Assessment of ASX Clearing and Settlement Facilities – September 2019 Appendix C2. Financial Stability Standards for Securities Settlement Facilities
Standard 5: Collateral
A securities settlement facility that requires collateral to manage its or its participants' credit exposures should accept collateral with low credit, liquidity and market risks. A securities settlement facility should also set and enforce appropriately conservative haircuts and concentration limits.
ASX Settlement | Austraclear |
Not applicable | Not applicable |
ASX Settlement does not assume credit risk as principal (see SSF Standard 4). Furthermore, the settlement process does not give rise to credit exposures for participants, since settlement occurs on a DvP Model 3 basis (see SSF Standard 10) and replacement cost risk (in respect of on-market trades in ASX-quoted securities) is managed via novation to ASX Clear as central counterparty. Accordingly, ASX Settlement does not collect collateral from participants.
Since Austraclear settles on a DvP Model 1 basis and does not assume credit risk as principal (see SSF Standard 4), it does not collect collateral from participants.
The Bank has therefore concluded that SSF Standard 5 and SSF Sub-standards 5.1 to 5.7 do not apply to ASX Settlement or Austraclear.