2.6.3 Risk Management Controls

Past version: Effective up to 14 Mar 2013

A corporate Member is required to have written policies and procedures and demonstrate compliance in the following areas:

(a) monitoring the credit risks arising from the acceptance of orders of Customers;
(b) monitoring account activity on an intraday basis;
(c) ensuring that the OMS conducts pre-execution checks for all Customers' orders (unless granted Bypass Privileges as contemplated under Rule 2.8) and includes the ability to set and manage automated limits;*

*Refer to Practice Note 2.6.3(c).
(d) ensuring that the OMS has error-prevention alerts so that when Approved Traders or Customers enter orders, they are alerted to possible erroneous entries of quantity, price and other data fields;^

^ Refer to Regulatory Notice 2.6.3(d).
(e) defining and managing the Member's sources of liquidity to ensure that there are sufficient liquidity facilities to meet increased settlement obligations;
(f) limiting the impact of significant market movements through the use of tools such as cash flow projection, stress testing or position limits; and
(g) maintaining a strict separation between the credit control, trading, dealing and marketing departments so as to ensure independence and mitigate the risks and consequences of conflicts of interests.#

#Refer to Practice Note 2.6.3(g).