Political Risk

It's associated
with the
change in
government
policies due
to change in
government.
If the
government
is not stable
then the
policies of
the
government
will not be
stable and
investors will
not take
concrete
decisions with
long term
investment
horizon.

Risk Management
A sound risk management system is integral to an efficient clearing and
settlement system .The system must ensure that brokers/trading member's
obligation are commensurate with their net worth.
Risk containment measure include capital adequacy requirements margin
requirements, position limits based on capital adequacy requirement ,margin
requirements position limits based on capital , online monitoring of client
position etc .the main concepts of a risk management system are listed below

There should be clear balance available in client's ledger account in the

broker's books.
The clients are required to provide margins upfront before putting in trade
requests with the brokers.
Ideally, the client must square up all the extra positions that have been
created on an intra-day basis before 3.15 Pm.
The client must settle the debits, if any arising out of MTM
settlements.

1
3