DOCSLIB.ORG

The Advent of Portfolio Margining by Michael Jamroz

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
The Advent of Portfolio Margining by Michael Jamroz Clearing the Deck A Historic Change in the Leveraging of Securities Purchasing: The Advent of Portfolio Margining By Michael Jamroz n December 12, 2006, the Securities eligible products to any margin eligible Options Clearing Corporation to determine Oand Exchange Commission approved equity security and any derivative based on margin requirements for its members. proposed amendments to the margin rules of an equity security or equity security based Although OCC now uses a model known as the New York Stock Exchange and the index. “STANS” to determine its margin require- Chicago Board Options Exchange. Those The amendments to NYSE Rule 431 and ments, it has agreed to provide certain assis- amendments will dramatically alter the CBOE Rule 12.4—the portfolio margin tance in the application of portfolio amount of credit that securities firms may rules—will allow securities firms that are margining, as discussed later in this article. extend to their customers. Instead of the per- members of those organizations to use a pre- Under the portfolio margin rules, the secu- centage-based margin requirements embed- scribed mathematical model to compute rities firm must aggregate all eligible positions ded in federal and self-regulatory organization margin requirements on all margin-eligible for the customer into a separate margin margin rules, U.S. securities firms will now be equity-based products. Those products account or sub-account clearly identified as a able to apply a prescribed quantitative model include: “portfolio margin account.” Those positions to determine margin requirements for equity • Equity securities that have a “ready market” must be sorted into positions that are related securities and positions related to equity secu- under SEC Rule 15c3-1 and certain other because they are associated with the same rities. For large customers with sophisticated control and restricted securities (Note that equity security or index. For each portfolio of trading accounts, that model should result in convertible bonds are treated as an equity related positions, the firm must revalue them much lower margin levels, and it does so in a security under the margin rules); for 10 equidistant assumed upward and down- way that is much more closely related to the • Listed equity security futures contracts; ward market movements. The assumed market economic risk of the portfolio than the cur- • Listed equity options; movements vary on the type of equity prod- rent requirements. • Listed equity index options, index warrants ucts that make up the portfolio. High capital- and index futures; ization, broad-based market index portfolios • Listed equity futures options; have high and low valuation points of +6% The Portfolio • Equity exchange-traded funds; and and -8%, while portfolios based on a single Margin Amendments • Over-the-counter derivatives on equity equity security have high and low valuation Following the amendments to Reg T in securities and the products described above. points of +/-15%. The margin requirement is 1998 that made portfolio margining possi- As the rules limit the availability of portfo- the largest computed loss at any equidistant ble, the securities industry began to debate lio margining to products related to equity point. The margin computed becomes both what direction the proposed changes to the securities, it is not available for debt positions, the initial and maintenance margin require- margin rules should take. Much of the dis- money market funds, foreign exchange, physi- ment for the customer. cussion took place in industry committees cal commodities or related derivatives. Non- Firms employing portfolio margining may coordinated by the Securities Industry equity products and money market funds may, obtain the theoretical prices of their portfolio Association and involved what the appro- however, be used as collateral to satisfy the for the assumed market movements directly priate levels of margin should be and to minimum equity in the portfolio margin from the OCC or develop their own models what extent firms should be allowed to uti- account. for determining those prices. Firms seeking to lize their own models. In 2002 enough of a The mathematical model that securities employ their own theoretical pricing models consensus was reached to enable the NYSE firms may use must follow specific parameters must have them approved by the SEC. and CBOE to file their first proposed port- that are outlined in the adopted rules. Those The rules also include a minimum of $.375 folio margin rule amendments. Three years parameters are the equivalent of the model for each listed option, unlisted derivative, later, the SEC approved the portfolio mar- currently employed by securities firms to deter- security futures product and related instru- gin rule filings of the NYSE and CBOE on a mine regulatory capital charges for listed ment, multiplied by the contract or instru- pilot basis. In December 2006, the SEC options positions under SEC Rule 15c3-1a. ment’s multiplier. In addition, accounts of approved an expansion to that pilot, which, That model, popularly known as “TIMS”, is persons other than registered broker-dealers among other things expanded the range of based on the method that was developed by and members of futures exchanges must main- 34 Futures Industry tain at least $5 million of equity in the portfo- must furnish the customer with a risk disclo- The rules also require that management lio margin account before that account may sure. The securities self-regulatory organizations must periodically review the above processes include an unlisted derivative. with authority over margin requirements—the to make sure the guidelines are followed. NYSE, the CBOE and the National Management must also make sure that data Association of Securities Dealers—intend to can be accessed on a timely basis and that sys- Margin Deficiencies separately publish a sample risk disclosure that tems can capture, monitor and report it. All margin deficiencies in a portfolio mar- their members may use as a guideline. The firm gin account must be met by the third day fol- must receive a signed acknowledgement that lowing the trade date. If the deficiency is not the customer understands the risk disclosure Issues and Observations met by then, the firm is prohibited from before the account is opened. Related to Portfolio Margining accepting new orders in that account, unless Prior to offering portfolio margining gener- As a general matter, the portfolio margin those orders operate to reduce the market risk ally, securities firms must have their credit risk rules will have a beneficial impact on the and margin requirement in the account. If the management procedures approved by their industry. They will move the margin require- customer does not satisfy the margin defi- designated examining authority (DEA)—the ments for large customers with complex trad- ciency by offsetting trades or depositing addi- NYSE, the CBOE or the NASD. The portfo- ing positions from a somewhat rigid set of tional equity into the account, the firm must lio margin rules include specific requirements requirements that are based on discrete trading eliminate the deficiency by liquidating posi- that those procedures must meet. The firm strategies to a portfolio-based model that tions in the account. Securities firms are pro- must have procedures for: allows more credit for risk-reducing positions, hibited, however, from allowing customers to • Obtaining and reviewing account documen- which is closer to how firms actually manage make a practice of meeting margin deficiencies tation necessary to establish credit limits; the risk of large customer accounts. Those by liquidating positions in its portfolio margin • Determination, review and approval of firms also currently employ many of the credit account. Transfers of margin equity from other credit limits; risk management processes that are mandated accounts are allowed, but account guarantees • Monitoring credit risk exposure during and by the rules. are not. at the end of the day and the type, scope To some degree, the rules also create a Although margin deficiencies must be and frequency of exposure reporting to sen- “level playing field” by relying on TIMS. Firms met by the third day following trade date, ior management; use the TIMS model to compute proprietary securities firms must take a deduction to their • Management’s response when credit limits capital charges for listed options positions and Rule 15c3-1 regulatory net capital for those have been exceeded; related hedges as well as the margin require- deficiencies on the day following trade date. • The use of stress testing; ments for market makers. The portfolio mar- Also, the total amount of leverage that firms • Managing the impact of portfolio margining gin rules will now cause TIMS to be the may offer in their portfolio margin accounts credit extension on the firm’s overall risk standard for not only proprietary trading and is limited. exposure; market makers but also large customers, most Securities firms cannot allow the aggregate • The review and testing of the risk proce- notably hedge funds. It should also reduce the margin requirement in all of its portfolio mar- dures by internal audit or a comparable amount of transaction structuring that cur- gin accounts to exceed 10 times their SEC independent group; and rently takes place to lower the collateral levels Rule 15c3-1 net capital for more than three • Requesting additional margin, including that firms
Load more

Recommended publications
  • Comment Letter
    ∗ Portfolio Margining: Strategy vs Risk y z z E. G. Coffman, Jr. D. Matsypura V. G. Timkovsky June 8, 2009 Abstract Introduced in the late eighties for margining certain accounts of brokers, the risk- based approach to margining portfolios with equity derivatives has yielded substan­ tially lower margin requirements in comparison with the strategy-based approach that has been used for margining customer accounts for more than four decades. For this reason, after the approvals of the pilot program on July 14, 2005, and its extensions on December 12, 2006, and July 19, 2007, the final approval of using the risk-based approach to margining customer accounts by the SEC on July 29, 2008, at the time of the global financial crisis, appeared to be one of the most radical and puzzling steps in the history of margin regulations. This paper presents the results of a novel mathematical and experimental analysis of both approaches which sup­ port the thesis that the pilot program could have influenced or even triggered the equity market crash in October 2008. It also provides recommendations on ways to set appropriate margin requirements to help avoid such failures in the future. 1 Introduction “We still have a 1930s regulatory system in place. We’ve got to update our institutions, our regulatory frameworks, . ”. the banking system has been “dealt a heavy blow,” the result of “lax regulation, massive overleverage, huge systematic risks taken by unregulated institutions, as well as regulated institutions.” – Barack Obama1 In the margin accounts of investors, i.e., customers of brokers, margin payments are based on established minimum margin requirements which depend on a large number of factors, such as security type, market price, expiry date, rating and other character­ istics of securities held in the positions of the accounts.
    [Show full text]
  • Clearing Credit Default Swaps: a Case Study in Global Legal Convergence
    Chicago Journal of International Law Volume 10 Number 2 Article 10 1-1-2010 Clearing Credit Default Swaps: A Case Study in Global Legal Convergence Anupam Chander Randall Costa Follow this and additional works at: https://chicagounbound.uchicago.edu/cjil Recommended Citation Chander, Anupam and Costa, Randall (2010) "Clearing Credit Default Swaps: A Case Study in Global Legal Convergence," Chicago Journal of International Law: Vol. 10: No. 2, Article 10. Available at: https://chicagounbound.uchicago.edu/cjil/vol10/iss2/10 This Article is brought to you for free and open access by Chicago Unbound. It has been accepted for inclusion in Chicago Journal of International Law by an authorized editor of Chicago Unbound. For more information, please contact [email protected]. Clearing Credit Default Swaps: A Case Study in Global Legal Convergence Anupam Chander* and Randall Costa** In the wake of the global financial crisis, American and European regulators quickly converged on a reform intended to help stave off similar crises in the future: central counterparty clearinghouses for credit default swaps. On both sides of the Atlantic, regulators identified credit default swaps (CDS) as a central factor in the crisis that seized Bear Stearns, Lehman Brothers, American International Group (AIG), and ultimately the world.' Regulators Professor of Law, University of California, Davis; AB, Harvard College; JD, Yale Law School. Managing Director, Citadel Investment Group, LLC ("Citadel"); BA, Yale College; MA, Yale University, JD, Yale Law School. This author was involved in Citadel's efforts in support of central counterparty clearing for CDS; however, the views expressed herein are those of the authors only and are not intended to represent the views of Citadel.
    [Show full text]
  • Futures & Derivatives
    September 2014 n Volume 34 n Issue REPORT A Survey of Portfolio Margining under Dodd-Frank BY JONATHAN CHING AND JOEL TELPNER Jonathan Ching has significant experience working with derivatives and their practical applications in trading and capital markets. He is involved in the structuring, negotiation and execution of OTC derivatives and synthetic financial products, and works regularly with capital markets, litigation, bankruptcy and finance teams at Jones Day on the derivatives aspects of litigation, acquisitions, financing transactions and corporate restructurings. His transactional practice includes the financing of various assets through lending arrangements, repos, derivatives, and other structured solutions. He also advises non-U.S. corporations and financial firms on compliance with various requirements for OTC derivatives under Dodd-Frank, foreign exchanges in their U.S. offerings of futures products, and non-financial corporate entities regarding the commercial end-user exception. Joel Telpner represents financial institutions, derivative dealers, Fortune 500 corporations, hedge funds, pension funds, and other end-users in designing, structuring, and negotiating complex derivative and structured finance transactions. Joel advises clients on a broad variety of financial products and transactions, including credit, equity, and commodity derivatives; synthetic products; credit and equity-linked products; hedge fund-linked products; and structured and leveraged finance transactions. In addition, Joel advises financial institutions
    [Show full text]
  • Risk Management Framework to Be Applied To
    RISK MANAGEMENT FRAMEWORK TO BE APPLIED TO THE EQUITY MARKET FOLLOWING BISTECH® TRANSITION AND CCP (CENTRAL COUNTERPARTY) SERVICE Central Counterparty Department March , 2015 CONTENTS I. INTRODUCTION ...................................................................................................................................... 3 II. RISK AND COLLATERAL MANAGEMENT ...................................................................................................... 3 A. Intraday Risk Management Procedures ................................................................................................. 5 B. End-of-Day Risk Management ................................................................................................................ 6 II. INNOVATIONS THAT BISTECH RISK MANAGEMENT WILL INTRODUCE .................................................. 7 A. Margin Calculation Method ................................................................................................................... 7 B. Assets Accepted as Collateral and Collateral Valuation Method ......................................................... 17 C. Calculation of the Guarantee Fund ...................................................................................................... 18 IV. CENTRAL COUNTER PARTY SERVICES AT THE EQUITY MARKET IN BORSA ISTANBUL ............................ 19 V. MEMBER SCREENS ................................................................................................................................... 20 FIGURES Figure
    [Show full text]
  • RIS Margining and Risk Mitigation for Non-Centrally Cleared Derivatives
    Regulation Impact Statement Executive Summary Margining and risk mitigation for non-centrally cleared derivatives (OBPR ID: 2016/20420) 1. This Regulation Impact Statement (RIS) has been prepared by the Australian Prudential Regulation Authority (APRA) to inform APRA’s proposals on implementing the internationally agreed reforms for margining and risk mitigation for non-centrally cleared derivative transactions in the Australian financial system. The G20 committed to a series of regulations recommended by the Basel Committee on Banking Supervision (BCBS) and International Organisation of Securities Commissions (IOSCO) in order to reform risk management practices in the global over-the-counter (OTC) derivatives market. 2. The key problem assessed by APRA is how to apply the requirements of the internationally agreed framework to the Australian market. APRA’s implementation has sought to capture the benefits of reduced risk while limiting costs where possible. APRA considers it appropriate to mitigate costs for small and less-sophisticated entities that could be unduly burdened by the requirements. Therefore, APRA has made reasonable adjustments to the international framework that maintain consistency while appropriately considering Australian-specific market conditions. 3. For implementation, APRA has considered two options for the margin requirements and a further two options for the risk mitigation standards. The option to maintain the status quo is not considered viable given the commitment of reforms by all the G20 governments, the high costs to Australian financial institutions of complying with the requirements of multiple foreign jurisdictions that would otherwise apply, as well as the risk to market fragmentation and reduced access to global markets in the absence of requirements.
    [Show full text]
  • 670 Part 703—Investment and Deposit Activities
    Pt. 703 12 CFR Ch. VII (1–1–18 Edition) under the gross-up approach, a credit union fund’s permissible investments (excluding must apply the risk weight required under derivative contracts that are used for hedg- paragraph (a)(2) of this appendix to the cred- ing rather than speculative purposes and it equivalent amount calculated in para- that do not constitute a material portion of graph (a)(3) of this appendix. the fund’s exposures). (5) Securitization exposure defined. For pur- (4) Alternative modified look-through ap- poses of this this paragraph (a), proach. Under the alternative modified look- ‘‘securitization exposure’’ means: through approach, a credit union may assign (i) A credit exposure that arises from a the credit union’s exposure amount to an in- securitization; or vestment fund on a pro rata basis to dif- (ii) An exposure that directly or indirectly ferent risk weight categories under subpart references a securitization exposure de- A of this part based on the investment limits scribed in paragraph (a)(5)(i) of this appen- in the fund’s prospectus, partnership agree- dix. ment, or similar contract that defines the (6) Securitization defined. For purposes of fund’s permissible investments. The risk- this paragraph (a), ‘‘securitization’’ means a weighted asset amount for the credit union’s transaction in which: exposure to the investment fund equals the (i) The credit risk associated with the un- sum of each portion of the exposure amount derlying exposures has been separated into assigned to an exposure type multiplied by at least two tranches reflecting different lev- the applicable risk weight under subpart A of els of seniority; this part.
    [Show full text]
  • Regulatory Insights Banking February 2016
    ENTERPRISE RISK SOLUTIONS FEBRUARY 2016 BANKS Regulatory Insight NEWSLETTER Managing Editor Key Developments at a Glance Pierre -Etienne Chabanel The Basel Committee on Banking Supervision (BCBS) provided updates to their Basel III monitoring Managing Director, program including revisions to their Basel III monitoring workbook; new instructions and a workbook for Regulatory & Compliance Solutions CVA QIS; and a new FAQ on Basel III Monitoring. The Irving Fisher Committee of the Bank of Contact Us International Settlements (BIS) published a working paper entitled “Big data: The hunt for timely insights and decision certainty.” Americas +1.212.553.1653 The chair of the Financial Stability Board (FSB) specified the FSB’s 2016 work programmer to the G20. [email protected] Additionally, the FSB released a report on possible measures of non-cash collateral re-use by financial Europe market participants as banks. +44.20.7772.5454 [email protected] KEY DEVELOPMENTS PER REGION Asia-Pacific (Excluding Japan) > EUROPE: The European Banking Authority (EBA) published its final guidelines on cooperation +85.2.3551.3077 agreements between Deposit Guarantee Schemes (DGS). Separately, the EBA released the methodology [email protected] and macroeconomic scenarios for the 2016 EU-wide stress tests. The European Central Bank launched a Japan public consultation on assessing the eligibility of institutional protection schemes (IPSs). +81.3.5408.4100 The European Commission (EC) presented an Action Plan to strengthen the fight against terrorist [email protected] financing; Final Rules (CIR 2016/200) on leverage ratio disclosure; and a Final Decision (CID Sign Up 2014/908/EU) on third countries and territories whose supervisory and regulatory requirements are equivalent to certain EC rules.
    [Show full text]
  • Syllabus 2015-2018
    PSGR KRISHNAMMAL COLLEGE FOR WOMEN College with Potential for Excellence (An Autonomous Institution, Affiliated to Bharathiar University) (Reaccredited with ‘A’ Grade by NAAC, An ISO 9001:2008 Certified Institution) Peelamedu, Coimbatore-641004 DEPARTMENT OF B.COM (FINANCIAL SERVICES) CHOICE BASED CREDIT SYSTEM BACHELOR OF COMMERCE – FINANCIAL SERVICES (B.COM (FS)) 2015 - 2018 FS1 PSGR KRISHNAMMAL COLLEGE FOR WOMEN College with Potential for Excellence (An Autonomous Institution, Affiliated to Bharathiar University) (Reaccredited with ‘A’ Grade by NAAC, An ISO 9001:2008 Certified Institution) Peelamedu, Coimbatore-641004 DEPARTMENT OF B.COM FINANCIAL SERVICES 2015-2018 Batch Sem Part Subject Title of the Paper Instr. Contact Tutorial Dur CIA ESE Total Credits Code Hrs/ Hours Hours at Week ion I I Language I – Tamil I/ TAM1401/ Hindi I/ HIN1401/ 6 86 4 3 25 75 100 3 French I FRE1401 I II ENG1501/ English I/ 6 86 4 3 25 75 100 3 ENG15F1 Functional English I I III FS13C01 Core - 1 - Financial 5 71 4 3 25 75 100 4 Accounting I I III FS14C02 Core -2 - Principles and 5 71 4 3 25 75 100 4 Practice of Insurance I III Allied I - Mathematics for TH13A11B Commerce Level I/ 6 86 4 3 25 75 100 5 TH13A11A Level II I IV NME14B1/ Basic Tamil I/ 2 28 2 - 50 50 100 2 NME14A1/ Advanced Tamil I/ 3 26 4 50 50 100 NME12WS/ Women Studies / - NME12AS/ Ambedkar Studies / 28 2 100 -- 100 - NME12GS Gandhian Studies 28 2 100 -- 100 - 28 2 100 -- 100 II I TAM1402/ Language II – HIN1402/ Tamil II/ FRE1402 Hindi II/ 6 86 4 3 25 75 100 3 French II II II ENG1502/ English II/ 6 86 4 3 25 75 100 3 ENG15F2 Functional English II II III FS13C03 Core - 3 Financial Accounting II 5 71 4 3 25 75 100 4 FS2 II III FS14C04 Core - 4 – General Insurance 5 71 4 3 25 75 100 4 II III Allied- II - Statistics for TH13A16B Commerce Level I/ 6 86 4 3 25 75 100 5 TH13A16A Level II II IV NME14B2/ Basic Tamil I/ 2 28 2 - 50 50 100 2 Advanced Tamil I/ NME14A2/ 26 4 3 50 50 100 Open Course 29 1 2 25 75 100 II VI NM12GAW General Awareness – -- -- -- 1 100 -- 100 Gr.
    [Show full text]
  • Securities Industry Developments - 2006/07; Audit Risk Alerts American Institute of Certified Public Accountants
    University of Mississippi eGrove Industry Guides (AAGs), Risk Alerts, and American Institute of Certified Public Accountants Checklists (AICPA) Historical Collection 1-1-2007 Securities industry developments - 2006/07; Audit risk alerts American Institute of Certified Public Accountants. Auditing Standards Division Follow this and additional works at: https://egrove.olemiss.edu/aicpa_indev Part of the Accounting Commons, and the Taxation Commons Recommended Citation American Institute of Certified Public Accountants. Auditing Standards Division, "Securities industry developments - 2006/07; Audit risk alerts" (2007). Industry Guides (AAGs), Risk Alerts, and Checklists. 1111. https://egrove.olemiss.edu/aicpa_indev/1111 This Book is brought to you for free and open access by the American Institute of Certified Public Accountants (AICPA) Historical Collection at eGrove. It has been accepted for inclusion in Industry Guides (AAGs), Risk Alerts, and Checklists by an authorized administrator of eGrove. For more information, please contact [email protected]. ARA-Securities-Cover.qxp 1/26/2007 3:23 PM Page 1 AUDIT RISK ALERTS Securities Industry Developments— 2006/07 Strengthening Audit Integrity Safeguarding Financial Reporting CCOUNTANTS A UBLIC P ERTIFIED C NSTITUTE OF AICPA Member and I Public Information: www.aicpa.org MERICAN A AICPA Online Store: www.cpa2biz.com ISO Certified 022387 ARA-Securities-Title Page.qxp1/25/20072:47PMPage1(Blackplate) AMERICAN INSTITUTE OF CERTIFIED P UBLIC ACCOUNTANTS 2006/07 Developments — Securities Industry Strengthening AuditIntegrity AUDIT RISKALERTS AUDIT Safeguarding FinancialReporting ARA-Securities-Front Matter.qxd 1/26/2007 2:34 PM Page ii Notice to Readers This Audit Risk Alert is intended to provide auditors of financial statements of broker-dealers in securities with an overview of re- cent economic, industry, regulatory, and professional develop- ments that may affect the audits they perform.
    [Show full text]
  • 1560913000.Pdf
    CONTENT INTRODUCTION..................................................................................................................... 4 I THEORETICAL PART OF RESEARCH ............................................................................ 7 1 Theories classification .......................................................................................................... 7 2 Investment theories ............................................................................................................... 9 2.1. Investment approaches .................................................................................................. 9 2.2. Investment psychology ................................................................................................ 11 2.3. Investment strategies ................................................................................................... 16 3 Hedge fund strategies ......................................................................................................... 19 3.1. Strategy building ......................................................................................................... 20 II ANALYTICAL PART OF RESEARCH ........................................................................... 24 4 Characteristics of analyzed hedge funds .............................................................................. 28 5 External analysis of hedge funds ......................................................................................... 34 5.1. Investment industry review
    [Show full text]
  • (Uk) Ltd. Agreements and Disclosure Documents
    INTERACTIVE BROKERS (U.K.) LTD. AGREEMENTS AND DISCLOSURE DOCUMENTS The documents in this package contain the terms and conditions of your customer account with Interactive Brokers (U.K.) Ltd. and also contain important information regarding the risks and characteristics of the securities, commodities and other investment products that may be traded in your account. Please read all these documents carefully. This package contains: Interactive Brokers (U.K.) Ltd. Customer Agreement Options Clearing Corporation Characteristics and Risks of Standardized Options Disclosure of Risks of Margin Trading Portfolio Margin Risk Disclosure Statement Disclosure Regarding IB’s Procedures for Allocating Equity Option Exercise Notices Day Trading Risk Disclosure Disclosure Regarding IB’s Business Continuity Plan FINRA/NFA Disclosure for Security Futures Trading Australian Futures Risk Disclosure Euronext Amsterdam Derivative Markets Risk Disclosure Statement Euronext Derivatives Explanatory Memorandum Euronext Liffe Risk Disclosure French Risk Disclosure German Risk Disclosure Hong Kong Regulations Swiss Franc Denominated Account Risk Disclosure-Futures Swiss Franc Denominated Account Risk Disclosure-Options Risk Disclosure Statement for Forex Trading and IB Multi-Currency Accounts CFTC Rule 15.05 Notice to Non-U.S. Traders Notice Regarding Anti‐Money Laundering and Customer Identification Procedures: To help the U.S. government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person or entity who opens an account. We are required by law to ask you to provide your name, address, date of birth and other information about you, your organization or persons related to your organization that will allow us to identify you before we approve your account.
    [Show full text]
  • Understanding Investment Risk Guide for Clients
    UNDERSTANDING INVESTMENT AND RISK A GUIDE FOR CLIENTS Guide | Understanding Investment and Risk www.fitz.com.au TABLE OF CONTENTS Introduction and Purpose of the Guide ............................................................................. 4 Definitions .................................................................................................................... 4 The Process ................................................................................................................. 4 Consider your financial goals ............................................................................................ 5 The importance of time frames .................................................................................... 5 How much risk are you able to take? ................................................................................ 5 Types of risk to your life plan and how to help manage it ................................................. 7 Understanding risk in a portfolio ....................................................................................... 8 Selecting a suitable Risk Profile .................................................................................. 8 How is risk measured? .............................................................................................. 11 What level of risk is acceptable? ............................................................................... 12 Example: Growth Risk Profile ...................................................................................
    [Show full text]