Derivatives market clearing

Derivative trades executed on ASX Trade are sent to ASX Clear for registration and clearing.

The Derivatives Clearing System (DCS) captures reported derivatives trade information and disseminates it to the relevant participants in near real-time. If a trade does not have underlying client allocation details specified at the time of order entry, the participant can allocate the trade to one or more accounts or give-up the trade to another participant, who can then take-up the trade. Any unallocated trades at end of day are allocated to the default house account of the participant.

DCS calculates each participant's settlement obligation, including premiums, fees, commissions and margins, less their existing cash balance and collateral. DCS also processes expired contracts to exercise relevant positions and randomly assign them to counterparties.  Any trades resulting from the expiry process that involve the physical delivery of securities are automatically reported to ASX Trade. 

DCS automatically provides a number of reports to participants, including financial, collateral, position, exercise and reconciliation reports. We strongly recommend that clearing participants do a daily reconciliation with DCS data, including:

• position count, allocation and activity
• exercise allocation and activity (manual and automatic)
• financial reconciliations (premium, interest, fees, commission)
• match out activity
• margin allocation, and
• collateral value and activity.