Enhancing the stability of Australia’s financial markets
A key requirement of the Reserve Bank of Australia’s Financial Stability Standards for Central Counterparties is that a central counterparty must have sufficient risk controls to provide a high degree of confidence that it can settle its obligations if there is a default by its two largest clearing participants and their affiliates in extreme but plausible market conditions.
As a result, ASX Clear (Futures) has multiple layers of risk controls, including:
- minimum capital requirements for clearing participants, monitored through financial returns
- intraday and end of day margining of clearing participants’ futures, options and OTC derivatives positions, including variation margin and initial margin calculated on open positions
- daily stress testing of clearing participant positions under extreme but plausible market conditions to ensure the ongoing adequacy of clearing house financial resources, including additional margin calls where required to manage the exposure
- conditions to restrict permissions, impose limits or direct participants to close out contracts
- a default fund comprising commitments from clearing participants and committed ASX assets, which may be applied to support and discharge ASX Clear (Futures) financial obligations under open contracts in the event of a default.