All brokers operating in the EU, whether they operate under a 125k licence or a 730k licence, are no doubt aware that under the Capital Requirements Regulation Directive 4, they need to be capturing their Capital Requirements.
However not all brokers are aware of how best to capture the information in an efficient, automated manner. In many cases, tasks are still done manually - this not only results in hidden staff costs but also in being totally unprepared to comply with Capital Requirements Directive 5, which is likely to be announced next year.
e-Forex talks to Tom Higgins, CEO of Gold-i, about the firm’s market leading business intelligence and risk management product, Visual Edge, and finds out more about how it provides brokers with a cost-effective, easy to use solution to meet Capital Requirements obligations.
How has the Capital Requirements Directive impacted brokers?
Under Capital Requirements Directive 4 (Regulation 575/2013), brokers operating in the EU are legally required to capture specific data relating to their trading operations. 730k brokers need information about counterparty risk, credit risk and market risk; whereas brokers with a 125k licence need to know all their open trades and client collateral.
Unlike with regulatory reporting, you may not have to report the required information. However, it is a requirement to capture and store the information daily. If the regulator requests it, brokers must be able to demonstrate that they are correctly monitoring their capital requirements. This creates a burden for brokers, many of whom are still using time-consuming spreadsheets to capture the required data. The importance of capturing the correct data cannot be underestimated. High-profile names from the FX industry and the wider finance industry have been in the news recently for failing foul of the Capital Requirements Directive - some had to cease trading whilst others experienced share price plunges because of incorrectly classifying the risk weighting on part of their loan book.
How can Visual Edge help with Capital Requirements data?
Gold-i has transformed its Visual Edge risk management platform to deliver a best-in-class business intelligence tool. This can be leveraged by several departments within a brokerage, from dealing desks and risk managers to finance teams and back office staff. It enables you to have a complete overview of your trading operations and to manage your exposure effectively across all asset classes. It also increases efficiency and reduces the time spent sourcing data and compiling reports.
Visual Edge provides a simple, automated way to gain insight into the metrics behind your trading operations, with a clear dashboard which displays information in real-time. We developed it to help brokers to increase profitability by optimising client trade flow and deciding A-Book and B-Book strategies. It also enables brokers to reduce potential losses by monitoring toxic clients. Additionally, at the touch of a button, it can now provide all the necessary Capital Requirements data. It can consolidate information across multiple servers. The data reports can be exported to excel or viewed in a browser. For anyone wanting to capture their Capital Requirements data in a simple, cost-effective way, Visual Edge is the ideal tool as it has so many benefits which impact a broker’s bottom line.
Gold-i specialises in multi-asset liquidity management and advanced business intelligence software, helping brokers to make more money, reduce risk and differentiate from competitors. For further information,
visit www.gold-i.com or email firstname.lastname@example.org