RMS Risk Management System Open position by MikeJenny


More Info
									Risk Management System
                       Process of RMS

• Identifying Risk
   –   Saudafer Risk / Misdeal
   –   Client default Risk
   –   Non compliance Risk
   –   Technology Risk
   –   Operational Risk
               Saudafer Risk / Misdeal

•   Punching Error
•   Miscommunication
•   Client Back out
•   Auction Losses due to non pay in in our part
                 Preventive Measures

• Single stroke limits
• Reconfirmation of deals with clients
• Accuracy rather than speed should be given priority
• Immediate square off on detection
• Contract acknowledgement/ day end confirmation/ compulsory
  digital contracts
• Co-ordination with back office for pay in shortages.
                 Client default Risk
• Credit assessment / credit worthiness / cross references to be
  done at client inception stage
• Upfront margins @ 30% for clients with Debits
• f&o margin (span+expo margin )
• Eligible securities acceptable as margin and shall be valued @
  70% on daily closing market price
• Consider only clean credits (exclude unclear cheques)
• set client level limits based on margins
• intra-day leveraging from 5 to 7 times
• intra-day margin monitoring
• replenishment of margin shortfall
                  Client default Risk
• margin calls if margin fall below 20% (cash mkt)
• liquidate exposures / stocks if margins fall below 10%
• avoid trading in illiquid stocks
• restrict overdue clients’ exposure to eligible securities
• F&o positions – use of options as hedge to reduce risk in case
  of falling margins
• Usage of stop losses in case of falling margins
• Communication to clients in case of square up from our end
                Non-Compliance Risk
• No trading without complete documents
• No trading in z Gr scrips and trading in T, Ts, S and B2 scrips
  not to exceed 10% of turnover
• No trading in scrips beyond 95% market wide limit in f&o
• No trading with unregistered remissiers
• Client level margining as per exchange norms to be maintained
• No third party pay-in / pay-outs
• Any violation will attract financial penalties / suspension
                  Technology Risk

• System failure
• Server failure
• Not to keep positions pending till last minutes
            Operational Risk Control

• Daily Bank Reconciliation
• Daily Stock Reconciliation
• Internal Audit
 Reports Available in Back Office Software

• Combined RMS Report (cash & f/o combine)
• Cash segment – margin report
   – stock report – client wise / scrip wise
• F&o segment -         client margin report
   –   scripwise span margin report
   –   clientwise open position report
   –   scrip wise open position report
   –   client wise exposure report
• Monitoring reports – f/o monitoring report
   – in-the money option loss report
   – RMS stock m2m report
                                        Combine RMS Report
                  To Download the Combine RMS report you have
              to follow the procedure in NSE Segment of Back office

This is the first screen, click on Combine               Verify Date and put family code as 0000000
                RMS Report                              to 99999999 and Click on Download in CSV
Combine RMS Report (contd…..)

   A Separate window will be opened so as to
    allow you to save the file…. Name it as
                       Client wise Open Position (F&O Segment)
   To Download the Client wise open position in F&O Segment you have
       to follow the procedure in NSE F&O Segment of Back office

This is the first screen, click on All Report in    Select Group by “Client”, Sub Group by
          that click on “Net Position”             “Scrip”, give client codes from 0000000 to
                                                   999999999 date of the last trading day, tick
                                                     the “Page Merge” check box and give
Client wise Open Position (F&O Segment) (contd…)

                  In this screen you may select all from
             till last by Dragging your Mouse cursor copy
               it and then paste it in a new MS Excel file
                        and save it for future usage
                                        FOUT Report
                    To Download the FOUT Report you have
           to follow the procedure as in NSE Segment of Back office

This is the first screen, click on Canned                                Select Family from the first list, give client
        FOUT in Finance Report                                            codes as 0000000000 to 99999999 select
                                                                           “DETAIL” and then client on TO FILE

                     Save the file output as CSV and then in MS Excel version for future usage
                         RMS Team

• Team comprises of
   – 12 member team
   – Graduates / Post-graduates in Finance

• Functioning of the RMS team:
   – Setting up limits for exposures
   – Monitoring intra-day & day end exposures
   – Sanctioning of payouts in form of cash & kind
Head RMS

    • Name : Ashish Buch
    • Qualification :B.Com-
    • Is heading the RMS
      department since 1994

To top