To handle Managers who don't make any trades but still redeem their commissions every Cycle, there is a Risk Threshold implemented which disincentivizes managers from just sitting on the fence, blocking capital and redeeming their commissions.
This Risk Threshold mechanism measures the amount of risk each manager has taken in a cycle, and only gives them the full commission amount if the risk they've taken exceeds a certain threshold. If an Asset Manager doesn't make any trade at all he won't get any rewards as his / her Risk = 0.
Risk Threshold Formula
We measure the risk a manager has taken using the formula:
And the threshold we have chosen for each manager is: