Armstrong Wolfe Markets iCOOC Forum: Algorithmic Trading
The management of risks surrounding the use of Algo Trading by banking corporations is a complex process, and in many places the industry has self-identified this process to be resource intensive, overly complex and granular, and thus inefficient. The process encapsulates three major testing phases.
First, organisations are required to complete a self assessment programme to analyse the compliance against the regulatory requirements and operational risks of their active algorithms. This is followed by a validation phase where the self-assessment is then itself evaluated, and this falls under the purview of the business’ risk management function. This validation is then audited to ensure validity, and to ensure that any areas which have been found to be non-compliant have had viable action plans assigned to them to address this.