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"Drop copy" can be viewed as an element or contributor to risk management that equips market participants with near real-time copies of trade reports and messages related to orders. Drop Copy as a report then summarises a participant’s execution activity on a trading venue, to provide an accurate picture of the firms position the firm's position in the market.
Drop Copy as a Risk Management Tool
Robust risk management policies and procedures are critically important aspects of any market participant’s trading operation. To aid in the implementation of and adherence to those policies and procedures, many trading venues have provided their participants with Drop Copy feeds. Consumers of Drop Copies have different methods of leveraging Drop Copy functionality to meet their individual risk management needs. The following examples illustrate possible uses of for Drop Copies by Consumers:
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- When trading activity approaches limits established by the sponsoring broker.
- Unusual changes in intraday trading activity that may indicate a potential problem at the client.
- Activity that An activity that may increase positions in accounts that are in a “liquidation only” state.
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