🇦🇺Australia

Liquidity Overcommitment Risks

2 verified sources

Definition

CPs legally settle all novated trades regardless of client receipt, requiring high capital buffers. Manual processes exacerbate poor visibility into net exposures.

Key Findings

  • Financial Impact: AUD millions in excess capital/liquidity requirements per CP; potential to revolutionise with real-time reducing costs by 50-80%
  • Frequency: Ongoing for T+2 cycle per trade
  • Root Cause: Batch settlement and bilateral confirmation delays pre-novation

Why This Matters

The Pitch: Third-party clearing in Australia 🇦🇺 incurs significant capital costs from novation exposures. Real-time clearing automation removes T+2 liquidity drag.

Affected Stakeholders

Clearing Participants, Risk Managers, Treasury

Deep Analysis (Premium)

Financial Impact

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Current Workarounds

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Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

Novation Processing Bottlenecks

AUD 10M+ daily capital locked in liquidity buffers per major CP; 20-40 hours/month manual validation per participant

Novation Failure Penalties

AUD 50,000-500,000 per breach in fines/liquidity calls; full trade value exposure if novation fails

Trading Suspension Opportunity Costs

AUD millions in lost trading value per major outage (e.g., 80-company December 2024 incident); 2-minute ETR halts x multiple stocks daily

Compliance Monitoring Overhead

20-40 hours/week manual surveillance at AUD 150/hour specialist rate = AUD 156,000 - AUD 312,000 annually per team

Monitoring Process Delays

6 weeks standard review delay = AUD 500K+ market exposure per cycle for mid-cap entities

Delisting Risk Fines

AUD 1.5M minimum working capital requirement; failure risks delisting and AUD 100K+ ASIC fines per breach

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