Sarna Technologies

Use Cases

Exchange Act Rule 15c3-5 (Market Access Rule) requires broker-dealers with market access or that provide market access to their customers to “appropriately control the risks associated with market access so as not to jeopardize their own financial condition, that of other market participants, the integrity of trading on the securities markets, and the stability of the financial system.” One of the most difficult aspects in complying to this rule is ensuring capital and credit pre-trade financial controls for the firm. Here is how Sarna’s Buying Power Engine can help you comply with these requirements:

Real World Scenario

Every morning broker dealers obtain morning files to take in the day’s buying power for each of their customer accounts in addition they must ensure that their customer does not exceed this intraday as customers enters trades. Broker Dealers must determine thresholds, account types (margin, regT, etc), if the customer is a pattern day trader, if there are existing and proposed positions. After taking in this information, they must then calculate if the customer has sufficient buying power or violate any regulatory rules/requirements.

Sarna Solution

Broker Dealers can utilize the Sarna BP Engine to send account balance request and configure the engine based on their firm’s specific policies on a per account or per symbol basis. A request sent to the BP including account specific data points and constraints and the engine will take in those inputs and can perform margin checks, provide value of accounts, and return results (e.g. sufficient buying power, allowed trade, etc.).

Results

Ensure compliance to the firm’s and regulators’ capital and pre-trade financial control requirements -buying power is not exceeded during the day
Recognize intraday margin calls
Reduce and avoid margin calls
Properly recognize pattern day traders vs a regular trading account
Moment to Moment Risk Monitoring

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