ASX aims to provide new risk management controls to Australian investors and asset managers, allowing them to protect their individual positions and collateral in the event of a significant default.
The OTC derivatives clearing service is integrated into ASX market infrastructure, and is regulated under Australian law.
ASX is now working to extend the OTC derivatives clearing service to add a client clearing solution for Australian investors. This will provide important mechanisms to transfer the client positions and the associated collateral to another clearing participant.
“ASX believes it is important that investors have access to a world-class and highly liquid clearing service in Australia. It is part of our agenda to ensure that Australia has the infrastructure that position [itself] globally and in the Asian Century,” Elmer Funke Kupper, ASX managing director and chief executive said.
ASX has been working with a client forum from the Australian investment community to develop a domestic OTC derivatives clearing solution.
They include AMP Capital, Colonial First State Global Asset Management, Future Fund, NSW Treasury Corporation, QIC, Queensland Treasury Corporation, Suncorp Bank, Treasury Corporation of Victoria and Victoria Funds Management Corporation.
“We recognise that financial markets are increasingly global in nature....Having a domestic clearing solution available for Australian dollar interest rate swaps is therefore a valuable option to us,” David Clarke, chief risk officer of QIC, said.
“We are pleased that a number of banks are working with the ASX to deliver a local solution,” he added.
This extension of ASX’s OTC derivatives clearing service is scheduled for delivery by the end of 2013, subject to regulatory approval and customer readiness.
