Trader Mandates and Aggregation Units

What this video covers

• What a trader mandate must specify, including products allowed, position limits, loss limits, delta or notional limits, approved counterparties, trading hours, and prohibited strategies
• Why a trader mandate is the internal equivalent of a customer agreement, and how it gives the principal written grounds to discipline unauthorized trades
• The three-step principal workflow for mandate breaches: monitor via exception reports, escalate to the chief compliance officer and direct supervisor, and document the breach with corrective action
• The exam trap that a mandate must be both in writing and enforced, and why documentation without review is a supervisory failure
• The four conditions for a bona fide aggregation unit under Reg SHO: clearly defined trading objective, non-commingled positions, written plan, and trader separation
• Why short-sale marking is determined at the aggregation unit level, not firm-wide, and how a unit's short position controls its marking even when the firm is net long
• What constitutes sham aggregation, including unit-switching or position transfers to defeat netting requirements, and why this triggers the prohibition on fictitious transactions