ConvergEx Group, an agency broker and trading technology company, has added functionality to its execution management system (EMS) to help clients comply with new rules governing market access that come into force today.
RealTick 10, ConvergEx’s multi-asset class EMS, now incorporates an enhanced risk management solution to meet the ban on unfiltered access brought in by the US regulator, the Securities and Exchange Commission (SEC).
The new rule prevents broker-dealers from allowing clients to trade directly on equity markets without appropriate pre-trade risk controls. Brokers will be required to establish, document and maintain a system of risk management controls and supervisory procedures to manage the risks associated with market access.
To help its clients comply with the new rule, RealTick 10 now includes an application to allow brokers to manage their trading clients’ pre-trade risk controls, credit and margin limits and to monitor risk in real-time. This includes pre-trade risk controls – relating to price, trade size, trade frequency, percentage of portfolio, aggregate intraday cost and conflict of interest – short sale management; and credit and margin limits and restrictions.
“Embedding rigorous controls that provide intermediaries and customers with the tools to comply with the current regulatory requirements is an integral component of any trading technology,” said Stuart Breslow, chief executive officer of ConvergEx’s RealTick. “Our delivery of these additional controls gives brokers the assistance they need to remain in compliance with the market access rule and to manage their risk as their clients trade.”
While the core elements of the SEC’s naked access ban have come into force today, some aspects of the ban have been delayed. One of these relates to the implementation of controls and procedures that ensure orders sent through brokers’ systems do not exceed pre-set credit or capital thresholds. The other will delay the introduction of the naked access ban for fixed income securities.