Know the risk you trade, trade the risk you want
In the margin trading FX and CFD world, there used to be a time when brokers would not hedge any of their customers’ positions. As customers’ trading is not known to be often successful, to put it mildly, the best approach instead used to be not to hedge their positions at all and pray for the best for the broker and the worst for the customer. This hedging strategy, called “B-booking”, explains a large part of the returns of the industry. As a matter of fact the B-book approach, infrequently led to the worst for the broker. Even so, the market still remembers the broker who discovered in the morning a $400 mios position being run on a $20 mios company core capital. Any 5% move in EUR/USD would have wiped them out. Most brokers also know that in any given year, B-booking typically loses money about 2 months out of 12.
A new approach
Nowadays, brokers are looking for more sophisticated and intelligent hedging strategies. In order to meet the customer’s needs in a competitive environment, modern Position Keeping Systems with real-time risk monitoring and real-time management of these positions are mandatory.
FinBird, a 100% subsidiary of 360T, has just rolled out its latest version of OWL Risk Management.
OWL Risk Management, enables a broker to run A-booking, B-booking as well as more sophisticated strategies which not only follow positions in real time, but allow automated, algorithmic management of the in-house position. Risk strategies defined by the broker are reliably and securely adhered to compliance rules therefore giving the management of such a business risk control assurance at all times.
FinBird’s full range of risk management tools include:
• Aggregation of feeds from multiple sources, banks or ECNs, giving independency from liquidity sources
• Monitoring and automated hedging of the house positions, according to various algorithmic hedging strategies. Moreover, hedging according to VAR limits is available.
• Monitoring of regulatory capital as a function of the risk profile, ensuring regulatory compliance.
• Monitoring of customers’ positions, automated close-out and roll over.
• Monitoring of connected clients, their equity, positions, orders, and available margins.
• Manual hedging of in-house and customers’ positions, giving maximum flexibility of manual optimisation
• Configurable email and SMS alerts, adding reliability to the system.
In addition, OWL’s very easy query functionalities allow dealers to drill down to the source of any position, wherever it may come from, by client, by pair, by branch or by sales team.
A full portfolio of administrative tools
FinBird’s OWL Risk Management also comes with its complete administration suite, which provides:
• Complete onboarding flow of a customer, from its first clicks on the website to live trading, with a full compliance module.
• Structure management of sales and trading teams, also supporting complex structures set-ups.
• A full CRM and marketing module, including an innovative tracking of advertising campaigns.
• Full audit logs, input and output quotes, history of customers’ connections, transactions, orders.
• A large number of sales and management reports, allowing optimising operations,
• Detection of non-nominal trading.
• Complete products management, including the complete set-up of new instruments, without further involvement of an IT team.
• Rights management
This risk management module allows managing multiple front-ends, as well as multiple liquidity providers, banks or ECNs, all from a single point of control. In short, OWL Risk Management ideally suits every broker, helping them to satisfy increasingly complex regulations as well as ensuring that risk profiles are strictly and automatically adhered to.