IMC ANNUALREPORT 2020 - Flipbook - Page 27
10 RISK
IMC ANNUAL REPORT 2020
RISK
IMC’S CORE BUSINESS is to
provide liquidity in financial assets
on trading venues, and directly to
qualified counterparties. We employ
algorithms, statistical techniques
and low latency technology to
execute our strategies safely and
profitably. We engage solely in
trading activities on our own account
and are subject to regulatory
requirements set by local authorities,
as well as consolidated supervisory
requirements. Our capital position
comfortably meets all regulatory
requirements.
Our unwavering focus on robust
risk management has been a
constant throughout our more than
30-year history. We continuously
and proactively review, refine and
upgrade our systems, introducing
new checks and balances and
reconfiguring and improving
software and safeguards to
reflect developments in our firm,
our markets and our industry.
Our goal remains to ensure that
we have comprehensive and
effective oversight and control of
our activities at all times in order
to ensure and support efficient
markets.
For IMC’s risk and compliance
team 2020 was a busy year.
Extreme market conditions, marked
by high volatility and trading
volumes, coupled with the challenge
of operating uninterrupted through
the global health pandemic, created
an environment in which the quality
and effectiveness of the risk and
compliance function and framework
was critical to business continuity.
Our immediate priority to
address that risk was to protect
IMC employees, as part of a safe
migration to out-of-office work
locations. We managed that
process seamlessly, including paying
special attention to information
security risks, while continuing to
Throughout 2020, IMC remained ‘in the market’ at all times, meeting
its obligations as a market maker in facilitating the transfer of risk for
investors, such as pension funds. Trading firms ensure continuous trading
flows (liquidity) on stock exchanges around the world, by issuing prices at all
times and in all circumstances.
That commitment gives investors the certainty of a counterparty, therefore
allowing them to manage risk. IMC’s ability and readiness to maintain a
continuous presence in multiple markets, especially at times of extreme
market stress, helps reduce market volatility and ensures the accurate
pricing of financial products and lower costs for investors.
IMC is in favour of smart regulation and well-regulated markets. We
believe in a level playing field and equal market access. There is a solid
understanding of our industry’s role, value and contribution among
regulators and at the highest political circles. IMC is actively engaged with
regulators, exchanges and legislators in multiple jurisdictions to make sure
that our firm and industry is understood, and to work wherever possible
and practicable with those authorities to ensure the continued efficiency of
final markets. We are a founding member of FIA European Principal Traders
Association, and a member of FIA Principal Traders Group and Association
of Proprietary Traders.
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operate in an extremely hectic
market environment. Our ability to
effectively respond to such an event
was testament to IMC’s robust risk
framework, including detailed risk
preparations and planning, and a
culture of individual responsibility
and teamwork, agility and ability
to move quickly, and a problemsolving mindset.
As in prior years, we pushed ahead
with a number of projects to further
strengthen our risk management
framework and tooling. These
multi-year projects demonstrate
IMC’s commitment to robust risk
and compliance management. Also,
in line with IMC’s strategic growth,
we again increased headcount at
our Risk & Compliance team, and
we expect to continue hiring in the
coming years.
Ongoing dealings with foreign
exchanges and trading platforms,
expansion in new markets, an
increasing number of direct
counterparty relationships, and
the firm’s market making growth
strategies were also the focus of our
risk and compliance teams.
In terms of the legislative and
regulatory landscape, we continue
to monitor closely planned legislation
related to remuneration. At the
same time, we are well-prepared
for the introduction of the (EUR)
Investment Firms Directive and
Investment Firms Regulation on
prudential (capital) requirements,
the new capital framework which
will come into force in June 2021
to replace the current framework
(Capital Requirements Directive IV /
Capital Requirements Regulation).
Separately, Brexit, the decision
of the UK to leave the European
Union, has had no material impact
on IMC.