ASX’s central counterparties (CCPs) employ a range of risk mitigation techniques to help manage the default of a Clearing Participant. These include margining, stress testing and the maintenance of financial resources set aside for Clearing Participant defaults which are designed to address shortfalls incurred in the event of the default of a Clearing Participant in extreme but plausible market conditions. ASX’s CCPs also have a range of discretionary powers they can exercise in the event of a default to minimise these shortfalls.
The Rulebooks of each of ASX’s CCPs, ASX Clear and ASX Clear (Futures), outline the circumstances that constitute a default event and the discretionary powers that are available to the CCPs.
The following links reference the main, but not only, Rulebook sections related to the default management capabilities of ASX’s CCPs.
For ASX Clear (Futures): Part 7 of http://www.asx.com.au/documents/rules/asx_clear_futures_part_07.pdf
In addition, the following documents provide a high level overview of the steps that may be taken by the ASX CCPs in the event that a Clearing Participant fails to meet its obligations to the CCP. Note that the summary information is provided for guidance only and should be read in conjunction with the ASX Clear Operating Rules and ASX Clear (Futures) Operating Rules. The documents do not replace or vary those Operating Rules.
For insolvency practitioners, please refer to this fact sheet for summary information on actions that ASX may take in the event of a participant default.
This FAQ has been developed to assist clients of ASX Clear participants in the event of a default.