Whole Section

  • 4.10 Risk Management and Financial Controls

    • 4.10.1

      A Trading Member must have written policies and procedures on risk management control 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) adequate pre-execution risk management control checks are conducted, including automated credit control checks on every order and trading limits for each Trading Representative; and
      (ii) there are appropriate internal controls and assessments conducted for the setting and modification of any parameters of such pre-execution risk management control checks;
      (c) having error-prevention alerts to bring attention to possible erroneous entries of price, order size 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.

      Refer to Practice Note 4.10.1(b).

      Refer to Practice Note 4.10.1(c).

      Added on 3 June 20193 June 2019.

    • 4.10.2

      A Trading Member must have automated processes and procedures 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, inject additional capital or take such steps as are necessary to prevent such breach.

      Refer to Practice Note 4.10.2.

      Added on 3 June 20193 June 2019.