Risk Management Framework
Last updated: February 2026
1. Purpose
Montrock Ltd maintains a comprehensive risk management framework to identify, assess, measure, monitor, mitigate, and report all material risks arising from its operations and regulated activities as an Investment Dealer licensed by the Financial Services Commission (FSC) of Mauritius. The framework is designed to protect the interests, assets, and confidential information of clients, safeguard the financial soundness and operational resilience of the company, and ensure compliance with all applicable legal and regulatory requirements.
2. Regulatory Framework
The framework is designed to ensure compliance with the Securities Act 2005, the Securities (Licensing) Rules 2007, the Financial Intelligence and Anti-Money Laundering Act 2002 (FIAMLA), the Data Protection Act 2017 of Mauritius, and applicable FSC Rules, guidelines, and circular letters.
3. Risk Governance
Risk is managed under the oversight of the Board, which defines and monitors the company’s risk appetite across the organisation. Montrock Ltd applies a three-lines-of-defence model: operational management (first line) manages risk in day-to-day activity; risk and compliance functions (second line) provide oversight, guidance, and monitoring of policy and regulatory adherence; and independent assurance (third line) evaluates the effectiveness of governance, risk management, and internal controls.
4. Risk Appetite
The company adopts a conservative overall risk posture with a low-to-moderate tolerance for risk, subject to regulatory requirements and Board-approved limits. The risk appetite is articulated across key risk categories and reviewed regularly through governance forums.
5. Market Risk
Market risk arising from adverse movements in prices, foreign exchange rates, interest rates, and overall market volatility is managed through defined position and exposure limits, stop-loss mechanisms where appropriate, and daily monitoring of open positions, concentration risk, and foreign exchange exposures.
6. Credit Risk
Credit risk is managed through pre-approval due diligence before establishing a counterparty relationship, an approved counterparty list, exposure limits to prevent concentration risk, and ongoing monitoring of counterparty financial health and creditworthiness.
7. Liquidity Risk
Liquidity risk is managed through cash-flow forecasting, maintenance of adequate liquidity buffers, segregation and safeguarding of client monies, and regular liquidity reviews. The company maintains sufficient liquid resources to meet foreseeable obligations under both normal and stressed conditions.
8. Operational Risk
Operational risk is managed through documented policies and procedures, segregation of duties, dual authorisation for key transactions, incident reporting, and due diligence and ongoing monitoring of outsourced service providers.
9. Client Asset Risk
Client monies are fully segregated from company funds at all times and held in designated segregated accounts with regulated financial institutions. Client money and asset positions are reconciled daily, with any discrepancies investigated, escalated, and resolved in accordance with established procedures.
10. AML/CFT & Sanctions Risk
The company maintains a risk-based AML/CFT and sanctions framework, including customer due diligence at onboarding, enhanced due diligence for higher-risk clients, screening against sanctions and watchlists, and ongoing transaction monitoring. Further detail is set out in the company’s AML/CFT policy.
11. Cybersecurity & Information Security Risk
The company maintains a layered security framework, including multi-factor authentication, firewalls, endpoint protection, encryption of sensitive data, least-privilege access controls, vulnerability assessments, penetration testing, and formal incident-response procedures.
12. Business Continuity Risk
A documented Business Continuity Plan and Disaster Recovery Plan support continued operation and recovery of critical functions, with clearly defined roles, regular review, and annual testing.
13. CFD Trading Risk
Contracts for Difference (CFDs) are highly speculative instruments and involve a significant level of risk due to leverage, which can amplify both gains and losses. Clients may lose part or all of their invested capital. Retail clients benefit from negative balance protection and cannot lose more than the funds available in their trading account. Clients should fully understand the risks involved before trading and, where appropriate, seek independent professional advice.
14. Trading Platform Risk
Trading on the company’s platform is subject to operational and technological risks. Orders are processed sequentially, and only server-generated quotes are valid and binding. In the event of connectivity disruptions or technical issues, clients can access missed or delayed quote information through the system’s quote database.
15. Slippage
Slippage is the difference between the expected price of a trade and the actual execution price, and is more common during periods of high market volatility. It may be positive (execution at a better price), neutral (execution at the requested price), or negative (execution at a less favourable price).
16. Force Majeure
The company shall not be liable for financial losses resulting from force majeure events — extraordinary and unforeseeable events beyond the reasonable control of the parties, including natural disasters, fires, utility failures, distributed denial-of-service (DDoS) attacks, riots, military action, terrorism, civil unrest, strikes, and regulatory actions.
17. Review & Update
This framework is subject to structured review and is updated promptly to reflect changes in applicable law, regulation, or FSC guidance, and following any material operational incident, significant risk event, or finding arising from internal or external review.