The pre-trade risk controls we offer are the first step in helping Members to manage their risk. These tools offer Members flexibility in setting intelligent limits that reflect their risk profiles. Furthermore, they are part of our ongoing commitment to safeguarding the marketplace.
Advanced Risk Protection
In response to industry demand for enhanced intraday risk monitoring, Eurex Clearing offers a pre-trade risk management service that enables Clearing Members to define individual risk limits for their associated Trading Participants and DC Market Participants to define risk limits for themselves. These limits are based on actual calculations and result in various pre-trade actions without latency impact.
The limits are evaluated against corresponding risk figures being calculated by Prisma and any breach of a set limit can result in the restriction of further trading activity, as pre-defined by the Clearing Member or their associated Trading Participants.
How limits are defined
All Members can select from four pre-defined metrics. Each represents a different aggregate of risk values, described below:
Available actions
These new limits encourage Members to set risk limits in advance to proactively safeguard trading activities. Members specify which of three actions will be implemented when a breach of each level or risk limits occurs.
Level 1: An alert message is broadcasted to the respective member.
Level 2: The system automatically slows down a Participant's order/quote entry and order/quote modification by enforcing a minimum delay between non-delete transactions in any single product.
Level 3: The Member's trading state is set to "halt":
However, when both a GCM and DC Market Participant both set limits, the more restrictive limits will hold.
Changing limits & timelines for settings
The Advanced Risk Protection service is based on real-time data being calculated by Prisma. This enables Members to implement additional risk monitoring metrics that are more complex as well as tailor-made.
Members can set risk limits using the C7 ARP GUI provided by Eurex Clearing. When Members use the GUI to enter and/or change risk limits, the new limits become valid immediately.
Eurex Clearing AG
Clearing Business Relations