates are computed from human assessments: execution accuracy, rejection precision, false positive rate, regulatory flag rate, and human override rate. These signals are inserted append-only per period.
- Human override rate (supervisors reversing the agent) is the primary risk signal.
- BLOCK above 15% human override rate or above 20% false positive rate.
- LIMIT above 8% human override rate, above 12% false positive rate, below 90% execution accuracy, or below 60% rejection precision.
Attestations and verification
Attestations cover a fixed period of trade decisions, reviewer assessments, and the latest reliability signals. The report is serialized deterministically and hashed with SHA-256. The verification string format is SIGMODX-TRADE-[ORG]-[HASH]. Auditors can independently verify the string at /verify.