Pre-Trade Compliance
Real-time order-level compliance checking against investment guidelines, fund prospectus rules, and regulatory limits.
Blocking behavior
Pre-trade compliance runs synchronously in the ATIM order submission path. A hard breach blocks the order from reaching the FIX Gateway. Soft breaches require authorized override before routing. All decisions are logged to the compliance audit trail.
How pre-trade compliance works
When a portfolio manager submits an order in Asset Atrium Investment Manager (ATIM), the compliance engine evaluates the proposed trade against all active rules assigned to the fund. The engine simulates the post-trade portfolio state ("what-if") and checks every applicable limit.
- Order submitted in ATIM (single order or block order with allocations).
- What-if calculation: engine computes projected positions, exposures, and weights assuming the order executes at limit price or last price.
- Rule evaluation: every active compliance rule for the fund is checked against the projected state.
- Result: PASS (no breaches), SOFT BREACH (override allowed), or HARD BREACH (order blocked).
- Audit log: all rule evaluations and results recorded with timestamps and user IDs.
Rule categories
| Category | Example Rules | Breach Type |
|---|---|---|
| Asset Allocation | Max 60% equities, min 20% fixed income, max 10% alternatives | Soft |
| Sector Exposure | Max 25% in any single GICS sector | Soft |
| Country Exposure | Max 30% in any single country; max 10% in emerging markets | Soft |
| Issuer Concentration | Max 5% in any single issuer (UCITS 5/10/40) | Hard |
| Instrument Eligibility | No unrated bonds; no equities below $500M market cap | Hard |
| Credit Quality | Min average rating BBB-; max 10% below investment grade | Soft |
| Liquidity | Min 80% of portfolio in instruments tradeable within 5 days | Soft |
| Currency Exposure | Max 20% unhedged non-base currency exposure | Soft |
| Counterparty Limits | Max 10% OTC derivative exposure to any single counterparty | Hard |
| Regulatory Limits | UCITS Art. 52: max 5% in single issuer (10% with conditions) | Hard |
Hard vs. soft breaches
| Breach Type | Behavior | Override | Audit |
|---|---|---|---|
| Hard | Order blocked — cannot proceed to FIX Gateway | Not allowed — PM must modify or cancel the order | Logged as HARD_BREACH with rule details |
| Soft | Warning displayed — PM can request override | Requires compliance officer approval (4-eye) | Logged as SOFT_BREACH + override decision |
Override workflow
When a soft breach is detected, the portfolio manager can request an override through the ATIM compliance panel:
- PM provides written justification for the override request.
- Request is routed to the designated compliance officer for the fund.
- Compliance officer reviews the breach details, projected exposure, and justification.
- Compliance officer approves or rejects the override with documented rationale.
- If approved, the order proceeds to execution with the override flag attached.
- Override is recorded in the compliance audit trail with full approval chain.
Override escalation
If a single fund accumulates more than 3 active soft breach overrides in a rolling 30-day period, an automatic escalation is triggered to the Chief Compliance Officer (CCO) for review. This threshold is configurable per fund risk tier.
Block order compliance
For block orders that allocate across multiple funds, Asset Atrium runs compliance checks against each recipient fund individually. A breach in one fund does not block allocation to other compliant funds — the non-compliant allocation is held pending override while compliant allocations proceed.
Performance considerations
- Pre-trade compliance evaluation targets <500ms response time for orders with up to 50 active rules.
- What-if exposure calculations use Oracle Coherence cached position data to avoid database round-trips.
- Rule evaluation is parallelized across rule categories using WebLogic work manager thread pools.
Testing compliance rules
New or modified compliance rules should be tested in UAT using the ATIM compliance simulation mode, which evaluates rules without blocking orders. Simulation results are logged separately for review before production activation.