|
Risk
Management
Risk management is the process of
analyzing exposure to
risk
and determining how to best handle such exposure.
Risk management can also be described as the culture, processes
and organization that helps a business to evaluate risk, assess
its potential impact and plan the appropriate action to take in
order to avoid or control risk by the most economical means. It is
not possible or desirable to eliminate all risks, the objective is
to implement cost effective processes that reduce risks to an
acceptable level, reject unacceptable risks, and transfer other
risks through insurance and other means.
Risk
management is recognised as an integral part of good management
practice.
Risk management is the term applied to a logical and systematic
method of establishing
the context, identifying, analysing, evaluating, treating,
monitoring and communicating risk
associated with entire system of securities trading.
Risk management is one
of the top priorities of the ISE administration. ISE ensure risk
management at different levels and introduced the following
measures:
�
The requirement of Net Capital Balance has been
enhanced by 10 times to Rs. 2.5 million for KSE, Rs. 1.5 million
for LSE and Rs. 0.75 million for ISE. The definition of net
capital balance is redefined to make it more realistic. (Rules of
Net Capital Balance Certificate)
�
The Members are required to maintain a capital
adequacy ration, which is 25 times of their net working capital.
The exposure must not exceed 25 times the net capital employed.
�
The members ability to trade up to Rs. 50 million
without margin was abolished and all exposure are now subject to
margin.
�
Investor protection fund and clearing house
protection fund had been established on the directive of SECP.
�
The undisclosed market system has been introduced.
�
The trading cycle is reduced to T+3 net settlement
system from T+7 days.
�
Blank selling is abolished.
�
Regulations for short selling in the ready market
are introduced.
|
