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Pre-trade Risk Management

Pre-trade Risk Management Outlined Controls from Rule 15c3-5

Lightspeed Gateway has been designed and implemented to meet the outlined regulatory controls contained within Rule 15c3-5, which include all pre-trade risk validation requirements. All account rules have been uniquely coded to minimize latency. These rules monitor risk associated with buying power, buying power factor, maximum order size, maximum position size, P&L loss thresholds, short checking, odd lot allowances/restrictions and settings to reject all incoming orders. Lightspeed Gateway prides itself on being brutally efficient. All risk and compliance checks are made prior to sending data to market without incurring any measurable latency. It is Lightspeed Gateway’s efficiency that allows these services to be provided with no significant impact on performance. Lightspeed Gateway demonstrates that pre-trade risk controls can be implemented without compromising the strategies of even the most latency-sensitive traders, while still complying with the requirements of Rule 15c3-5.

Easy To Borrow List (ETB)
Lightspeed Gateway supports ETB lists. Short sells for names not on the ETB list are automatically rejected back to the customer from the Short Avail server. The state of each security is distributed and updated in real-time as updates occur.

Order Type Restrictions
Lightspeed Gateway has the ability to configure client connections to reject order types.

Max Order Shares
Max Order Shares is one of many risk settings that can be changed on an account-by-account basis. Orders exceeding the limit are automatically rejected back to the customer.

Max Loss per Account
If the maximum loss amount is reached – disable account.

Max Position Size
If maximum position size reached – only able send reducing/closing orders.

Max Notional Value per Order
Max dollar value restriction per order.

Max BP per Symbol
Max dollar amount restriction per stock symbol.

BP Adjustment for Open Orders
The total dollar amount of any open orders will be subtracted from that account’s buying power.

BP Multiplier
If specified, is used to calculate Buying Power by multiplying the cash.

Odd Lot Allowances/Restrictions
To ensure compliance with share size.

Auto Cancel Thresholds
To ensure compliance with short sells.

Reject Mark Crossing Orders
To ensure compliance with Reg NMS.

Stock Trading Restriction
Prevent trading in requested symbols.

Mark Overnight Positions to Close
Overnight positions marked to closing price for accurate P&L.

Enforce Short Sale
To ensure compliance with long and short sells.

Lightspeed Risk Real Time Monitoring
Can perform the following functions:

  • Total P&L
  • Total Shares Traded
  • Realized P&L
  • Unrealized P&L
  • Share Volume Count
  • Equity Ratio
  • Open Shares
  • Start of Day Liquid Equity
  • Committed Capital Used
  • Gross Market Value
  • Requirement
  • Risk Breach Alerts
  • Position Size Share Limit
  • Position Size Dollar Limit
  • Position Concentration Limit as % of Equity
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