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Model risk & agent governance baseline (SR 26-2)

The platform's model-risk governance baseline is Federal Reserve SR 26-2, which supersedes SR 11-7. Older pages that cite SR 11-7 describe controls that remain valid; SR 26-2 is the current reference for scope and terminology.

Scope split under SR 26-2​

  • Quantitative models are in scope. Every model that informs a trading, risk, or allocation decision is governed under the model-risk framework below: inventory, materiality tiering, and independent validation.
  • GenAI / agentic AI is outside SR 26-2's scope and is instead governed by the platform's own AI-risk framework: the typed promotion gate (StrategyPromotionRequest — the single money-plane crossing), hash-locked AgentSpec versions, per-run budgets and tool allowlists, immutable audit trails, and human-in-the-loop approval (step-up-MFA-gated; agents can submit but never self-approve).

Confirm the scope interpretation with counsel before any go-live.

Quant model-risk controls​

ControlMechanismWhere
Model inventorydata.risk.model_inventory — inventory + materiality tieringQAP data-plane tool
Materiality tieringTier drives validation depth and revalidation cadencemodel inventory records
Independent validationValidator must differ from producer; gate DENYs otherwisePromotionGateChain step 5 (gate_independence)
Effective challengeValidationVerdict / RiskDecision / RiskReport contractsQAP cross-plane contracts
Overfitting controlspbo > 0.5 unrepresentable; DSR deflation; CPCV with purging/embargoStrategyCandidate + research plane
Change managementHash-locked spec versions; immutable registry rowsagent_spec_versions et al.

Pre-trade control checklist (SEA 15c3-5 / MiFID II RTS 6)​

Every live or paper trading deployment MUST verify before go-live:

  1. Kill switch — platform-wide halt reachable by operators; engaged kill-switch DENYs promotion and halts in-flight runs.
  2. Pre-trade risk limits — per-order price/size limits, per-strategy and per-tenant credit/exposure caps enforced deterministically in the order path (no LLM on the order path).
  3. Duplicate/erroneous order controls — idempotent order intents (intent_id), fail-closed on orphaned or cross-tenant orders.
  4. Message throttles — venue-level rate/participation caps.
  5. Direct market access controls — only gate-approved strategies may emit exchange orders; advisory agents mint drafts requiring human approval.
  6. Audit retention — order, decision, and entitlement audit records with multi-year retention (WORM where applicable).
  7. Annual review — RTS 6-style annual self-assessment of the algorithmic trading controls above, recorded in the compliance evidence map.