Requirements for DCP Algo Traders

At ECC, we recognize the importance of algorithmic trading for our DCP members.

Below are the key points regarding algorithmic trading:

 

DCP Prospects: Permission to Use Trading Algorithms

During the Know Your Customer (KYC) process, prospective clients who intend to engage in algo trading may be requested to complete a standardized Algo Trading questionnaire. The partner exchange evaluates risk factors based on the responses provided. If necessary, a deeper investigation may be conducted to assess the prospect’s risk profile.

The decision to admit an algo trader depends on the partner exchange’s assessment. The partner exchange considers whether the DCP applicant has robust risk management practices in place for their algo trading activities. These practices include:

• Model governance: Validation and approval steps before implementing changes in the trading algorithm.
• Pre-/post-trade exposure limits / volume limits per delivery period
• Intraday/near to real-time exposure monitoring
• Emergency stop/stop loss/ kill button in case of unexpected build-up of exposure
• Monitoring of erroneous trades/mistrades