We stand between every buyer and every seller, so that neither has to trust the other.
Clearing is the Exchange capability that turns a bilateral bargain into an obligation to a central counterparty. At novation the clearing house becomes buyer to every seller and seller to every buyer, and from that moment the credit question in the market is a question about us, not about the operator on the other side of the trade.
That substitution is only worth anything if it is funded. The Exchange sizes margin to a two-day close-out, calls variation at least once per session, maintains a default fund with skin in the game ahead of members, and publishes the waterfall that determines who bears a loss and in what order.
Cleared Value, Trailing Year
Clearing Members
Margin Held
Settlement Cycle
How Clearing Works Here
Novation at match
A matched trade is novated to the clearing house within the session it was executed in. There is no window in which two operators face each other unmargined, and no bilateral credit assessment standing between a small producer and a large offtaker.
Margin sized to close-out, not to comfort
Initial margin is set to cover a two-day close-out at a 99% confidence level on five years of corridor price history, floored by a stress scenario the Exchange publishes. Variation margin is called at least once per session and twice in stressed conditions.
A default waterfall members can read
A defaulting member's margin is consumed first, then its own default fund contribution, then a pre-committed tranche of Exchange capital, and only then the mutualised contributions of surviving members. The Exchange's own capital sits ahead of members' by design.
Porting before liquidation
Where a General Clearing Member fails, client positions and the margin supporting them are transferred to a receiving member wherever one can be identified within the porting window. Liquidation is what happens when porting fails, not instead of it.
Settlement across a panel
Cash settlement runs across a panel of admitted Settlement Banks, each committing an intraday liquidity line. No corridor opens without at least two panel banks covering its settlement currency.
What Clearing Changes
Counterparty risk becomes measurable
Operators price a known central counterparty instead of assessing every trading partner. Small producers get the same credit terms as large ones.
Working capital is released
A T+1 finality cycle returns roughly a week of working capital to producers who previously carried consignments through a bilateral settlement lag.
Failure is contained
A member default is absorbed by a funded waterfall rather than propagating through the corridor as a chain of unpaid obligations.
Governance and Oversight
Clearing concentrates risk deliberately, so the governance around it is where the Exchange is most explicit about who decides what.
Risk committee with member representation
Margin models, default fund sizing and stress scenarios are reviewed by a risk committee that includes Clearing Member representatives and independent members, and whose recommendations are published with the board's response.
Annual default management exercise
Every Clearing Member, General Clearing Member and Settlement Bank participates in a live default management exercise each year. Findings are published in summary and drive the following year's rulebook amendments.
Independent systems audit
Clearing systems, margin calculation and the settlement interface are audited annually by an independent firm, with the audit opinion published to members.
Ninety days' notice
Changes to margin methodology, the default waterfall or the settlement cycle carry ninety days' notice, except where an emergency power is exercised and reported to members the same day.
