Risk Management for Brokers
Risk Management includes liquidity transfer, volume, and exposure control. We delve deeper, leveraging client experiences to spot trader fraud. Our system employs evolving trigger-based risk management, notifying and analyzing dealer attention.
Most our competitors position their Risk Management solutions as moving most profitable accounts from B-Book to A-Book. Risk Management for them is everything that revolves around the executor, liquidity, and the transferring of liquidity to the upstream broker, everything about net volumes and exposure. Most brokers succeed with this model and don't bother. We absolutely agree that this is very important. But we are trying to dig deeper than that.
We are trying to combine the experience of all our clients and identify patterns of suspicious behavior of the traders, prevent cheating activities and detect fraud. The methods of identifying these threats are constantly evolving along with the threats themselves. It's a neverending battle.
The concept of risk management in Brokerpilot is based on the use of triggers. The trigger is a small event-dependent algorithm integrated into the data stream. Users can configure these triggers and set the conditions that they'd like to get notifications on. Some of these notifications will be automatically processed by the system and some require attention of the dealer to analyze the situation.
Our Risk Management consists of the following:
- Dealing Desk Monitoring and Management;
- Trading Activity Analysis;
- Event-based Triggers;
- Extra Triggers;
- Hedge Accounts.
1. Dealing Desk Monitoring and Management
A comprehensive big picture of your Dealing desk. Instant access to Session PnL, Net volumes, Exposures, Winners and losers, Market makers.
Abrupt changes in the Dealing desk and unusual actions of traders that can cause significant financial consequences are important to monitor first.
Such events may be associated with Trading Leverage, Spread changes, Account activity. For example, the Dynamic leverage trigger is capable of setting the period of increased margin requirements on any instrument, thereby avoiding large financial losses for the Broker.
Changing Spread by period is no less relevant. Spread is controlled depending on Net volume or other factors monitored by the Brokerpilot.
2. Trading Activity Analysis
Detection of cheating activities in your dealing desk based on experience of leading brokerage companies in the industry.
Brokerpilot is able to track problems with price quotes. In particular, Backlog of rates and Series of bad rates will detect problems with quotes in time. And the Scalpers - HFT trigger will alert the broker in real time about high-frequency trades made by traders.
3. Event-based Triggers
A real-time control and instant response to events in Dealing desk reduces decision making time, which is crucial to manage risks efficiently.
4. Extra Triggers
Many additional useful features for dealers that help in maintaining control over Dealing desk.
For example, Brokerpilot is able to identify vulnerabilities associated with Stealing quotes and monitor the trader's activities between trading platforms thanks to the CID control trigger.
5. Hedge Accounts
Direct connection to your hedge accounts. Available integrations: ClearPro, ISPrime, OneZero, Match-Prime and LMAX. Also, all providers working via MetaTrader 4/5.
Brokerpilot aggregates data on all your hedge accounts into a single picture, you know exactly how much you earned or lost on these accounts today. Also, total net volumes are displayed in real time, which dealers can compare with the net volumes of your A-book. If this data does not match, your executor is not working correctly, providing incorrect hedged volume data. This is very dangerous, because you may think that you are hedged, but in fact you are not. So additional controls help brokers eliminate such risks.