Core concepts

Risk engine

Every order intent runs through 8 checks, in a fixed order, before it can reach a venue.

Execution order

The checks run in the order below. The breaker check short-circuits the rest: if it trips, evaluation stops immediately and the intent is rejected with BREAKER_TRIPPED. Every other check runs to completion and all failures are collected into a single decision — an intent can fail multiple checks at once.

#	Check	Rejection code	Fails when
1	Breaker	BREAKER_TRIPPED	The agent's circuit breaker is tripped
2	Market filters	MARKET_BLOCKED / TAG_NOT_ALLOWED	Market is block-listed, or carries a tag outside the allow-list
3	Order size	MAX_ORDER_EXCEEDED	size_usdc exceeds max_order_usdc
4	Daily volume	DAILY_VOLUME_EXCEEDED	Rolling 24h volume + this order exceeds daily_volume_limit_usdc
5	Concentration	POSITION_CONCENTRATION	Resulting position exceeds max_concentration_pct of bankroll
6	Kelly cap	KELLY_EXCEEDED / NO_EDGE	Size exceeds Kelly-optimal sizing, or expected value ≤ 0
7	Price sanity	PRICE_BAND	Price deviates from midpoint by more than price_band_pct
8	Liquidity impact	SPREAD_TOO_WIDE / BOOK_IMPACT	Spread or estimated slippage exceeds configured maximums

Reading a risk decision

A rejected intent returns HTTP 409 with the full decision — not just the first failure:

409 response

{
  "approved": false,
  "failures": [
    {
      "code": "DAILY_VOLUME_EXCEEDED",
      "message": "Daily volume 9500 + 600 exceeds limit 10000",
      "details": { "current": 9500, "limit": 10000, "requested": 600 }
    },
    {
      "code": "POSITION_CONCENTRATION",
      "message": "Position value 4200 exceeds 25% of bankroll",
      "details": { "concentration_pct": 0.31, "max": 0.25 }
    }
  ],
  "adjusted_size_usdc": 850.0,
  "checked_at": "2026-01-15T10:30:00Z"
}

Adjusted size suggestions

When the concentration or Kelly cap check fails, Meridian computes the maximum size that would have passed. If that size is at least $5 USDC, it's returned as adjusted_size_usdc — retry the intent with that size instead of guessing.

Kelly-optimal sizing

When your intent includes a probability_estimate, Meridian computes the Kelly-optimal position size from your estimate and the market's implied odds:

kelly

kelly_size = max(0, (b·p − (1−p)) / b) × fraction × bankroll

where:
  p = your probability_estimate
  b = market odds implied by price (1/price − 1)
  fraction = configured Kelly fraction (default 0.25, i.e. quarter-Kelly)

If p·b ≤ (1−p) — no edge — the Kelly size is 0 and the intent fails with NO_EDGE regardless of size.

100% branch coverage

The risk engine is the one component of Meridian held to a non-negotiable testing bar: every branch of every check is covered by both unit and property-based tests, enforced in CI.

Circuit breaker

The breaker trips on either condition, independently:

Portfolio drawdown from the peak recorded bankroll snapshot ≥ max_drawdown_pct
10 consecutive risk rejections within a 10-minute sliding window, with no approved intent in between

While tripped, every intent for that agent is rejected immediately with BREAKER_TRIPPED — no other checks run. Reset it explicitly via POST /v1/breaker/reset once you've reviewed what happened.

Quickstart

Execution modes