ASX Clear approach for participant exercise errors
The following information outlines the approach generally followed by ASX Clear where as a result of a participant error (irrespective of whether caused or contributed to by its client) the participant:
- failed to exercise an Options CCP Contract; or
- exercised an Options CCP Contract,
and the participant requests ASX Clear’s assistance in contacting counterparty participants who are sellers of the Options CCP Contract in order to address the error.
Participant may contact ASX Clear
In the event that a participant has made an error in having sent or not having sent a clearing message in DCS which results in an Options CCP Contract not being exercised, or being exercised, in error, as applicable, the relevant participant (‘requesting participant’) may request ASX Clear to contact the participant(s) who are the sellers of the affected Option CCP Contract series and who have been allocated or not allocated an exercise notice, as applicable, (‘counterparty participants’) and ask them if they are prepared to address the exercise error.
Such request for assistance must be made by the authorised signatory for the requesting participant contacting ASX Clearing Operations by 9am on the business day following the error. The request must also be provided in writing as soon as possible to ASX Clear (email@example.com) in the form as may be specified by ASX Clear from time to time. The request must include;
- Clearing Participant ID
- Account number
- ASX Code
- Affected Option Series
- No of Contracts affected
- Nature of Error (ie whether as a result of the error there was a non-exercise or exercise of the affected Options CCP Contracts)
- Contact details
Where ASX Clear has received such a request it will, to the extent reasonably practicable, contact prior to 9:30am on that business day the counterparty participant/s and inform them of the error and ask them if they are prepared to address the exercise error.
ASX may at this stage disclose the identity of the requesting participant to the counterparty participants.
Counterparty participant discretion
It is at the absolute discretion of the relevant counterparty participant as to whether they agree to address an exercise error.
If the counterparty participant indicates it is prepared to address the error or consents to its details being provided, ASX Clear will inform both parties of each other’s contact details.
It is then a matter for both parties to contact each other and to negotiate between themselves as to whether they agree to address the exercise error and the terms of any such agreement.
Other than for certain limited circumstances related to an exercise error other than at expiry, any actions agreed between the requesting participant and counterparty participant to address a participant exercise error are to occur directly between those participants outside of the exercise and allocation process undertaken by ASX Clear and ASX Clear and its Derivatives Clearing System records will not reflect any such arrangement agreed between the relevant participants.
Under no circumstances will ASX Clear undertake to resolve the participant exercise error on behalf of the requesting participant.
Note that notwithstanding anything contained in this document, a participant does not have a right to have its exercise error addressed and ASX Clear and counterparty participants are under no obligation to address the error.
ASX Clear emergency assistance
The approach set out in this document in relation to exercise errors is not intended to address the scenario where a clearing participant is experiencing technical problems in the transmission of clearing messages before the exercise cut-off time. Under these circumstances a clearing participant may contact ASX Clear before exercise cut-off and request ASX Clear’s emergency assistance to address such circumstances under ASX Clear Operating Rule 6.9, including for ASX Clear to submit exercise notices on their behalf. A request for assistance in those circumstances will be dealt with by ASX Clear in accordance with its Operating Rules.
This document provides general information only and may be subject to change at any time without notice. ASX Limited (ABN 98 008 624 691) and its related bodies corporate (“ASX”) makes no representation or warranty with respect to the accuracy, reliability or completeness of this information. To the extent permitted by law, ASX and its employees, officers and contractors shall not be liable for any loss or damage arising in any way, including by way of negligence, from or in connection with any information provided or omitted, or from anyone acting or refraining to act in reliance on this information. The information in this document is not a substitute for any relevant operating rules, and in the event of any inconsistency between this document and the operating rules, the operating rules prevail to the extent of the inconsistency.