Design a retail trading platform

Q: Design a retail trading platform

This question evaluates a candidate's competencies in designing scalable, low-latency retail trading systems, covering system architecture, order routing and state management, market data ingestion, cash and position ledger consistency, risk controls, and compliance/observability.

Q: How do I approach System Design interview questions?

System Design questions require understanding of core concepts and practice. PracHub provides solutions with explanations to help you master system design interviews.

Q: What difficulty level is this interview question?

This is a hard difficulty System Design question, commonly asked during Onsite rounds at Fanatics.

Q: What role is this question designed for?

This question is commonly asked for Software Engineer candidates at Fanatics during technical interviews.

Question

System Design: Retail Stock Trading Platform (Robinhood-like)

Context and Assumptions

Design a mobile-first, retail stock trading platform with a clearing broker partner for custody and settlement. U.S. equities settle on T+1. Start with cash accounts (no margin or options at launch), add options/crypto later. Assume 24/5 support for extended hours and a third-party market data vendor for SIP/top-of-book.

Requirements

User Onboarding and Funding
- KYC/AML: identity verification, sanctions screening, fraud checks, account opening with clearing broker.
- Funding: ACH (Plaid or micro-deposits), wires, with holds and returns handling.
- Account types: individual cash accounts now; margin/options later.
Balances and Buying Power
- Real-time cash balances: settled vs unsettled, withdrawals, holds.
- Buying power calculations and guardrails.
Market Data
- Ingest vendor feeds (SIP, top-of-book), maintain symbol master.
- Stream quotes to clients with throttling and coalescing.
Orders
- Submit/validate market, limit, stop (stop-market, stop-limit) orders.
- Risk checks: buying power, symbol status (halts), duplicate prevention (idempotency), fat-finger checks.
- Acknowledge, route to market makers/exchanges, and manage order state.
Routing and Post-Trade
- Route via SOR to market makers/exchanges.
- Receive executions/drop copies; integrate with clearing broker for confirmation, allocation, and settlement.
Portfolio and Positions
- Positions and lots with cost basis (FIFO default), realized/unrealized PnL.
- Corporate actions (splits, dividends, symbol changes, mergers) and DRIP.
Data Model and Storage
- Core entities: users, accounts, cash ledger, orders, executions, positions/lots, instruments, ticks, corporate actions.
- OLTP for trading/ledger; streaming/event store for order/market data; time-series storage for ticks.
Architecture and APIs
- Service decomposition; synchronous vs asynchronous APIs.
- Message queues, event sourcing, idempotency design.
Consistency and Latency
- Guarantees for order state vs portfolio views (strong vs eventual consistency).
- Latency targets for quotes, order acks, fills.
Scale, Reliability, and Failures
- Market open surges; backpressure strategies.
- HA/DR design, rate limits, circuit breakers.
- Failure modes: market data outage, exchange issues, clearing delays.
Observability and Compliance
- Metrics, tracing, centralized logs.
- Audit/compliance logging (immutable/WORM), SOX/SEC/FINRA considerations.
Extensibility
- How to add options (OPRA, OCC, risk/margin) or crypto (wallets, custody, 24/7).

Design a retail trading platform

Quick Overview

System Design: Retail Stock Trading Platform (Robinhood-like)

Context and Assumptions

Requirements

Solution