Whole Section

  • Practice Note 4.10.2 Firm Level Monitoring of Capital and Financial Requirements and Prudential Limits

    • 1. Introduction

      • 1.1

        Rule 4.10.2 provides that 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.

        Added on 3 June 20193 June 2019.

      • 1.2

        This Practice Note explains the requirement for monitoring potential breaches of capital and financial requirements and prudential limits on exposures to a single customer and a single security.

        Added on 3 June 20193 June 2019.

    • 2. Firm-level monitoring of capital requirements and prudential limits

      • 2.1

        In an electronic trading environment where orders are processed and routed at speed, Trading Members should use appropriate measures to monitor if the firm is at risk of breaching its capital or financial requirements or any prudential limits, for example:

        (a) setting automated filters on firm-wide aggregated exposures;
        (b) having processes to generate warnings; or
        (c) having processes to route large value orders for review.

        Added on 3 June 20193 June 2019.