To ensure that the review of margin financing accounts is robust, the framework include at least the following:
- Policies and procedures to be put in place for determining the suitability and valuation of acceptable collateral;
- Concentration limits to be set at security and single customer level to prevent the firm from taking on excessive risks;
- Performance of timely monitoring of adverse news and market developments to identify potential matters that may impact the valuation of collaterals (e.g. trade with caution alerts, trade suspension, corporate actions); and
- Performance of daily mark to market of margin collateral and daily margin calls to restore margin ratios.
Added on 1 April 2025.