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Risk Management

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Leslie Kramer
Leslie Kramer
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RCG RiskHunter Rolls Out Real-time Risk Application Using Coral8 CEP

New tool offered for managing risk in volatile market environment

Rosenthal Collins Group, an independent futures clearing firm, has developed and filed for patent protection on a futures brokerage risk management system. Based on Complex Event Processing (CEP) technology and scheduled to launch in the first quarter, RCG RiskHuntersm is designed to "hunt" out and highlight any trading pattern or behavior that deviates from a client's or trader's historical behavior. The advanced technology will enable RCG to highlight prospective risk issues in real time across exchanges, products and the 24-hour trading day to allow for rapid response and amelioration if needed.

Connamara Systems worked with the RCG technology team to develop and implement RCG's idea, bringing in California-based Coral8 to supply the CEP technology. CEP has been used in the military and other industries including behind algorithmic trading.

RCG RiskHunter augments the existing pre-trade and post-trade risk management processes long in place at the firm. By operating in near real time around the clock, the system closes the time gap that firms usually face between a transaction and the regular monitoring of profit and loss within and across accounts. If RCG encountered a situation in which the pre-trade process did not prevent a behavior that could put a client or the firm at risk, within minutes of an electronic trade, the firm could understand the impact and take corrective measures.

"RCG RiskHunter is an indispensable technological tool that goes beyond our already robust pre- and post-trade risk management processes to protect our clients, trading personnel and the firm," said Scott Gordon, RCG Chairman and chief executive officer, in a press release. "Throughout the past year, we've seen unprecedented volatility across the financial and commodity markets to the point where a market can take a remarkable turn against a client in very short order. RiskHunter gives our premier risk management personnel an extraordinary new vehicle for mitigating risk by finding potential issues before they can have a significant impact on individuals or the firm," he said.

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