Risk management

As a central counterparty clearing house, ASX Clear (Futures) is counterparty to each Clearing Participant on all ASX 24 futures and options transactions. In order to ensure the ongoing financial performance of those contracts in the event that a Clearing Participant fails to honour its obligations to the central counterparty, ASX Clear (Futures) undertakes a range of important risk management activities to mitigate this default risk, thereby protecting the non-defaulting Clearing Participants and their clients.

Arising from this obligation, ASX Clear (Futures) is exposed to the counterparty risk that its Clearing Participants defaults and that the central counterparty incurs losses due to market prices moving adversely before ASX Clear (Futures) closes out (replaces) the open positions of the defaulting Clearing Participant. ASX Clear (Futures) continually measures, monitors and ultimately protects itself against the risks.  Key risk management protections include the following:

  • Margins and position monitoring
  • Capital Based Position Limits ('CBPL')
  • ASX Clear (Futures)’s $400mn in financial resources set aside for potential losses arising from a Clearing Participant default
  • Admission criteria, including ongoing minimum financial adequacy requirements

ASX also operates a fidelity fund to cover losses sustained by a client of an ASX 24 Participant caused by defalcation or fraudulent misuse of money or other property which was entrusted to the Participant for the purposes of futures trading.