KSE observed that RMGS would make the trading system of brokers more efficient, provide them systematic control and monitoring ability over their clients' trading activities. - File photo

KARACHI: The Board of Directors of Karachi Stock Exchange approved the development of a Risk Management Gateway System (RMGS) for Brokerage Houses.

The bourse announced on Monday that the system was 'going through rigorous User's Acceptance Test (UAT)'. It stated that subject to successful outcome of the tests, the RMG would be introduced by Jan 30, 2012.

KSE observed that RMGS would make the trading system of brokers more efficient, provide them systematic control and monitoring ability over their clients' trading activities.

It would help improve general compliance of brokers for trade related rules and regulations in the following manner: the members would be able to exercise control and check their clients' orders permissible quantity and amount with respect to their held margins or any other limit that may be required for risk management system of brokerage houses.

Secondly, it would provide members, the ability to control incidents of unintended 'wash sales' and would help identify 'Blank Sales' and 'Short sales', including enforcement of client wise symbol restrictions and/or any other restriction that members may required to be placed on any of their specific client from risk management point of view, at order level.

The KSE management said it believed the RMG implementation would be a 'mile stone' achievement with respect to Risk Management and Trade related Regulatory compliance of brokers, which would have a positive impact on investor confidence on the system and investors perception of a robust risk management system a the exchange.