Delta1 assesses all orders against a number of controls designed to help a trading entity's risk and compliance team mitigate their organization's overall risk for both trading applications and front-end users. These controls are managed through a dedicated web-based graphical user interface (GUI) for designated risk managers (Delta1 Risk Control) as well as an automated file submission service (Restricted Securities List Service) for maintaining a list of restricted securities.
Clearing firms can sponsor access for entities within their own organization as well as outside entities, to separate the risk associated with these entities we use a logical container called a Risk Group. A clearing firm can create any number of Risk Groups and subsequently assign any number of FIX sessions or front-end logins to those groups. A front-end login or FIX session can only be assigned to a single Risk Group.
Risk controls are specific measures designed to assist firms in their financial risk management and supervisory efforts. The measures selected for each risk control are designed to:
- Prevent the entry of orders that exceed appropriate pre-set capital thresholds.
- Prevent the entry of erroneous orders, by rejecting orders that exceed appropriate price or size parameters on an order-by-order basis.
- Prevent the entry of orders for securities for an entity, where such entity is restricted from trading those securities.
The following events are subject to controls:
- New order entry
- Order cancel and replace (update)
- Initiator report of a trade
- Counter-party accept of a pending trade report
Events found to violate any of the below controls are rejected upon submission:
- Contract size of order/trade - Maximum number of contracts permitted per order or reported trade.
- Notional value limit - Maximum notional value per order or reported trade.
- Aggregate notional value of daily trading activity - Maximum notional value as the sum of all working orders, filled orders, reported trades, and pending trades.
- Upper/Lower price limit - Sets a low and high percentage away from the fair-market price of any instrument, establishes a minimum and maximum accepted price.
- Restricted security list
Setting Risk Controls
Risk controls can be set through two means. The first is Delta1 Risk Control, a web-based real-time user interface available over general internet. The second is the Restricted Securities List Service, a file transmission service that accepts and applies restricted securities to submitter designated Risk Groups intraday.
- Visit Delta1 Risk Control to get started
- For information about the restricted security service, visit Restricted Securities List Service