OpenBondX is designed to address all aspects of SEC RULE 15c3-5 (Market Access Rule). These controls are configured at the account, user, and entity levels and customized to thresholds agreed upon by subscriber, their prime brokers, OBX, and its clearing firm
Accounts are assigned a start of day Trade VaR Limit- a credit line determined by a tri-party discussion between the customer, their clearing firm or prime broker, and OBX. The credit line is used to limit the exposure on the customer's total executed intraday trades. Each new order has a VaR Debit determined by a proxy of the 3 standard-deviation interest rate volatility of the specific bond issue being traded. Executed orders have the VaR Debit debited from their Trade VaR Limit, and so long as there is enough Trade VaR Available to cover a proposed order, the order passes validation.
Accounts are assigned an Order VaR Limit - a credit line determined by a tri-party discussion between the customer, their clearing firm or prime broker, and OBX. The Order VaR Limit is used to limit the risk exposure on the customer's total open orders. Each new order has a VaR Debit calculated in the same way as for VaR above. Open orders have the VaR Debit debited from Order VaR Limit, and as long as there is sufficient Order VaR Available to cover a proposed order, the order passes this validation. As orders are executed or cancelled, the VaR Debit is no longer deducted and Order VaR Available is updated.
The total market value bought plus total market value sold.
Via the per-account limits mentioned previously, PBs and clearing firms can limit their aggregate client exposures on the OBX System.
The value of a proposed order is compared to a mutually agreed upon pre-configured limit of maximum single-order notional value.
Order initiators are required to confirm that they are aware that an existing order in the same issue is currently open. This check is not performed for accounts categorized as market makers.
Customers and prime brokers can have an issue added to their restricted list (defined by CUSIP)
The OBX System has access controls requiring a user name and password. Role-based access entitles users to access an OBX-defined set of accounts. The System supports two types of roles - "trader" which permits the placement and management of orders, and "view only" for non-trade desk and compliance or supervisory personnel. Both roles permit the user to view all orders and order-status changes real time.
The System will also validate the issue and issuer's status; and allow or disallow trading based upon the coupon type (fixed, floating, zero, other); and whether the issue is convertible or callable. Self-match prevention is automatically enabled at the account level and for the same user if trading in multiple accounts.