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Post Trade Risk Management
AD Clear is committed to maintaining a secure and resilient clearing environment. Our Default Fund and Waterfall structure plays a critical role in managing and mitigating the risks associated with member defaults. This page provides an overview of the Default Fund's purpose, contributions, and the sequence of loss absorption in the event of a default.
The Default Fund is a financial safeguard designed to cover losses that exceed the collateral provided by a defaulting Clearing Member. It is an essential component of AD Clear's risk management framework, ensuring that sufficient resources are available to manage defaults and protect the integrity of the clearing system.
Default Funds’ contribution can be posted in cash (AED) only.
Contributions to the Default Fund
AD Clear's default waterfall establishes the sequence in which the financial resources of a defaulted Clearing Member, non-defaulting Clearing Members and the resources of AD Clear are utilized to meet liquidation losses arising from default event. This is designed to be aligned with standard industry practice, i.e. defaulter-pays principle.
AD Clear's Default Fund and Waterfall structure provide a robust mechanism for managing and mitigating the risks associated with member defaults. By ensuring a well-defined sequence of loss absorption, we protect the integrity of the clearing system and maintain the confidence of our participants. Our commitment to proactive risk management and financial stability underscores the trust and reliability that AD Clear brings to the market.