Model Documentation refers to the comprehensive, structured records detailing the design, assumptions, data inputs, validation, and limitations of quantitative models used in financial decision-making. In crypto investing, this applies to algorithms for smart trading, risk assessment models for institutional options trading, and pricing models for RFQ crypto, ensuring transparency and auditability.
Mechanism
The operational process involves the systematic capture and storage of model specifications, including mathematical formulations, calibration procedures, input data sources, and software implementation details. It also records validation results, backtesting analyses, and sensitivity tests, providing a verifiable audit trail for internal governance and regulatory scrutiny.
Methodology
The strategic objective of robust model documentation is to facilitate model governance, ensure regulatory compliance, and enable effective risk management. This methodology supports internal review processes, allows for independent validation, and provides a clear reference for model users, mitigating operational and reputational risks associated with opaque or poorly understood algorithmic systems in the dynamic crypto market.
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