Restrictions and infrastructure risk: how it differs from market risk
· beginner
Automated material · TradeAlmanac editorial deskDraft prepared by a language model from our stored data; not reviewed by an editor.
Ordinary market risk is the risk that a price moves against you. It is measurable, observable, and partly removed by spreading across assets.
Infrastructure risk works differently: an asset can hold its price and still become unreachable. No volatility measure shows that.
How it shows up
A block in the chain of depositories that records ownership. Inability to receive a payment the issuer honestly transferred. Suspension of trading in an instrument. Restrictions on operations for particular categories of holder.
What all these cases share: the problem is neither in the issuer nor in the price but in the path between you and the asset.
What reduces the risk
Understanding the custody chain: where exactly the rights to a given asset are recorded and how many intermediaries sit between you and the issuer. The shorter the chain and the closer it is to your own jurisdiction, the fewer points of failure.
Splitting across several independent infrastructures — more expensive and more complicated, but the only real diversification against this class of risk.
The Russian context
Events of recent years turned infrastructure risk from theoretical into practical, and the cost of underrating it proved high. Covered separately in Moscow Exchange and SPB Exchange: two venues, two histories and Substitute bonds: foreign-currency income inside a rouble contour.
What to remember
"What will happen to the price" and "will I be able to use this" are different questions, and the second cannot be derived from the first. On the general risk framework: How to assess the risk of a position, step by step.
Draft prepared by a language model from our stored data; not reviewed by an editor.
Model: claude-opus-5
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