INDIA INX

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Risk & Control

In today’s marketplaces there is an increased focus on risk management and specifically on Trade Risk Management. At the same time speed of response and latency are getting more and more important, especially when algorithmic and program trading methodologies form the major base of a customer’s business

As a leader in trading and data technology for the financial industry, INDIAINX has instilled Trade Risk Management controls that provide its customers Trade Risk Management solutions that adds no latency.

The different pre trade, At-trade and general risk controls are as mentioned below.

Risk Management Controls Description
Pre trade Maximum Order Quantity This limit checks the total quantity of each of the orders being placed. And if the value is greater than the limit set, the order will get rejected
Max Order Value This limit checks the total value of each of the orders being placed. And if the value is greater than the limit set, the order will get rejected
Price reasonability check This check compares the price of an incoming limit order against the Price Reasonability Range that is dynamically computed using real-time reference price of the security. If the price deviates more than the defined threshold the incoming order will be rejected. The same logic will also be applied for order amendments. If the new order in the order amendment request deviates by more than the defined threshold the order will be rejected.
Algorithm Id Check Members using Algorithms to do trading are required to share an identifier at the gateway. If the validation fails then the order gets rejected
IP address check The orders routed to the exchange are also validated against the IPs assigned to that particular session Id. This check helps in unauthorized order routing though non registered address.
At - Trade Self-Trade Prevention Check The Self-Trade Prevention mechanism enables Market Makers to prevent unintended executions in which each side of a trade is originated from the same trader
Trading Limit check If the trading limit gets utilized beyond the specified limit then Risk reduction mode (RRM) would be activated. In this mode all unexecuted orders shall be cancelled and Fresh orders placed by members to reduce open positions shall be accepted
Position limit Check If the open position of any trading member exceeds the specified limit then the Risk reduction mode (RRM) would be activated. In this mode all unexecuted orders shall be cancelled and only fresh orders placed by members to reduce open positions shall be accepted. The trading member will continue to be in the RRM mode until his position reduces below the threshold
General Cancel on Disconnect As all the ETI sessions given by exchange are marked as High Frequency trading enabled so when the connection to the matching engine is lost ( session gets disconnected ) then automatically all the open orders and/or quotes gets cancelled
Order Mass Cancellation This functionality allows members to send a message cancelling all open orders