Advantage Futures employs a talented and experienced Risk Management Team to maintain a stable and financially dependable organization. Financial safeguards include three levels of protection for your funds: our uncompromising data integrity, our capital base and pledged assets for clearing purposes, and our risk monitoring.
SIGNIFICANT FINANCIAL SAFEGUARDS
Client funds deposited with Advantage Futures are held in strict segregation from Advantage’s operating funds, in accordance with the regulatory requirements of the U.S. Commodity Futures Trading Commission (CFTC). Advantage Futures maintains excess capital above CFTC capital requirements, providing a cushion relative to the risk margin of our clients’ positions. In addition, Advantage Futures has considerable pledged assets in exchange-required collateral that contribute to our financial strength.
REAL-TIME RISK MANAGEMENT
Our credit control processes provide even more financial security. All new clients undergo credit reviews. Subsequent trading activity and current positions are stress-tested, analyzing the effects of extreme market moves to ensure that potential losses are covered by the assets of the clients on deposit with our firm.
This same diligent oversight is applied to our internal investment process. Investment choices for our segregated funds, and the level of concentration allowed, are approved by our Senior Management – including our Chief Executive Officer, Chief Risk Officer, and Chief Compliance Officer.
RISK MANAGEMENT PHILOSOPHY
We have two primary tenets at Advantage Futures: that much of effective risk management occurs prior to an account being opened and responsibility for risk management is a firm-wide endeavor. By striving to know and understand our clients prior to opening, we avoid issues before they become problems and ensure that we are in a position to quickly mitigate issues that may arise.
Once an account is open and trading, we monitor activity on a real-time basis, stress test positions to ensure coverage of extreme moves, watch for changes in trading style, etc. We work with our clients to develop a diligent risk management policy that is tailored to their trading practices.
We also established a culture at Advantage where everyone bears responsibility for risk management and feels empowered to mention anything they see that seems unusual, whether it involves money movements, trade clearing, compliance questions, etc.
CLIENT-FOCUSED RISK MANAGEMENT
REDUCING RISK THROUGH COMMUNICATION
We have automated risk management systems that monitor and sort information in a variety of ways. This lets us scan market by market, rotating between them to focus on those that are relevant, as well as how those segments affect the system as a whole.
We watch market action, changes in client trading behavior, account values, position changes, as well as potential moves in the marketplace. All clients have order/position limits in place and we monitor the origins of trades (pit, screen, give-ins, etc.) In addition to these intra-day reviews, we conduct scenario stress testing, attempting to evaluate the effects of extreme moves and assess the impact of market/position liquidity. If we need a client to reduce or eliminate a position, we do our best to contact the client and discuss the necessary steps with them in order to reduce risk exposure.