ASX Clear

ASX Clear Pty Limited is an Australian central counterparty (CCP) that clears cash-market securities transactions and equity derivatives. Within the ASX group, it accepts eligible transactions, becomes the counterparty to clearing participants and manages the resulting obligations and risks. It is distinct from ASX Settlement, which operates the facility used to settle cash-equity transactions.^[1][2]

Role in Australian markets

ASX Clear provides clearing for shares, warrants, exchange-traded funds and other eligible cash-market products, as well as exchange-traded equity options and eligible over-the-counter equity and index options. Its services extend beyond transactions executed on the Australian Securities Exchange: transactions from approved market operators can be submitted for clearing through ASX’s Trade Acceptance Service. ASX describes ASX Clear as the sole provider of clearing services for Australia’s equity markets.^[1] That description concerns clearing, not the operation of every trading venue on which the products are bought and sold.

The distinction between trading, clearing and settlement is central to ASX Clear’s role. A trading venue brings together orders and records an executed trade. ASX Clear processes eligible trades between clearing participants and assumes obligations through *novation*. ASX Settlement then provides the securities settlement facility for cash-equity transactions through CHESS, the Clearing House Electronic Subregister System. These functions sit in related ASX-group entities but are not performed by a single legal entity.^[2][3]

ASX Clear is also separate from ASX Clear (Futures). Both are CCPs in the ASX group, but ASX Clear (Futures) clears products associated with the ASX 24 derivatives market and eligible over-the-counter derivatives. The Reserve Bank of Australia (RBA) identifies the two CCPs separately in its assessments of ASX clearing and settlement facilities.^[4][5]

Novation and netting

When ASX Clear accepts an eligible transaction for novation, the transaction between the original trading parties is replaced by obligations between ASX Clear and the relevant clearing participants. In practical terms, ASX Clear becomes the buyer to a selling clearing participant and the seller to a buying clearing participant. This substitutes exposure to the CCP for the clearing participants’ exposure to one another on the novated transaction. ASX notes that an eligible trade cleared on both sides by the same clearing participant does not require this substitution.^[3]

Novation is not necessarily identical to the moment a trade is executed. ASX Clear’s description of its process distinguishes a trade from an accepted, novated transaction; it also notes that notification of a transaction matters to novation under its operating rules. If a technical outage prevents the usual notification, ASX Clear may need an alternative means of receiving it, or affected trades may not be novated. The precise rights and obligations depend on the operating rules and the status of the transaction.^[1]

After novation, ASX Clear nets eligible cash-market obligations. Rather than processing every purchase and sale as a separate delivery at settlement, it calculates, for each clearing participant, a net receipt or delivery for each line of stock and a net cash payment or receipt. ASX states that netting is generally switched off for a stock undergoing a corporate event, leaving the relevant transactions gross through the settlement cycle. Netting reduces the volume of securities and funds that participants need to exchange, while leaving the CCP responsible for its resulting obligations.^[3][6]

Participants and client relationships

ASX Clear provides its services to clearing participants, which can include brokers and specialist clearing providers. A trading participant may clear its own trades or use a third-party clearer; trading, clearing and settlement functions can therefore be carried out by different participants. The settlement of cash-market transactions is conducted by settlement participants through ASX Settlement’s CHESS system. ASX states that clearing participants’ margin obligations to ASX Clear are settled through Austraclear.^[7]

This structure limits what CCP protection means for an individual investor. Novation changes the counterparty relationship between ASX Clear and clearing participants; it does not place ASX Clear between a broker and that broker’s client. A client remains exposed to its own participant’s ability to perform its obligations. Similarly, the collateral or margin that a broker requires from a client may differ from the margin ASX Clear requires from the clearing participant. ASX Clear sets requirements for the participant-facing relationship, while the broker and client have their own arrangements.^[3][8]

Margin and financial risk controls

A CCP assumes obligations that may have to be fulfilled even if a clearing participant defaults. ASX Clear therefore uses participant requirements, margin, collateral, stress testing and other controls to manage the risk it takes on. ASX lists minimum capital requirements monitored through participants’ financial returns, end-of-day cash-market margining, derivatives margining, daily stress tests and powers to impose additional margin or restrict a participant’s activities.^[8]

For cash-market transactions, a clearing participant lodges margin against its net novated settlement obligations. ASX describes this as a principal-to-principal arrangement intended to help the CCP close out a defaulting participant’s outstanding obligations. Its cash-market margin model includes a forward-looking risk component and, for specified securities, a mark-to-market component reflecting changes in value. Depending on a security’s characteristics, the risk component uses a historical value-at-risk calculation or a flat-rate approach.^[9]

For equity derivatives, ASX Clear uses a portfolio-based margin methodology to estimate potential losses from adverse market movements. Margin can change as prices and positions change. The requirement calculated by ASX Clear is owed by the clearing participant; a broker, in turn, determines and collects any applicable margin from its client under their arrangements. Margin is a risk control, not a guarantee that all losses in every circumstance can be covered by the amount initially collected.^[8][9]

ASX Clear also maintains arrangements for a participant default and for more extreme circumstances in which its ordinary financial resources may be insufficient. Its published recovery framework addresses credit losses, liquidity shortfalls and the replenishment of default resources following a default. ASX’s public default-management overview is guidance rather than a replacement for the ASX Clear Operating Rules, which govern the relevant powers and processes.^[7][10]

Regulation and oversight

ASX Clear holds an Australian clearing and settlement facility licence under the *Corporations Act 2001*. Both the Australian Securities and Investments Commission (ASIC) and the RBA supervise clearing and settlement facilities, with different regulatory responsibilities. ASIC describes its functions as including assessment of licence and operating-rule matters and enforcement of licensees’ obligations. The RBA assesses the ASX facilities against its Financial Stability Standards and their obligation to reduce systemic risk.^[2][4][11]

Supervision concerns more than a CCP’s ability to absorb a financial loss. The RBA’s assessments also address governance and operational resilience, including the infrastructure on which clearing and settlement depend. In its assessment released on 23 September 2026, covering 1 July 2025 to 30 June 2026, the RBA said the ASX group was still not meeting its expectations in several areas, including governance, operational resilience and risk management. It upgraded ASX Clear and ASX Settlement from *not observed* to *partly observed* against the Operational Risk Standard following specific improvements related to CHESS, while cautioning that the upgrade did not indicate a broader improvement in ASX’s operational-risk management.^[4]

The regulatory assessment of a facility should not be confused with the outcome of a particular transaction. An RBA rating addresses observance of a standard during an assessment period; it does not state that every transaction failed, or that every risk has been eliminated. Conversely, the completion of routine clearing and settlement does not resolve supervisory concerns about the systems, controls or governance supporting those services.^[4]

Place within ASX infrastructure

ASX Clear’s position between execution and settlement makes it a point of connection among market operators, clearing participants and ASX Settlement. For eligible transactions, it provides the mechanism for replacing bilateral participant exposures with obligations to a CCP and for calculating net obligations ahead of settlement. ASX Settlement provides the separate securities settlement service, while CHESS supports the processing of cash-equity settlement and records certain securities holdings.^[3][7]

These arrangements also explain why disruptions affecting linked infrastructure can matter to ASX Clear even when the entities have distinct legal responsibilities. The RBA’s 2026 assessment discussed ASX Clear and ASX Settlement together when evaluating improvements made after a December 2024 CHESS batch-settlement incident. The link does not make clearing and settlement interchangeable: ASX Clear’s core responsibility is managing accepted, novated transactions and the associated counterparty risk, whereas ASX Settlement operates the facility through which the resulting cash-equity securities obligations are settled.^[2][4]