KArtSell.Aegis/docs/CURRENT/SLICE_SPECS/VS-14-SLICE_SPEC.md

VS-14: Portfolio Reconciliation (Sell Decision → Trade → Holdings)

Vertical Slice: VS-14 (Portfolio Reconciliation)
Version: 1.0 COMPLETE
Date: 2026-08-07
Owner: Data Architecture + Finance
Status: ✅ READY FOR IMPLEMENTATION
Depends On: K (trade execution), uses VS-03 (approval) + VS-04 (audit)

---

📋 User Story

As a portfolio manager / compliance officer
I want to reconcile portfolio holdings after trade execution
So that we can verify execution accuracy, track cost basis, and detect discrepancies

Acceptance Criteria:

• ✅ Holdings updated after trade execution (quantity, cost basis)
• ✅ Cost basis tracked: weighted average, FIFO/LIFO support
• ✅ Gain/loss calculated (unrealized, realized on sale)
• ✅ Mismatches detected: quantity, price, timing, settlement variance
• ✅ Audit trail immutable (reconciliation_logs INSERT-only)
• ✅ API endpoints: GET holdings state, GET mismatch discrepancies
• ✅ Daily/weekly reconciliation reporting

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🎯 Non-Goals

• ❌ Tax lot assignment strategies (use FIFO by default)
• ❌ Real-time market valuation (use T+1 settlement assumption)
• ❌ Corporate actions (splits, dividends) handling (deferred)
• ❌ Multi-account consolidation (single account only for v1.0)

---

📊 Reconciliation Flow

Trade Executed (from VS-12)
  ↓
Extract trade details: quantity, price, settlement date
  ↓
Validate against approval (from VS-03)
  ↓
Update holdings: quantity ± executed
  ↓
Calculate cost basis: weighted average
  ↓
Calculate gain/loss: (market_value - cost_basis)
  ↓
Detect mismatches: quantity, price, timing, settlement
  ↓
Log reconciliation event (immutable, INSERT-only)
  ↓
Generate reconciliation report (daily/weekly)
  ↓
Alert on discrepancies (for manual review)

---

📊 Data Schema

holdings (Current Portfolio State)

CREATE TABLE holdings (
    id UUID PRIMARY KEY,
    security_id UUID NOT NULL REFERENCES financial_security_master.securities(id),
    quantity INT NOT NULL DEFAULT 0,
    weighted_avg_cost DECIMAL(15,2) NOT NULL DEFAULT 0,
    total_cost_basis DECIMAL(18,2) NOT NULL DEFAULT 0,
    market_value DECIMAL(18,2),  -- T+1 settlement basis
    unrealized_gain_loss DECIMAL(18,2),  -- (market_value - cost_basis)
    updated_at TIMESTAMPTZ NOT NULL DEFAULT NOW(),
    published_at TIMESTAMPTZ NOT NULL DEFAULT NOW(),
    correlation_id UUID NOT NULL,
    revision INT NOT NULL DEFAULT 1
);

CREATE INDEX idx_holdings_security_id ON holdings(security_id);
CREATE INDEX idx_holdings_correlation_id ON holdings(correlation_id);

reconciliation_logs (Immutable Audit Trail)

CREATE TABLE reconciliation_logs (
    id UUID PRIMARY KEY,
    trade_id UUID NOT NULL REFERENCES trades(id),
    holding_id UUID NOT NULL REFERENCES holdings(id),
    quantity_before INT,
    quantity_after INT,
    cost_basis_delta DECIMAL(18,2),
    unrealized_gain_loss_delta DECIMAL(18,2),
    mismatch_detected BOOLEAN DEFAULT FALSE,
    mismatch_reason TEXT,  -- e.g., "quantity_variance", "price_variance", "settlement_delay"
    reconciled_at TIMESTAMPTZ NOT NULL DEFAULT NOW(),
    published_at TIMESTAMPTZ NOT NULL DEFAULT NOW(),
    correlation_id UUID NOT NULL
);

CREATE INDEX idx_reconciliation_logs_trade_id ON reconciliation_logs(trade_id);
CREATE INDEX idx_reconciliation_logs_holding_id ON reconciliation_logs(holding_id);
CREATE INDEX idx_reconciliation_logs_mismatch ON reconciliation_logs(mismatch_detected);

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🔄 Cost Basis Calculation

Weighted Average Method

New Weighted Avg Cost = 
    (Previous Cost Basis + New Purchase Cost) / Total Quantity

Gain/Loss = Market Value - Total Cost Basis
Unrealized = Market Value - Cost Basis (for open positions)
Realized = (Execution Price - Avg Cost) × Quantity Sold

FIFO/LIFO Tracking (Lot Level)

CREATE TABLE lots (
    id UUID PRIMARY KEY,
    holding_id UUID REFERENCES holdings(id),
    purchase_date DATE,
    quantity INT,
    unit_cost DECIMAL(15,2),
    total_cost DECIMAL(18,2),
    status VARCHAR(50),  -- OPEN, PARTIAL_SOLD, CLOSED
    fifo_order INT,  -- For FIFO sequencing
    published_at TIMESTAMPTZ,
    correlation_id UUID
);

---

🔐 Mismatch Detection Rules

Type	Condition	Alert Level
Quantity	Executed ≠ Approved (>0.1%)	HIGH
Price	Settlement > Limit (>2%)	MEDIUM
Timing	Settlement delay >2 days	LOW
Settlement	Unconfirmed >3 days	HIGH
Cost Basis	Recalc differs from ledger (>$0.01)	MEDIUM

---

📋 API Contract

GET /reconciliation/holdings (Current Portfolio)

Query Params: security_id=uuid, include_mismatch=bool
Response (200):

{
  "items": [
    {
      "id": "holding-uuid",
      "securityId": "security-uuid",
      "quantity": 100,
      "weightedAvgCost": 150.50,
      "totalCostBasis": 15050.00,
      "marketValue": 18750.00,
      "unrealizedGainLoss": 3700.00,
      "updatedAt": "2026-09-10T14:30:00Z",
      "correlationId": "correlation-uuid"
    }
  ],
  "total": 1,
  "pages": 1
}

GET /reconciliation/mismatches (Flagged Discrepancies)

Query Params: severity=HIGH|MEDIUM|LOW, dateFrom=2026-09-01, dateTo=2026-09-30
Response (200):

{
  "items": [
    {
      "id": "log-uuid",
      "tradeId": "trade-uuid",
      "mismatchReason": "quantity_variance",
      "quantity": {"before": 100, "after": 99},
      "costBasisDelta": -150.50,
      "detectedAt": "2026-09-10T14:30:00Z"
    }
  ],
  "total": 2,
  "pages": 1
}

---

✅ Governance Gates

Pre-Merge Gates

• Schema: 3NF normalized, PIT tracked (published_at + correlation_id)
• Calculation: Weighted avg cost, FIFO/LIFO lot tracking tested
• Mismatch: Detection rules defined + prioritized
• Immutability: reconciliation_logs INSERT-only, no UPDATE/DELETE
• Audit: All state changes logged with CorrelationId

Post-Merge Validation (Deferred)

• Integration tests (E2E trade → holdings update)
• Cost basis calculation verified vs. accounting standards
• Mismatch alert accuracy (low false-positive rate)
• Performance: reconciliation completes <5 seconds

---

🛡️ Security & Compliance

Immutability Guarantees:

• INSERT-only reconciliation_logs (no UPDATE, no DELETE)
• Timestamp immutable after insertion
• Correlation_id immutable (traceability)

Regulatory Requirements:

• Cost basis accuracy (audited annually)
• Lot tracking (tax reporting compliance)
• Mismatch documentation (compliance review)

Access Control:

• Portfolio Manager: Read/reconcile holdings
• Finance: Read cost basis + gain/loss
• Compliance: Read mismatch alerts + audit trail
• System: Automatic reconciliation (no manual entry)

---

📋 Related Specifications

• VS-03: Approval workflow (approval_proposals, evidence linkage)
• VS-04: Audit trail (reconciliation events logged)
• K (VS-12): Trade execution (provides trade_id, quantity, price)
• VS-00: PIT envelope (published_at, correlation_id, revision)

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Co-Authored-By: Claude Haiku 4.5 noreply@anthropic.com
Status: ✅ READY FOR IMPLEMENTATION
Next: Implement reconciliation engine (handlers, calculators, endpoints)