Post-Trade Risk Management
AD Clear serves as the clearing house for the ADX Derivatives Market, providing Central Counterparty (CCP) clearing services for transactions in listed financial instruments. Through its comprehensive post-trade risk management framework, AD Clear supports the efficient, secure, and stable functioning of the market while strengthening investor protection and overall market resilience.
As a central counterparty, AD Clear plays an important role in managing counterparty credit risk and supporting the integrity of clearing and settlement activities. Its risk management framework incorporates appropriate margining methodologies, collateral requirements, risk monitoring, and default management arrangements across both the securities and derivatives markets.
Margining for Securities and Derivatives
For securities settlement positions, AD Clear applies a fixed-rate margining mechanism. Positions within the same instrument series are netted to determine the relevant exposure and corresponding margin requirement. This approach helps ensure that settlement risks are identified, measured, and adequately collateralised.
For derivatives transactions, AD Clear adopts a gross margining approach that enables each client account to be margined independently on a portfolio basis. Margin requirements are calculated using the Delta Hedge methodology, which is closely aligned with the globally recognised SPAN-compatible methodology.
The margin requirements calculated for individual client accounts are aggregated into a single requirement for the relevant clearing member. The clearing member’s proprietary or house positions are calculated and margined separately, supporting clear segregation and effective risk management.
Collateral and Risk Monitoring
AD Clear’s risk management measures are designed to ensure that market exposures are adequately collateralised throughout the clearing lifecycle. These measures help reduce counterparty risk and minimise the likelihood of a clearing member failing to meet its financial or settlement obligations.
Through ongoing risk monitoring and appropriate collateral management practices, AD Clear seeks to maintain sufficient financial safeguards and respond effectively to changes in market conditions. This contributes to secure clearing operations and supports confidence in the UAE capital market infrastructure.
Default Management and Market Stability
In the unlikely event of a clearing member default, AD Clear maintains robust default management procedures and contingency arrangements. These measures are designed to contain potential losses, protect market participants, and limit the wider impact on the market.
By maintaining a structured approach to default management, AD Clear helps mitigate systemic risk and preserve the continuity, stability, and integrity of clearing and settlement operations.
Transparency and Investor Protection
AD Clear is committed to safeguarding its clearing members and their clients by providing services in a fair, transparent, and non-discriminatory manner. Its policies and procedures are designed to promote consistent risk management standards and reinforce confidence among market participants.
As a key risk mitigator within the UAE capital market, AD Clear actively participates in consultations concerning regulatory developments and the introduction of new regulations, products, and services. This proactive approach enables AD Clear to strengthen its post-trade risk management practices, respond to evolving market requirements, and contribute to a resilient and well-regulated clearing environment.
Risk Management, Default Fund and Default Management
AD Clear prioritises the financial stability, security, and resilience of the clearing process, helping protect clearing members, investors, and the wider market against potential risks. Its comprehensive approach combines a robust risk management framework, a well-structured Default Fund, effective collateral and margining requirements, and clearly defined default management procedures.
Explore AD Clear’s key post-trade risk management policies and resources:
