4912. Risk management process

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    1. A Dealer Member must have a risk management function with clear independence and authority to ensure risk limit policies are developed and transactions and positions are monitored for adherence to these policies.

    2. A Dealer Member must have a risk management process to identify, measure, manage, and monitor risks associated with the use of derivatives.

    3. The risk management process has two parts:

      1. An appropriate Executive must be knowledgeable of the nature and risks of all derivative products used in treasury, proprietary, institutional and retail activities, and

      2. The Dealer Member’s policies and procedures must clearly outline risk management guidance for derivatives activities.

    4. A Dealer Member’s financial accounting department must measure the Dealer Member’s revenue components regularly and in sufficient detail to understand risk sources.

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