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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.


Risk Groups

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 

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. 

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