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Recovery and resolution

In accordance with Australian regulatory standards, ASX Clear has established a framework of recovery tools to address credit losses and liquidity shortfalls, and replenish default funds following a clearing participant default

ASX recovery and resolution framework

Recovery

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.

ASX Clear recovery rules

We have consulted widely with customers and other stakeholders on enhancing our operating rules to comply with domestic and international standards.  Here are the rules applying to ASX Clear.

ASX Clear Operating Rules

ASX Clear Procedures

ASX Recovery Rules

ASX Recovery Handbook

ASX Consultation Material

Resolution

The Council of Financial Regulators is further considering the design of a proposed financial market infrastructure resolution regime for Australia. ASX Clear recovery plans will need to be consistent with any proposed resolution regime.