Finalto Prepares Proactive Risk Strategy Ahead of US Election

With the 2024 US Election rapidly approaching, global financial markets are bracing for significant volatility. Finalto, a leading financial services provider, has stepped up its efforts to shield clients from potential market disruptions. As part of its comprehensive risk management strategy, the company is putting robust plans in place to navigate the uncertainty and ensure that clients experience uninterrupted service during this critical period.

Daniel Frostick, Finaltos Chief Risk Officer, has outlined a proactive approach to mitigating risks associated with the election. “We have identified key areas of focus so that we can ensure a robust and resilient service for our clients, no matter how the market reacts,” Frostick stated. “Our goal is to maintain continuity and limit exposure to heightened risks.”

Contents

01

Key Areas of Risk Management

1.1

Operational Risk Preparedness

1.2

Market Risk Management and Scenario Testing

1.3

Credit Risk Control and Client Protection

1.4

Liquidity Risk: Ensuring Sufficient Collateral

02

Anticipating Market Swings and Uncertainty

03

About Finalto

Key Areas of Risk Management

Operational Risk Preparedness

Finalto's operational risk preparedness plan is designed to ensure that the company can maintain high levels of service, even in the face of unprecedented events. This includes reviewing staff capacity, trade flow management, and the integrity of business continuity plans (BCP) and disaster recovery (DR) measures. Frostick emphasized that these processes are being thoroughly examined to guarantee that they are up to date-and capable of handling any scenario that may arise during or after the election.

Given its global presence, Finalto is also taking additional steps to ensure that all regions are adequately staffed and prepared for potential increases in trade volume. By having on-call support across time zones and implementing extra monitoring in key trading and technology areas, Finalto aims to maintain seamless operations throughout this critical time.

Market Risk Management and Scenario Testing

Market risk is a primary focus for Finalto ahead of the election. The company has already introduced election-specific scenario testing, which includes both historical and current data, to evaluate potential market outcomes. Frostick noted that market gaps and swings are to be expected, especially in sectors that are directly impacted by US economic policies.

One of the more volatile areas under scrutiny is the cryptocurrency market. With Donald Trump‘s pro-crypto stance as a potential game-changer, the market could see sharp reactions to election-related developments. Finalto’s market analysts are working around the clock to model possible scenarios and ensure that clients are well-prepared to react to sudden market movements.

Frostick highlighted the importance of being ready for the unexpected: “We spend a lot of time and effort to ensure we are always ready for unusual events. This is a cornerstone of our risk management approach, and we have planned meticulously for every possible election outcome.”

Credit Risk Control and Client Protection

Finalto is also placing a strong emphasis on credit risk control. Scenario and stress analysis are critical to monitoring client positions and protecting them from significant market shifts. The company's automated controls ensure that clients are fully informed of any potential risks and can take swift action to safeguard their positions.

Frostick pointed out that these measures not only protect clients from potential losses but also provide opportunities for those looking to capitalize on market volatility. “Our systems and policies are designed to make sure clients have the information and resources they need to make timely, informed decisions,” he said.

To further support its clients, Finalto has implemented strict policies to manage client credit exposure and liquidity demands. By ensuring that clients have funded their accounts in advance, Finalto is minimizing the risk of missed opportunities due to insufficient capital.

Liquidity Risk: Ensuring Sufficient Collateral

As an award-winning liquidity provider, Finalto is fully committed to maintaining the liquidity necessary to meet its clients' trading needs during the election. Antony Parsons, Head of Liquidity at Finalto, shared that the company has increased its cash reserves with key liquidity providers to ensure that demand is met without delay. “We have strong relationships with our core liquidity providers, who already offer deep liquidity pools. Weve taken steps to make sure that our clients will continue to benefit from these throughout the election period,” Parsons said.

Ensuring sufficient liquidity is crucial in times of market stress, as sudden surges in demand can strain even the most well-prepared institutions. Finaltos focus on managing liquidity risk ensures that clients can execute trades and maintain their positions, even in the face of significant market swings.

Anticipating Market Swings and Uncertainty

Neil Wilson, Finalto‘s Chief Market Analyst, cautioned that this year’s election is particularly difficult to predict, with polls remaining tight in key swing states like Pennsylvania. This creates an environment of uncertainty, where traders are pricing for a binary outcome that could have significant consequences for markets. Wilson emphasized that the elections impact on trade, tariffs, and US debt policy could drive price action across a variety of sectors.

“Algo-driven markets could be especially sensitive to headline risk, making them vulnerable to sharp swings based on election-related news,” Wilson noted. “The greatest risk to markets would be a contested election result, as it could prolong uncertainty and lead to significant market turbulence.”

Wilson went on to explain that, historically, markets have shown pre-election angst, reflected in higher risk premiums, with relief rallies often following once the results are confirmed. However, this years election introduces unique challenges, and traders should be prepared for a wide range of possible outcomes.

About Finalto

Finalto is a globally recognized liquidity provider and risk management specialist, offering a comprehensive range of financial services across international markets. With a focus on innovation, resilience, and client service, Finalto is committed to delivering reliable and robust solutions that meet the evolving needs of its clients.