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 October 2016, ASX OTC Clearing has cleared over A$4.7 trillion in OTC notional value.
The Australian market will always be most important to ASX. We have over 140 staff based in Sydney dedicated to business, technology, operations and management. This local focus means ASX naturally has the deepest understanding of Australian regulation, onshore default management, collateral custody and bankruptcy treatment, as well as the deepest connections into the local market, to take effective and efficient action.
ASX OTC Clearing is focussed on delivering market-aligned best practice, including:
- Industry approved margining model based on a historical Value at Risk (VaR) methodology.
- Cross-product margin offsets between interest rate futures and OTC derivatives (initial margin reductions of up to 50% have been achieved).
- Market standard connectivity via the MarkitSERV OTC Trade Affirmation platform.
- Distribution via OTC trading platforms.
- Austraclear connectivity.
- Large range of acceptable collateral with access to centralised Collateral Management through ASX Collateral.
- Operating cycle from 6:00am to 9:00pm (AEST).
- Real time clearing in the Australian time zone.
Broad AUD product offering
ASX's OTC Clearing service can support a broad suite of A$ 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 1m vs. BBSW 6m (10yrs)
- BBSW 3m vs. BBSW 6m (30yrs)
- AUD Single Currency 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 currencies in 2017.
Enhanced Client Protection structures
In 2014 ASX established an account structure that enables its Participants to offer their futures and OTC Derivative customers an account option that allows for separate identification and protection of individual customers’ gross positions and collateral value.
On 31 August 2015, the introduction of client account enhancements for ASX 24 Exchange Traded Derivatives and OTC Interest Rate Derivatives became effective. The Operating Rules of ASX Clear (Futures) were amended to enable:
- excess client collateral to be held directly with ASX for individual client accounts; and
- a Clearing Participant to instruct ASX to attribute specific cash and non-cash collateral to an individual client account so that in the event of a Clearing Participant default ASX can port to an Alternative Clearing Participant or return (less close-out costs) directly to the client, equivalent collateral to that attributed.
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 a service description outlining the core components of the service, two FAQ documents; one for Clients, one for Clearing Participants and fact sheets for Client Clearing.
- OTC client clearing service description
- Clearing Participants FAQ
- Clients FAQ
- Client Fact Sheet
- Client Protection Model Fact Sheet
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.
ASX Fixed Income Sales group
Phone: +61 (2) 9227 0026