Clearing is an essential process in financial markets, ensuring the security of transactions from execution to settlement. It involves managing positions, calculating obligations, and ensuring there is sufficient cash or financial instruments to cover potential risks.
Asia Commodity Clearing House (ACCH) is a fully owned subsidiary of ACM and the designated clearinghouse for our markets.
ACCH provides clearing and settlement services for all traded transactions across the range of products listed on ACM. Our processes are designed for efficiency, security, and transparency, providing comprehensive solutions to customers globally.
Risk Management
ACCH continuously monitors the financial health of member firms and mitigates potential financial risks, ensuring the stability and integrity of the markets.
Counterparty Risk Mitigation:
ACCH acts as the counterparty to both sellers and buyers, thus mitigating counterparty risk. This allows transactions to be completed with confidence as ACCH guarantees payment and delivery of the underlying commodities.
Membership criteria and Credit-worthiness:
Our clearing members strictly follow ACCH-approved trading rules and Third-Party mandate agreements, ensuring a secure and regulated commodity trading environment.
Clearing Members are required to report their activities and end balances daily to ACCH for financial surveillance review. This process involves assessing the adequacy of deposited margins against current market conditions and the individual risk profiles of the members. Our risk management framework allows us to efficiently manage potential risk and under-collaterization.
Margining Services and Market Risk Management
Margins, also known as Performance Bonds, are deposits required to ensure that a trading participant can cover potential losses with its positions. Margins help ensure that clearing members can meet their obligations to their customers and to ACCH. Performance bonds/margins vary according to product and market volatility.
ACCH implements risk-based margining to cover anticipated price changes and uses quantitative and qualitative metrics to determine margin rates. Continuous mark-to-market valuation keeps the market value of positions transparent and updated.
Default Management
ACCH effectively handles clearing member defaults by ensuring the costs of closing the defaulter's position do not exceed their margin and guaranty fund contributions.
This strategy is vital in safeguarding non-defaulting members and maintaining the stability of the markets ACCH serves. ACCH is equipped with extensive powers, as stipulated in their default management rules, to efficiently manage such defaults.
In extreme situations, ACCH has a financial safeguards package to minimize market risks. ACCH supports the defaulter pays model and the defaulting party takes the first loss via its own contributions to the guaranty fund, prior to using any resources of non-defaulting clearing members. This model limits the likelihood that losses would be extended.
This process is part of ACCH's broader effort to maintain market continuity and client confidence during default scenarios.
Rules and Regulations
ACCH, as a clearing house operating in Indonesia, complies with regulations set forth by BAPPEBTI (Badan Pengawas Perdagangan Berjangka Komoditi), the Indonesian Commodity Futures Trading Regulatory Agency.
This compliance involves adhering to standards and rules regarding financial integrity, market conduct, and consumer protection. ACCH ensures that its operational practices align with BAPPEBTI's requirements, including reporting, risk management, and transparency mandates.
This alignment is crucial for ACCH to operate effectively within the Indonesian commodities market and maintain the trust of its participants.
Physical Delivery
ACM is a global exchange specialising in physical commodities. We offer delivery based trading for Commodity Repurchase agreements (Repos) and other commodity derivatives.
Delivery-based trading grapples with the challenges of intricate logistics, quality assurance, and counterparty default risks, all magnified by the necessity of physically handling commodities. ACCH addresses these issues, ensuring that the physical delivery of commodities is executed effectively and efficiently.
Warehousing:
Warehousing is crucial for the physical delivery of commodities as it ensures the safekeeping and quality preservation of goods between production and distribution. It mitigates market and environmental risks, optimizes logistics, and reduces costs through goods consolidation. Warehouses also facilitate financing by providing warehouse receipts as collateral, underpinning the commodity's value and securing supply chain integrity.
ACCH, as a subsidiary of CWT Group, benefits significantly from CWT's extensive warehousing network for the physical delivery of commodities. This affiliation allows ACCH to leverage CWT's strategically positioned facilities across Europe, the Middle East, Africa, and Asia. These facilities, including those accredited by the London Metal Exchange (LME) and the Intercontinental Exchange (ICE), offer a range of services essential for commodity logistics.
ACCH's access to this network enhances its capabilities in handling, storage, and overall logistics, providing a comprehensive solution for the physical delivery needs of its clients. The integration with CWT's advanced information systems for inventory management further streamlines the process, ensuring a secure and efficient delivery chain for global commodity trading.
All warehouse partners have been stringently vetted and chosen to ensure that goods stored in their warehouses are managed with expertise.
ACCH streamlines the process of physical delivery by coordinating logistics and ensuring that commodities are delivered to the market participants in a timely manner. This facilitates a smooth transition from the trading of Commodity Repos or derivatives to the actual transfer of physical commodities.
Warehouse Receipts Management:
ACCH holds all warehouse receipts related to Repos and derivatives traded on ACM as irrefutable proof of the commodities' presence and status within the storage facilities. ACM has strict protocols and requirements for our warehouse operators.
Inventory Monitoring:
Throughout the financing period, ACM diligently monitors the inventory to ensure the consistent quantity and quality of the commodities and ensures the integrity of warehouse operations This proactive approach minimizes risks for both parties involved in the agreement.
Physical Delivery and Settlement:
ACCH streamlines the process of physical delivery by coordinating logistics and ensuring that commodities are delivered to the market participants in a timely manner. This facilitates a smooth transition from the trading of Commodity Repos or derivatives to the actual transfer of physical commodities.
From risk mitigation to transparency and liquidity enhancement, ACCH can play a vital role in your physical and derivative trading. ACCH, with its risk-based margining and ability to consolidate physical and derivative positions, can contribute significantly to the sector's operational and capital efficiency.
Physical Collateral Management
Transparent and secure, ACM strives to provide financiers with the highest level of information for all managed collateral.
The value and quality of commodities used as collateral are strictly assessed in determining the financing capacities of commodity suppliers.
Along with our network of reputable warehouse partners, we ensure strict quality control of the commodities held.
Settlement and Delivery
The clearing house administers all aspects of settlement right through to the physical delivery mechanisms. As physical commodities are very diverse in nature, ACCH strives to cater and customize the process for each commodity to ensure smooth operational transitions and excellent service standards for our market participants.
