Eurex Clearing, the European clearing house for securities and derivatives transactions, has launched an “Advanced Risk Protection” solution.
Advanced Risk Protection enables clearing members and non-clearing members to control their trading and operational risks by setting pre-trade limits on aggregate risk metrics such as the total margin requirement.
“A reactive risk management approach is not sufficient to cope with the increasing speed in the trading environment, says Thomas Book, member of the Eurex Executive Board responsible for clearing. Our Advanced Risk Protection solution contributes to market safety and is our response to the market’s desire for powerful risk controls that are both latency-neutral and can easily be expressed in terms of real risk figures.”
All members can define the level of protection for themselves, and clearing members are able to set limits for their non-clearing members. Up to three staggered limits are activated when the pre-defined risk metrics are breached. The risk checks are performed in real-time based on actual positions using real-time market prices, Eurex said in a statement.