Regulatory standards set by the Reserve Bank of Australia (RBA) require ASX Clear to establish powers (‘recovery tools’) under its Operating Rules to:
- Fully address any credit losses or liquidity shortfalls as a result of clearing participant default, and
- Replenish its default funds following a default.
The RBA standards require these recovery tools to:
- address extreme scenarios in which the ASX Clear’s financial resources are insufficient to cover credit losses or payment obligations following a clearing participant default, and
- Be consistent with international guidance on recovery of financial market infrastructure (FMI).
In addition, we are required to have comprehensive arrangements to allocate losses from the custody and investment risks we incur as a result of our clearing activities.