Financial Services (Investment and Fiduciary Services)
Repealed Subsidiary 2007/002
FINANCIAL SERVICES (CAPITAL ADEQUACY OF INVESTMENT FIRMS) REGULATIONS 2007
Regulations 7 and 29.
1. Positions or portfolios held with trading intent shall comply with the following requirements–
there shall be a clearly documented trading strategy for the position/instrument or portfolios, approved by senior management, which shall include expected holding horizon;
there shall be clearly defined policies and procedures for the active management of the position, which shall include the following–
positions entered into on a trading desk;
position limits are set and monitored for appropriateness;
dealers have the autonomy to enter into/manage the
position within agreed limits and according to the approved strategy;
positions are reported to senior management as an integral part of the investment firm’s risk management process; and
positions are actively monitored with reference to market information sources and an assessment made of the marketability or hedge ability of the position or its component risks, including the assessment of, the quality and availability of market inputs to the valuation process, level of market turnover, sizes of positions traded in the market; and
there must be clearly defined policy and procedures to monitor the position against the investment firm’s trading strategy including the monitoring of turnover and stale positions in the investment firm’s trading book.