Risk Management function is a centralized operation based out of Head office. It is the sole responsibility of the RMS team to measure and manage the risk. Branch and sales personnel do not have access to risk management function.
1. The Beginning of day processes of Transaction processing system at Indian Business Inc. central processing centre at Head Office in Chennai.
2. The BOD process updates the positions and margin of clients using the trade and position files and margin files received from the exchange. After the completion of the above said process, the RMS team will send the ledger balance of client thru SMS and finally the team will send the contract Note to the clients.
3. Once completed the BOD process, the team will place the Before Market orders as per the requirement received from the client.
4. Funds received from clients are updated based on actual entry in back office systems. Details of all cheques and payment instructions are updated in the Indian Business Trade Inc. – back office for tracking by RMS team. RMS process considers only cleared credits. Based on the fund and requirement of the client, the team will provide the limits. Request for release of funds to client bank account are checked for adequacy of margin post-withdrawal by the risk management team. Funds are approved for release only if the client has sufficient margins post-withdrawal of the funds.
5. Margin available and requirement is generated for each client by receiving the Margin shortfall file from the exchange. Margin Calls are sent thru SMS to all clients appearing in the margin calls. Margin reports are generated and sent to all relevant personnel within the organization for their information and further action.
At the time of any order entry checks are performed to ensure margin sufficiency. The key points of the Risk Management Logic are as follows –
(a) A client provides margin to Indian Business Trade Inc. in the form of fund (ledger credit).
(b) For every fresh position that the client wishes to take, the client has to have sufficient margin available in his account.
(c) Intraday profit or loss incurred during the day is also accounted for by the system for the purpose of margin availability calculations.
(d) Margin is required for all positions.
6. The square off generation process re-computes margins of positions and generates the square off warning message to the client from 50% margin reached. This alert will display every 5% margin utilized from 50%. Once 75% of margin attained, the position will get auto square-off.
7. To avoid square up, client may enhance his margin in the following ways:
a) Client may enhance his fund margin by doing a Net Transfer of funds or by depositing a demand draft or a pay order to the nearest Branch.
b) Client may do an atom transfer in real time from his or her bank account through the External Payment Interface built into the trading system if he or she has any of the account. This fund transfer instantaneously updates the limits of the client in the trading as well as the risk management system.
8. At the time of End of the day of market, the following processes are carried out,
a) The RMS team will check the position and pending orders of clients and cut the intraday positions in the predefined time.
b) Rest of the positions is carried out
c) Positions updated with Intraday/carry forward Transactions and are marked to market to regenerate margin calls.
d) All Transaction information is replicated in real time in the RMS DB.
9. Strong and speedy flow of information is the backbone of the Risk Management System. The Risk Management system provides thorough & instant information to the sales team so that they have full access to their clients’ margin status on request.
Margin Report: This is a daily report containing the calculations of margin percentage of all clients. This will send at the end of the day to the respective branch for necessary follow-up.
The margin alerts based on margin percentage are intimated to the client.
Calls made to customers who are in margin call informing about the same and asking them to fulfill the margin requirement. Branches also carry out margin call calling to customers who are in margin call to enable the customers to replenish the margin shortage in time.
10. The RMS team will regularly monitor and update the circular/message which received from the MCX on time to time to the client.
Note :The above policy might alter subject to the Rules and Regulations of Management/MCX/ SEBI. The Risk team and the client are requested to note and co-operate as per the changes done by the Management.)