Forex Encyclopedia Foreign Exchange Global Code of Conduct (XII)

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Principle 26 Market participants forexbrokerrebateprogram maintain an cashback forex aut forexrebatebestebateforex management framework with systems forex broker rebate program internal controls to identify and manage their exposure to foreign exchange risk Effective risk management begins with market participants identification and understanding of the types of risks they face and involves the creation of risk limits and monitoring mechanisms, as well as the adoption of risk mitigation and other prudent practices Effective risk management The framework may include, but is not limited to: an appropriate and well-documented approval process for setting risk limits; a comprehensive and well-documented strategy for identifying, measuring, integrating and monitoring risks in foreign exchange operations, including those specific to market participants that act as intermediaries for customer transactions as prime brokers or that provide access to the market; and policies, processes and controls that are documented and are regularly reviewed and testing to manage and mitigate risks; clear communication of risk management policies and controls within the organization to promote awareness and compliance and processes and procedures to facilitate employee understanding of such policies and controls; information systems to facilitate effective risk monitoring and timely reporting; robust incident management, including appropriate price increases, mitigation measures, lessons learned; and robust risk assessments for all products, services, and processes to identify emerging risks. Sound accounting policies and practices, including prudent and consistent assessment methods and processes; appropriate and robust risk control self-assessment processes, including processes to remedy identified gaps or weaknesses In addition, the guidelines encourage relevant market participants to engage in online dialogue with market participants using their credit intermediary or market access services, thereby emphasizing the principle of expectations regarding appropriate conduct in the marketplace.27 Market participants should take steps to demonstrate, monitor, and control the risks associated with the implementation of trading activities in the foreign exchange market These practices include, but are not limited to: regular monitoring of trading These practices include, but are not limited to: regular monitoring of trading activity, including identification of failed, cancelled or erroneous trades and internal price increases, as appropriate automated or manual monitoring systems to identify actual or intended market misconduct and market manipulation relevant personnel should be qualified to detect trading patterns that may indicate unfair trading or manipulative practices market participants may use specific data or indicators to flag behaviors that require further review, such as off-exchange quotes The validation of the assessment of risk management and bookkeeping purposes for repeat orders, and orders of unusual size, to be performed by employees independent of the business unit that owns the relevant risk, with regular, timely and independent reporting of risk positions and trader profit and loss statements to the relevant risk management department and executives, including further review of profit and loss in excess of expectations, and, as appropriate, timely and accurate access to trades, so that for Regular reconciliation of front, middle and back office systems for monitoring purposes, in a timely and accurate manner, with staff independent of the business unit identifying discrepancies and tracking solutions Timely reporting to senior bodies or individuals when risk limits are breached, including follow-up actions to keep risk limits within certain limits, and implementation of any initiatives that could prevent the situation from recurring Appropriate order and quote submission regarding Controls, such as closing switches or throttling valves in the case of electronic trade submissionsThe purpose of these controls should be to prevent the entry and transmission of erroneous orders or quotes that exceed predetermined size and quote parameters and financial exposure thresholdsMarket participants should be aware of the risks associated with relying on a single source of liquidity and, where appropriate, include contingency planning Principle 28Market participants should take steps to independently assess The effectiveness of the risk management and compliance function and compliance with the risk management and compliance function should perform periodic independent assessments, document the results of any reviews, and follow up on corrective actions using an appropriate assessment approach, and all material risks associated with foreign exchange market activity should be included The assessment team should have the necessary authority and support, including a sufficient number of employees with the requisite experience or expertise The results of the assessment should be reported to the appropriate senior level for review and follow-up, and where appropriate, the above measures should be implemented by the audit department
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