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OTC Client Clearing API

International regulation and the growing popularity of using electronic trading venues to execute swap trades has seen the introduction of initiatives that are central to the reduction of counterparty risk. These initiatives are:

  • The automation of the clearing take-up process by the CCP via API messaging technology; and
  • The requirement for pre-clearing client limit checks on a per trade basis

Therefore, as part of ensuring ASX delivers an OTC service that is aligned with international best practice, ASX OTC Clearing is expanding the platform functionality to include an OTC Client Clearing API. The API will enable ASX to align with globally standardised clearing workflows that automate eligibility and client limit checks required before clearing and ensures continued adherence to strict regulatory requirements both locally and abroad.

The API service is expected to be available no later than 29 May, 2017.

 

Design Approach

The OTC Client Clearing API will deliver:

  • Functionality to support clearing workflows for both voice and platform executed IRS trades
  • Support for client credit limit checks via either the client’s Clearing Participant or a central limit hub
  • Use of market standard FpML messaging

 

API Development Roadmap

There are currently two scheduled releases.

Release 1 - May 2017

Release 1 of ASX’s API development focuses on changes to OTC client clearing workflows where MarkitWire is the primary source of trade registration. Messaging workflows will enable Clearing Participant credit-checks and take-up via the following mechanisms:

  1. Automated pre-trade credit check: Enabling executing brokers, Swap Execution Facilities (SEFs) and other approved platforms to utilised MarkitWire to submit Client Clearing trades to ASX with a pre-trade credit token
  2. Request for Consent (RFC): Following submission of trades to ASX without an automated credit token, a standardised RFC message will be delivered in FpML format to Clearing Participants, or appropriate third party limit hubs, to approve/take-up new OTC trades on behalf of their clients.

 

Release 2 - TBC

The current scope of release 2 will expand the above workflows to be submitted to/from Swap Execution Facilities (SEFs) (or other trade registration platforms) as an alternative to submitting trades via MarkitWire. Minor enhancements to FpML messages will also be made in order to support:

  • RFC workflows on client trades being transferred to clients either within the same Clearing Participant or to clients of another Clearing Participant
  • Post clearing block trade allocations
  • Support for packaged deals, where swaps have been executed as either curve, spread or butterfly trades

Timeline

Technical Documentation

FpMl messaging specifications and details of external connectivity requirements are contained within the following documents:

 

Customer Testing

Testing of the API functionality will commence from 24 April, 2017.

Details of how to connect to ASX external test environments and minimum required tests will be released closer to this date.

 

Further Information

For any additional information on this service please contact:

Allan Mcgregor Candice Trevenna

Senior Manager, Rates

T: +61 (0)2 9227 0814

M: +61 (0)467 642 566

E: allan.mcgregor@asx.com.au

Senior Manager, Clearing Risk Development

T: +61 (0)2 9227 0595

E: candice.trevenna@asx.com.au