4.6.7A Risk Management and Financial Controls

(1) A Trading Member must have written policies and procedures on risk management controls and demonstrate compliance in the following areas:—
(a) monitoring the credit risks arising from the acceptance of all orders on at least a daily basis;
(b) ensuring that:
(i) automated pre-execution risk management control checks are conducted on all orders, including credit control checks on all orders;
(ii) there are appropriate internal controls for the setting and modification of any parameters of such automated pre-execution risk management control checks;
(c) having error-prevention alerts to bring attention to possible erroneous entries of quantity, price and other data fields; and
(d) defining and managing the Trading Member's sources of liquidity to ensure that there are sufficient liquidity facilities to meet settlement obligations.
(2) A Trading Member referred to in Rule 4.6.7A(1) must have automated processes in place to monitor at the firm level if the Trading Member is at risk of breaching capital and financial requirements and prudential limits on exposures to a single customer and a single security, so as to restrict trading activity or inject additional capital if necessary.

Refer to Practice Note 4.6.7A(2).

Added on 18 September 201218 September 2012 and amended on 15 March 201315 March 2013.