ASX Clearing Corporation
ASX Clearing Corporation assists ASX participants to more effectively undertake their clearing activity by reducing systemic risk, minimising counterparty risk and by increasing capital efficiency and operating efficiency.
This is achieved through ASX Clearing Corporation’s wholly owned subsidiaries, ASX Clear Pty Limited1 and ASX Clear (Futures) Pty Limited2, which provide central counterparty facilities as well as risk management systems, securities collateralisation services and electronic 'straight through' processing of trades.
ASX Clear is Australia’s clearing facility and central counterparty for securities listed on the ASX Trade platform, including cash market securities (comprising equities, pooled investment products and warrants) and predominantly equity-related derivatives (comprising exchange traded options and futures).
1 Formerly Australian Clearing House Pty Limited (ACH)
ASX uses the margin system – CME SPAN v4.0 - to calculate margins for both CCP’s Clearing Participants. CME SPAN v4.0 was implemented on ASX Clear (Futures) in March 2012 and on ASX Clear in December 2012.
ASX is currently undertaking a project to implement routine daily cash market margining. ASX is therefore actively consulting stakeholders such as Clearing Participants and system vendors on the introduction of cash market margining.
New Regulatory Standards
Widespread regulatory-driven changes are currently affecting all financial markets and their users. These changes are also impacting the international and domestic regulatory environment for central counterparties, arising especially from the G20 mandate for the central clearing of standardised OTC derivatives. Recently there have been significant changes to the global regulatory standards for CCPs, reflected in changes to the Financial Stability Standards with which ASX’s CCPs must comply.
ASX is working closely with market stakeholders to ensure ongoing compliance with these new standards and that ASX’s CCPs maintain international best practice.
ASX Clear (Futures)
ASX Clear (Futures) is the clearing facility and central counterparty for futures and options in interest rate, equity, energy and commodity products that are traded on ASX Trade24.
ASX Clear (Futures) also offers clearing services for certain OTC and block trading related transactions.
2 Formerly SFE Clearing Corporation Pty Ltd (SFECC)
An essential function of a central counterparty (CCP) is to manage the default of a Clearing Participant of the CCP, with minimal impact on its other Clearing Participants or the wider marketplace for which it clears.
ASX’s CCPs, ASX Clear and ASX Clear (Futures), have robust rules and procedures that are designed to ensure that if a Clearing Participant defaults, the CCPs will continue to be able to meet their obligations to non-defaulting Clearing Participants, thereby reducing systemic risk and enabling the orderly continuation of trading, clearing and settlement.
The CCPs are supported by a range of risk mitigation practices and, in total, nearly $1bn of financial resources – the vast majority of which is supplied by ASX itself – held by the CCPs to cater for extreme but plausible default events.