Recent multi-million dollar losses in the capital markets caused by technology glitches, erroneous trades and errant trader behavior have heightened demand for tools to control risk during the electronic trading process.
Now global trading platform provider InfoReach offers the ability to monitor and control risk in real time across a broad spectrum of firm-specific requirements for multiple asset classes.
The risk limits component embedded within the InfoReach Trade Management and HiFREQ multi-broker trading systems covers orders originated manually, algorithmically, via API or via FIX. Pre-defined risk checks trigger alerts, allowing users to adjust trades or block the release of non-compliant orders. Risk limits can be established for such variables as users, categories, instrument, position, unit and destination (broker desk, algo and direct market access).
By employing the risk controls, trading firms can spot—and act upon--situations where the parties to a trade or the wider market could be adversely impacted by an intended order. For example, trade participants can:
- Prevent fat-finger mistakes
- Avoid adverse market impact by comparing the order against such metrics as the calculated average traded volume of the instrument
- Check for duplicate, stale or runaway orders
- Flag orders that exceed a broker's own internal risk thresholds or those of a buy-side client
- Check for an order that is entered in error or exceeds any kind of risk tolerance, such as taking out too large a position
- Can aggregate risk across multiple trading platforms
For firms using more than one trading platform and/or trading through multiple brokers, the InfoReach risk limits component can be used to aggregate risk globally across asset classes and trade execution platforms. It integrates seamlessly with other trading platforms so that traders can continue to use their choice of trading technology.
"These automated risk controls make it possible for our buy- and sell-side clients to quickly and seamlessly apply a hierarchy of safeguards and oversight to all their electronic trading across asset clat classes," comments InfoReach CEO Allen Zaydlin. "We're empowering them to identify risk as well as arrest or control it on a real-time basis."