ASX Clear (Futures)
ASX Clear (Futures) is the Clearing House for all futures and options products traded on ASX Trade24 and all eligible OTC products submitted via an approved Affirmation Platform.
ASX Clear (Futures) provides central counterparty (CCP) clearing of exchange-traded derivatives and over-the-counter (OTC) derivatives.
Through the novation process, the CCP assumes the credit risk of all trades centrally cleared and facilitates an efficient and orderly clearing and settlement function for the market.
LEI: 549300ZD7BBOVZFVHK49
Trades executed on ASX Trade 24 or otherwise executed in accordance with the ASX 24 Operating Rules, and OTC trades affirmed on an ASX approved Affirmation Platform, are submitted to ASX Clear (Futures) for registration.
Once ASX Clear (Futures) accepts and novates a Market Contract or OTC Transaction, it becomes two Open Contracts: one each between ASX Clear (Futures) and the respective Clearing Participants. If a Trading Participant is not also a Clearing Participant, the contract is with their Guarantor Clearing Participant. More details on the novation process are available here.
A Clearing Participant can allocate or transfer an Open Contract to another Clearing Participant, provided the recipient accepts it; the contract will then be registered in the recipient's name. In circumstances where a non-Clearing Trading Participant has been granted access to the clearing system by their Guarantor Clearing Participant for the purpose of allocating Open Contracts, that non-Clearing Trading Participant may allocate an Open Contract to a Clearing Participant that is not their Guarantor Clearing Participant, subject to the recipient accepting it.
At the end of each clearing day, ASX Clear (Futures) will margin the Clearing Participant a daily variation margin based on the movement in the value of the positions, and an initial margin calculated on the open positions held across the House and Client account for settlement the following business day. The Clearing Participant will arrange settlement via Austraclear and/or ASX Collateral.
Membership
ASX offers a range of participant membership categories that span our trading, clearing and settlement facilities.
Products Cleared
ASX provides the ability for Banks, Funds and end-users across the globe to clear A$ and NZ$ OTC Interest Rate Derivatives 24 hours per day between Monday morning and Saturday (7:00am AEST).
Client Protection
ASX has established an account structure and set of governing rules that enables Participants to offer their Futures and OTC Derivative customers the choice of clearing through an Individual Client Account or the traditional Client Omnibus account.
Risk Management
ASX views effective risk management as key to achieving and maintaining its operational and strategic objectives. ASX CCPs operate within a comprehensive risk management framework incorporating layers of risk controls, which enable CCPs to manage their clearing risks with respect to Margining, Exposure Limits, Stress Testing and Default Management.
ASX Clear (Futures) services are provided to clearing participants who are typically brokers or clearing and custody service providers. The two key benefits to clearing participants are netting efficiencies and counterparty credit protection.
ASX Clear (Futures) is approved as a ‘netting market’ for the purposes of the Payment Systems and Netting Act. This enables the netting of settlement obligations in each individual equity providing greater market efficiency at the time of settlement and reducing participant transaction and funding costs.
Diagram 1 below depicts Participant A’s trading activity in a single product
At a gross level, Participant A has sold 100 contracts to, and bought 50 contracts from, Participant B. Participant A has also sold 30 contracts to, and bought 50 contracts from, Participant C.
Diagram 2 below represents the netting efficiencies post novation
With ASX Clear (Futures) as the central clearinghouse, Participant A’s trades with Participants B and C are replaced with trades between Participant A and ASX Clear (Futures). Post netting this becomes a net sale of 30 contracts from Participant A to ASX Clear (Futures).
Through novation, ASX Clear (Futures) provides protection to non-defaulting clearing participants (and, indirectly, their clients) from a defaulting clearing participant which does not meet its obligations. Different arrangements apply for different categories of financial product transactions.
Clients, typically investors, must be fully informed and satisfied with the creditworthiness and performance risk of their clearing participant. ASX Clear (Futures) does not interpose itself between a clearing participant and its clients. Novation does not change the exposure that clients have if their own clearing participant defaults and cannot meet its obligations to them.
Watch and learn how these services culminate in a highly regulated, diverse network that provides efficient access to deep liquidity required to manage risk. ASX continues to optimise and extend this network of services to meet evolving customer needs in a changing marketplace and economic environment.
