The natural home of A$ OTC liquidity
Delivered as part of ASX's interest rate franchise alongside the existing futures offering, ASX's OTC Clearing service is tailor made to meet the risk management needs of the Australian market, whilst adhering to the highest global regulatory standards. As of February 2017, ASX OTC Clearing has cleared over A$6.7 trillion in OTC notional value.
The Australian market will always be most important to ASX. We have over 500 staff based in Sydney dedicated to business, technology, operations and management. This local focus means ASX naturally has the deepest understanding of Australian regulation, onshore default management, collateral custody and bankruptcy treatment, as well as the deepest connections into the local market, to take effective and efficient action.
ASX OTC Clearing is focussed on delivering market-aligned best practice, including:
- 24 hour clearing between Monday 12.01am and 7:00am Saturday (AEST)
- Cross-product margin offsets between interest rate futures and OTC derivatives delivering significant initial margin reductions
- Industry approved margining model based on a historical Value at Risk (VaR) methodology
- Distribution via OTC trading platforms.
- Large range of acceptable collateral with access to centralised Collateral Management through ASX Collateral.
- Austraclear connectivity
Broad AUD product offering
ASX's domestic focus means our OTC Clearing service can support a broad suite of A$ products, including:
- AUD Interest Rate Swaps
- BBSW 1m vs. Fixed (10yrs)
- BBSW 3m, 6m vs. Fixed (30yrs)
- AUD Overnight Index Swaps (3yrs)
- AUD Single Currency Basis Swaps
- BBSW 1m vs. BBSW 3m (10yrs)
- BBSW 3m vs. BBSW 6m (30yrs)
- AUD BOB Swaps
- BBSW 1m vs. AONIA (10yrs)
- BBSW 3m vs. AONIA (10yrs)
- BBSW 6m vs. AONIA (10yrs)
A detailed ASX OTC Clearing trade eligibility matrix is available here.
ASX is also working towards introducing additional additional A$ products and NZD Interest Rate Swaps in the future.
Enhanced Client Protection structures
ASX's Client Protection Model supports the Client Clearing serice and creates a higher level of custoemr protection in two key areas:
- Account Segregation - The Model introduces the Individual Client Account (ICA) alongside the Client Omnibus (or traditional 'pooled') account, offering customers a choice of clearing accounts. The ICA's structure segregates an indivual customer's gross positions and associated collateral value from those of the Client Omnibus account. The ICA structure can also identify customer's specific collateral and protect excess collateral.
- Account Portability - The Model affords further protection to those customers who opt for an ICA account by giving them the opportunity to transfer ('port') their positions to a named alternate clearer, if their current clearer defaults. If porting cannot occur, and ASX are required to terminate the contracts in the ICA, any remaining collateral value will be returned directly to the customer.
The U.S. Commodity Futures Trading Commission (CFTC) issued an Order of Exemption from registration as a derivatives clearing organisation to ASX Clear (Futures) on 18 August 2015, as amended on 28 January 2016. Subject to the terms of the Order, ASX Clear (Futures) is permitted to clear proprietary swap positions for its U.S. clearing members (including transactions of a parent or affiliate of a U.S. clearing member).
Prospective Dealers, Clients and Clearing Participants of the ASX OTC Client Clearing Service can access a comprehensive listing of ASX OTC Operating Rules and information below:
To provide prospective Clients and Clearing Participants an introduction to the ASX OTC Client Clearing Service, ASX has produced two FAQ documents; one for Clients, one for Clearing Participants and fact sheets for Client Clearing.
- Clearing Participants FAQ
- Clients FAQ
- Client Fact Sheet
- Client Protection Model Fact Sheet
- OTC Derivatives Supplement
Dealer to Dealer clearing
ASX currently has 8 OTC Clearing Participants that are major swap dealers in the Australian market. For further information on becoming an ASX OTC Clearing Participant, please refer to the link below or contact ASX Business Development for further information.
T: +61 2 9227 0026