| 1. Pre-Trade Margins: Margins are collected in line with those charged by the respective exchanges (where such data is available), but on a pre-trade basis. This ensures that the margining efficiency of portfolio margining is extended to cover working orders also. The increase in trading space can be up to 100% as compared to conventional pre-trade margining mechanisms. |
| 2. In Line With Exchange Margining Methodology: Since the margins collected are in line with the initial margins determined by the respective exchanges, it assures that the broker would not go out of funds for payment to the exchange, merely because he extended portfolio margining benefit even before the trade has happened. ActiveMargin™ margins are in line with those computed by SPAN™ and Eurex Portfolio Margin scheme.
|
| 3. Dual Margin Check: VaR and Exchange Methodology: In cases where the broker extends leverage to clients, ActiveMargin™ provides two kinds of checks – margin check and a Value-at-Risk (VaR) check. The former validates if the allowed limit for the client (including leverage) lies within the initial margin payable to the exchange at day end. The latter checks if the VaR (the measure of actual risk in the position, without regard to the margins levies by the exchange) is within the cash and collateral deposited by the client (ignoring the leverage).
|
|
| 4. Permits Safe Leveraged Trading for Day Traders: Point (3) permits brokers to set leverage levels for intra-day traders, who can trade to many times the margins payable to the exchange, while at the same time, the broker is sure that the actual risk is less than the collateral value in the client’s account. |
| 5. Real Time Marking to Market: ActiveMargin™ can accept real-time data feeds for computation of mark-to-market margins and for raising alerts, should there be a sharp adverse market movement. |
| 6. Business Rules Check: Apart from margin check, ActiveMargin™ also enforces business rules set by the risk manager. For example, such rules may set upper limits on order values (to prevent fat finger errors) or only allow selective access to trading venues.
|
| 7. Client Hierarchy: Validation of orders across a hierarchy of clients is yet another standard feature finger errors) or only allow selective access to trading venues. |
| 8.Very Fast: ActiveMargin™ accepts order requests for validation in real-time and provides extremely high throughput. Further, ActiveMargin™ can be run on a parallel array of sub-systems, thus scaling out indefinitely. In benchmark tests conducted in-house, ActiveMargin™ provides sub-50 milli seconds response on an average for processing an order, even with a large portfolio. The response time does not deteriorate significantly with increasing portfolio size. |
|
| 9. Remote Risk Control and Monitoring: ActiveMargin™ risk monitoring screens can work on a wide area network or on the internet. Thus a broking firm can provide distributed and remote access, monitoring and controlling capability to risk managers. |
|
