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Nasdaq's Pre-Trade Risk Management Business Application

Market operators today must put processes in place to ensure that toxic flow is prevented from entering the marketplace. They must demonstrate and maintain market integrity at the highest levels. While organizations know they need these added controls, they know these controls can elevate operational cost, and can impact latency, affecting execution speed and quality.

Part of the Nasdaq Financial Framework, Nasdaq’s Pre-Trade Risk Management business application offers a real-time, multi-tiered risk solution that integrates pre-, at- and on-trade risk management, including margining. The flexible solution, which is proven and in use by 8 marketplaces today, resides natively within a market’s matching engine, minimizing latency impact while maximizing protection. 

Its open architecture enables placement of risk checks in whichever location will work best with the market’s business strategy: pre-trade, at the match or post-trade. By setting exchange-wide limits at one of these locations, the solution help marketplaces to better control their market health by ensuring all market participants are meeting pre-defined parameters. Additionally, risk checks cover cross-asset, cross-market analysis and are designed for low-latency so that member execution speed is not severely impacted.

Nasdaq PTRM is suitable for use by clearinghouses, exchanges, inter-dealer brokers and execution venues of all sizes, and seamlessly ties into both Nasdaq trading platforms and third party or propriety trading and clearing solutions. Some key use cases include:

  • Clearing Certainty: Designed to control credit consumption and margin availability with ability to clear trading positions to protect the CCP or GCM
  • Exchange Guards: Designed to safeguard market health by ensuring market participants meet exchange-set limits
Features of Nasdaq Pre-Trade Risk Management
Open architecture that allows for different risk checks in different tiers to meet specific business requirements and all relevant use cases
Pre- and At-trade risk checks reside natively within the matching engine and introduce typically less than 2* microseconds in latency
On-trade risk infrastructure optionally ties into real-time margining engine for improved capital efficiency
Pre-trade risk connects into post-trade for additional real time margin checks
Wide variety of risk checks available for margin checks, daily quantity checks and “fat finger” checks
Ease of integration between Nasdaq Trading and Clearing Business Applications as well as custom-built or third-party business functionality
Seamless integration to the Nasdaq Core (link) empowers user firms with unrivalled scalability, flexibility and performance benefits

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