Political Risk

It's associated with the change in government policies due to change in

government. If the government is not stable then the policies of thegovernment will not be stable and investors will not take concrete decisions with long term investment horizon.

13Risk ManagementA sound risk management system is integral to an efficient clearing and settlement system .The system must ensure that brokers/trading member's obligation are commensurate with their net worth.Risk containment measure include capital adequacy requirements margin requirements, position limits based on capital adequacy requirement ,margin requirements position limits based on capital , online monitoring of client position etc .the main concepts of a risk management system are listed below There should be clear balance available in client's ledger account in the broker's books. The clients are required to provide margins upfront before putting in trade requests with the brokers. Ideally, the client must square up all the extra positions that have been created on an intra-day basis before 3.15 Pm. The client must settle the debits, if any arising out of MTMsettlements.