# Risk Management Automate your counterparty relationships, and reduce risk, all on one screen. We provide trading restriction mechanisms and other tools that strengthen protection against credit or market risk. {% tabs %} {% tab title="For Takers" %} ### First Steps **Step 1: Create connection**\ Upon first log in, set up trading with your Liquidity Provider.
**Step 2 (optional): Set currency and limits**\ Open the “Gross limit & margin” section. Enable the gross limit, choose the required currency, and specify the limit amount. Click “Apply Changes” to save.
**Step 3: Enable trading**\ Open the “Trading status” section. Click “Enable Trading” to finish the setup.
**Step 4: Add more Counterparties**\ To add a new Counterparty, click "+ New Connection" and enter the Counterparty ID. The Counterparty will appear in the Risk Management profiles list with a "Verification" status until the invitation is accepted. **Step 5: Monitor Connections**\ After adding multiple Liquidity Providers, use the "Overview" widget to track statuses. View both incoming and outgoing connection requests on Risk Management page.
### What does this section regulates? This section regulates the risk management parameters with your liquidity providers. Set up a desired limit on your end, and the liquidity provider will set up a limit on their end. The smaller of the two will apply. Once the KYC is complete, you will need the ID to set up a limit on your end. ### What is a counterparty limit? It is a value that both you and the Liquidity Provider (LP) determine for trading.\ To start trading with each other, counterparties may set their counterparty limits against each other. It regulates the maximum possible open position with a particular counterparty. **a. Do I need to settle every trade?**\ No. You may lock the exchange rates and settle in bulk. **b. How does the liquidity provider assign the limit?**\ It depends on their risk assessment policy, your jurisdiction, etc. **c. Is it a renewable limit?**\ Yes. Once you settle what you owe your liquidity provider and withdraw the assets, the limit will restore to its initial value **d. My limit is nominated in USD, does this mean I can only buy crypto for USD?**\ No. You may execute crypto-crypto or any crypto-fiat trades. However, the value of the results of the trade cannot exceed the limit nominated in USD. **e. What if I need a temporary increase in the limit for bulk trade?**\ Please contact us and your liquidity provider for the temporary increase of the limit. **f. Will I have access to more liquidity if my limit gets increased?**\ Yes. You only see the liquidity that your gross limit permits.
### What is a gross limit? The Gross limit is regulating the maximum possible open position taker or maker may open (exposure). You can make a trade only if you have trading limits set and your free limits are positive. **a. How do you calculate the gross limit?**\ We take the absolute values of everything you see in positions tab and summarize them using the formula below. Mind you that deposits also utilize the limit as well as uncommitted settlement transactions.\ \&#xNAN;*Formula:* *MAX( |SUM(Long reachable positions)|, |SUM(Short reachable positions)|)* **b. What if I set my limit in USD and my counterparty sets it in EUR?**\ We use a mark-to-market type of accounting thus we will recalculate the EUR value back to USD and will use the smaller value out of the two. The same logic applies to limits nominated in crypto. **c. What is an applied gross free limit?**\ This the value of how much you may use for long or short positions (buying or selling) ### What is a gross limit by asset? The gross limit by asset allows you to limit your open position in a particular asset. It works the same way as a regular gross limit, but takes into account only positions in the particular asset. You may set a limit by asset in any asset you find convenient. Limit value will be converted to the target asset using prices of the assets at the moment when risk management is applied. ### What is equity? We summarize the value in USD of your open positions using the formula below:\ \&#xNAN;*EQUITY = SUM(Positions)*\ \ Since the base currency of our platform is USD, the assets you hold to maintain the required level of equity would be reevaluated against USD every 15 minutes. For example, if hold BTC as your collateral, its value may fall during the day to accommodate the limit in USD. Thus, your liquidity provider and the system would require you to top up the account. ### How do I set up a limit with my liquidity provider (LP)? 1. Go to Risk Management 2. Press '+ New connection' 3. Input the counterparty ID that you receive from your LP and 'Request Connection' 4. Enable the gross limit, select the limit currency, and enter the limit amount 5. Press 'Apply changes'
### Which currency I may use for the limits? The one you use to evaluate your market exposure. Our recommendation is to use fiat currency (USD or EUR) for the limits. ### Which limit prevails if they are different? The smaller limit prevails over the greater one. For example,\ \ You have set 30 USD of Gross limit however, your LP has set only 10 USD for the counterparty limit described above. The system will use 10 USD as the limit. ### If my liquidity provider requires posting collateral, how do I know if it’s time to settle or top up? If you see any of the following statuses: Margin Call, Low Gross Free, Restricted trading, liquidation - it’s time to top up. ### I have stopped seeing orders, what should I look for? Firstly, please ensure you have available free gross limit Check limits for special marks, it may be time to top up your account. If everything checks out and the issue persists, please contact us or your liquidity provider. ### Can I disable trading with the liquidity provider? You may disable trading with a counterparty by unticking the box in the card of the 'Edit' menu. The trading will be stopped while allowing settlements. It will be convenient if you prefer to stop trading while settling, trade with your counterparty for special occasions (e.g. trading during banking hours), or if you wish to halt trading. Please note that you will still be charged the overnight rate. ### Can I disable trading of certain coins with my counterparty? Sure! Click on 'Edit' on the CP's card, select 'Limits per asset'. \ \ You can set the limit per asset either in the currency of the asset or in the other currency you prefer. In the case of the latter, we will use the mark-to-market approach to determine the value of the asset. \ \ Please keep in mind that if you have an open position nominated in the coin, your counterparty would still be able to trade with it until the moment the position is closed.
### Can I restrict trading of the particular markets (trading pairs)? Yes, whitelisting is a functionality that allows you to restrict trading to an approved list of instruments only. It is disabled by default; in order to enable it, please: 1. Click 'Instruments' in the left hand menu 2. Switch to the 'Whitelisting' tab 3. Toggle the 'Whitelisting' switch at the top right of the corner. After you have enabled whitelisting for the first time, all instruments become non-whitelisted by default.
In order to whitelist an instrument, you need to switch on the toggle (1) as shown on the screenshot above. There are two tips that can make this process easier: 2. Click here to collapse the list, hiding the counterparties level of hierarchy. It will make the list much more readable. 3. Use the Search functionality to search for specific instruments {% hint style="info" %} Note: whitelisting applies to all your counterparties and sub-accounts. {% endhint %} {% endtab %} {% tab title="For Liquidity Providers (LP) & Masters" %} ### What does this section regulate? This section regulates relationships and risk management settings with your Counterparties (takers and other LPs). You may specify the buying power and requirements for the collateral if needed. Once the KYC is complete, you will need the ID to set up a limit on your end. ### What is a counterparty limit? To start trading with each other, counterparties may set their counterparty limits against each other. It regulates the maximum possible open position with a particular counterparty. Within this limit you may specify:\ \ 1\. Gross limit regulates the maximum possible open position counterparties may open. 2\. Margin requirements restrict trading if the equity that your counterparty has with you exceeds the preset criteria. You may use both of them or gross limit only. ### Which limit prevails if they are different? In any circumstance, the system will always use the smaller value out of all. For example, if you allow your Taker to trade with you for 5 USD and your Taker limit is 10 USD, the system will use the 5 USD as a restriction for the maximum open positions. ### What is a gross limit? The Gross limit is regulating the maximum possible open position counterparty may open. You can make a trade only if you have trading limits set and your free limits are positive. **a. How do you calculate the gross limit?**\ We take the absolute values of everything you see in the positions tab and summarize them using the formula below. Mind you that deposits also utilize the limit. *Formula:* *MAX( |SUM(Long positions)|, |SUM(Short positions)| )* **What if I set my limit in USD and my counterparty sets it in EUR?**\ We use a mark-to-market type of accounting thus we will recalculate the EUR value back to USD and will use the smaller value out of the two. The same logic applies to limits nominated in crypto.
### What is equity? We summarize the value in USD of your open positions using the formula below:\ \&#xNAN;*EQUITY = SUM(Positions)*\ \ Since the base currency of our platform is USD, the assets you hold to maintain the required level of equity would be reevaluated against USD every 15 minutes. For example, if you hold BTC as your collateral, its value may fall during the day to accommodate the limit in USD. Thus, the system would require the taker to top up the account. ### How do I set up a relationship with my taker? 1. Go to Risk Management. 2. Click '+ New connection'. 3. Enter the counterparty ID provided by your taker and submit the connection request. 4. Specify markups *(optional)*. Read more about markups [here](/product-features/trading/markups.md). 5. Enable Gross limit *(optional)*. 6. Enable margin requirement if you require collateral *(optional)*. 7. 'Enable trading' Once the taker enables trading on their side, they will start receiving your quotes.
### Which currency I may use for the limits? The one you use to evaluate your market exposure. Our recommendation is to use fiat currency (USD or EUR) for the limits. ### Which limit prevails if they are different? The smaller limit prevails over the greater one. For example, Your taker has set a Gross limit of 30 USD however, you have set only 10 USD. The system will use 10 USD as a Gross limit ### How do I set up a taker if I require holding collateral? You would need to enable margin requirement either upon set up or by clicking configure on the existing clients’ card. The values are in % and will be calculated from the value of the gross limit. Here are a few tips on what those fields mean: | Maintenance | Once the equity reaches the specified value in % from the gross limit, you reserve the right to liquidate Takers’ positions | Input the smallest value | | ------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------ | | Restricted Trading | Once the equity reaches the specified value in % from the gross limit, the Taker will not be able to execute more trades unless the value of their equity improves | Input the value at which you wish to restrict trading | | Initial Margin | The collateral that the taker must send to the maker to start trading. Keep in mind that the required % will always remain with you. You will not be able to send a transaction that decreases the % of the initial equity | Input the % of your required collateral for the limit specified in the Gross Limit section above | ### How do I disable trading with a particular counterparty? You may disable trading with a counterparty by clicking 'Disable Trading' in the risk management profile. The trading will be stopped. ### Can I disable trading of certain coins with a particular counterparty? Go to 'Limits per Asset' in the 'Risk management'. From this screen, you may limit the amount of a particular coin traded as well as stop trading it together. You can set the limit per asset either in the currency of the asset or in the other currency you prefer. In the case of the latter, we will use the mark-to-market approach to determine the value of the asset. Please keep in mind that if you have an open position nominated in the coin, your counterparty would still be able to trade with it until the moment the position is closed.
### Can I restrict trading of the particular markets (trading pairs)? Yes, whitelisting is a functionality that allows you to restrict trading to an approved list of instruments only. It is disabled by default; in order to enable it, please: 1. Click 'Pricing & Instruments' in the left hand menu 2. Switch to the 'Whitelisting' tab 3. Toggle the 'Whitelisting' switch at the top right of the corner. After you have enabled whitelisting for the first time, all instruments become non-whitelisted by default.
In order to whitelist an instrument, you need to switch on the toggle (1) as shown on the screenshot above. There are two tips that can make this process easier: 2. Click here to collapse the list, hiding the counterparties level of hierarchy. It will make the list much more readable. 3. Use the Search functionality to search for specific instruments {% hint style="info" %} Note: whitelisting applies to all your counterparties and sub-accounts. {% endhint %} ### How do I disable assets for a taker? If you need to restrict a specific asset, go to Risk Management → Limits per asset.
You can either set the limit to 0 (not allowed) for all clients or configure it individually. **To set the limit per asset:** 1. Press "Configure" 2. Select the asset or asset class 3. Choose the client or client group 4. Toggle the switch for 'Enable limits per asset' 5. Set the currency and limit amount to **0** 6. Click "Apply"
**To set only the short sales ban per asset:** 1. Press "Configure" 2. Select the asset or asset class 3. Choose the client or client group 4. Toggle the switch for "Enable limits per asset" 5. Disable “Same limit for short and long” 6. Enter the currency and set the short position limit to 0 7. Click "Apply"
### **What are the Overnights (Long and Short)?** Overnight fees for long and short positions can be set on a per-asset basis, or for all assets, in the same 'Assets' tab. Please refer to [Non-deliverable Trading](/product-features/trading/non-deliverable-trading.md) for more information. ### How would I liquidate the taker if their equity has fallen below the specified parameter? Please contact us through Instant Messenger or through . {% endtab %} {% endtabs %} --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://faq.finerymarkets.com/product-features/risk-management.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.