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CBS-1 Securities Broking & Trade Execution
Introduction
Establishing impact tolerance is a critical step in Kenanga Investment Bank’s operational resilience journey, as it defines the maximum level of disruption that the organisation can tolerate without causing unacceptable harm to customers, market integrity, or regulatory objectives.
For Securities Broking & Trade Execution, this is especially important given its direct exposure to time-critical transactions, market volatility, and regulatory scrutiny.
Clear impact tolerances ensure that resilience efforts are prioritised around outcomes that matter most, rather than solely on systems or processes.
Guided by the principles outlined in the 2025 BNM Discussion Paper on Operational Resilience, Kenanga’s approach to impact tolerance focuses on maintaining important business services within acceptable disruption thresholds under severe but plausible scenarios.
This chapter translates those principles into practical service-level tolerances across the end-to-end trade lifecycle, enabling management to identify vulnerabilities, assess current resilience, and take targeted action when tolerances are breached.
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Table P4: Establish Impact Tolerance for CBS-1
|
Sub-CBS Code |
Sub-CBS |
Maximum Tolerable Downtime (MTD) |
Maximum Tolerable Data Loss (MTDL) |
Customer Impact |
Regulatory Impact |
Impact Type |
Current Resilience Status |
Action Required |
|
1.1 |
Client Onboarding & Order Intake |
4 hours |
≤ 15 minutes |
Clients are unable to place or modify orders; loss of trading opportunities |
Moderate – potential breaches of conduct and client service obligations |
Customer / Financial |
Generally Resilient |
Enhance digital onboarding fallback and manual order intake procedures |
|
1.2 |
Order Validation & Pre-Trade Checks |
2 hours |
≤ 5 minutes |
Increased risk of rejected or delayed orders |
High risk of breaching market rules and internal risk limits |
Regulatory / Financial |
Partially Resilient |
Strengthen real-time controls and automated failover |
|
1.3 |
Order Routing & Trade Execution |
1 hour |
Zero data loss |
Immediate inability to execute trades; potential financial loss |
Severe – market integrity and best execution obligations impacted |
Financial / Market |
Critical |
Implement active-active connectivity and broker/exchange rerouting |
|
1.4 |
Trade Capture & Enrichment |
4 hours |
≤ 15 minutes |
Incomplete trade records; delayed downstream processing |
Moderate – audit trail and record-keeping risks |
Operational / Regulatory |
Generally Resilient |
Improve straight-through processing (STP) monitoring |
|
1.5 |
Trade Validation & Verification |
4 hours |
≤ 15 minutes |
Delays in identifying trade discrepancies |
Moderate – risk to control effectiveness |
Operational |
Partially Resilient |
Enhance exception alerts and segregation of duties |
|
1.6 |
Trade Confirmation & Affirmation |
End of trading day |
≤ 30 minutes |
Clients receive late or incorrect confirmations |
Moderate – client disclosure obligations |
Customer / Regulatory |
Generally Resilient |
Automate client notification contingencies |
|
1.7 |
Trade Settlement Instruction & Clearing |
End of settlement cut-off |
≤ 15 minutes |
Failed or delayed settlements; liquidity impact |
Severe – settlement discipline and clearing obligations |
Financial / Regulatory |
Critical |
Strengthen clearing agent dependency mapping and recovery playbooks |
|
1.8 |
Post-Trade Reconciliation & Exception Handling |
1 business day |
≤ 30 minutes |
Accumulation of unresolved breaks |
Moderate – increased operational risk |
Operational |
Partially Resilient |
Increase automation and reconciliation frequency |
|
1.9 |
Trade Reporting & Regulatory Compliance |
Regulatory deadline |
Zero data loss |
No immediate client impact |
Severe – regulatory breaches and penalties |
Regulatory |
Generally Resilient |
Regular testing of regulatory reporting recovery scenarios |
|
1.10 |
Client Settlement & Confirmation Delivery |
End of settlement day |
≤ 15 minutes |
Client dissatisfaction and trust erosion |
High – client asset protection obligations |
Customer / Financial |
Partially Resilient |
Enhance client communication and alternative delivery channels |
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Using Impact Tolerance to Strengthen CBS-1 Resilience
The impact tolerance thresholds defined for CBS-1 Securities Broking & Trade Execution provide Kenanga Investment Bank with a clear, outcome-focused benchmark for resilience.
By articulating maximum tolerable downtime and data loss at each stage of the trade lifecycle, Kenanga can better understand where disruptions would cause intolerable harm and where resilience investments should be prioritised.
Consistent with the 2025 BNM Discussion Paper on Operational Resilience, these tolerances are not static.
They should be regularly reviewed through scenario testing, changes in trading volumes, regulatory expectations, and evolving customer behaviours.
As Kenanga strengthens its people, processes, technology, and third-party arrangements, these impact tolerances will serve as a practical anchor, ensuring that Securities Broking & Trade Execution remains reliable, compliant, and trusted even under severe yet plausible disruption scenarios.
Gain Competency: For organisations looking to accelerate their journey, BCM Institute’s training and certification programs, including the OR-5000 Operational Resilience Expert Implementer course, provide in-depth insights and practical toolkits for effectively embedding this model.
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