Risk management, like trading, should not be overly complex. However, if an institution has to monitor numerous positions, then it obviously becomes more difficult.
In many ways, electronic trading has facilitated the process, but it has also made it more complex. For instance, it is not easy for a bank, broker or full commission merchant, to monitor the activity, in real time, of their sometimes vast client base, some of whom are likely to be trading on numerous different venues.
Rosenthal Collins, one of the largest independent FCMs, has announced what it believes to be an innovative risk management solution – so innovative, in fact, that it has filed for a patent. The system, which utilises complex event processing (CEP) technology, is scheduled to launch in the first quarter. Called RCG RiskHunters, it is designed to spot trading activity that deviates from a client’s normal patterns of behaviour. It will highlight potential prospective risk issues continuously and in near real time across exchanges and products.
The product has been developed jointly by Connamara Systems and RCG and uses CEP technology from California-based Coral8. “RCG RiskHunter is an indispensable technological tool that goes beyond our already robust pre- and post-trade risk management processes to protect our clients, trading personnel and the firm,” says Scott Gordon, RCG chairman and chief executive officer.