Overview

CFE Risk Management has been designed to assist Trading Permit Holders (TPHs) and Clearing Firms in managing the risk of over-executing using Risk Limits, some of which prevent new orders/quotes from being entered without affecting other orders/quotes (Pre-Order) and others that take effect only after execution and cancel other live orders/quotes (Post-Execution). TPHs and Clearing Firms design risk profiles that define the various limits on a per-product basis using CFE Risk Management Tool presented in this document.

TPHs will not be permitted to enter any orders/quotes to the CFE system for a given Futures product until their Clearing Firm has set values for Limit Order Protection, Max Order Size, Net Long and Net Short Risk Limits in that product. TPHs will not be permitted to enter any orders/quotes to the CFE system for a given Options On Futures product until their Clearing Firm has set values for Max Order Size, Max Order Notional, and Absolute Notional Risk Limits in that product. TPHs can optionally also set values for Limit Order Protection, Max Order Size and Traded Volume Rate, but are not required to do so in order to submit orders/quotes to the exchange. When the TPH sets risk limit values, the most restrictive of the values settable by both Clearing Firm and TPHs apply (Limit Order Protection and Max Order Size only).

In addition to Risk Limits, CFE provides Kill Switch functionality through a web interface and Mass Cancel functionality through order entry protocols. Mass Cancel functionality also provides for the ability to lockout subsequent order entry until explicitly reset by TPHs, Clearing Firms or the CFE Trade Desk. This document describes the suite of Risk Management capabilities provided by CFE.