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

1. 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.
2. Balances and Buying Power
   • Real-time cash balances: settled vs unsettled, withdrawals, holds.
   • Buying power calculations and guardrails.
3. Market Data
   • Ingest vendor feeds (SIP, top-of-book), maintain symbol master.
   • Stream quotes to clients with throttling and coalescing.
4. 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.
5. Routing and Post-Trade
   • Route via SOR to market makers/exchanges.
   • Receive executions/drop copies; integrate with clearing broker for confirmation, allocation, and settlement.
6. Portfolio and Positions
   • Positions and lots with cost basis (FIFO default), realized/unrealized PnL.
   • Corporate actions (splits, dividends, symbol changes, mergers) and DRIP.
7. 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.
8. Architecture and APIs
   • Service decomposition; synchronous vs asynchronous APIs.
   • Message queues, event sourcing, idempotency design.
9. Consistency and Latency
   • Guarantees for order state vs portfolio views (strong vs eventual consistency).
   • Latency targets for quotes, order acks, fills.
10. 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.
11. Observability and Compliance
    • Metrics, tracing, centralized logs.
    • Audit/compliance logging (immutable/WORM), SOX/SEC/FINRA considerations.
12. Extensibility
    • How to add options (OPRA, OCC, risk/margin) or crypto (wallets, custody, 24/7).