Rain or shine, you need to be sure about forward contracts without straining the working capital. This is why we partner with leading financial institutions to ensure settlements in several ways. These depend on price exposure, risk profiles of contracting parties and their acceptance for margining, clearing or insurance.
To facilitate trading decisions, the platform
- Provides risk profiling insights during anonymous communications between registered users;
- Helps pre-authorize (filter) potential counterparties along business, compliance and security criteria.
Two parties accepting mutual performance risk may opt out of post-trade processing, with or without interim settlements.
At contract inception, each party transfers to a custodian bank an initial security deposit based on historical market volatility.
If the agreed pricing reference (spot market) rises or falls beyond the agreed limit during the contract, the affected party transfers to the bank an additional (fully refundable) security deposit.
At contract maturity, the bank transfers the settlement amount to the owed party (if any) and refunds residual security deposits.
Please refer to Model Contracts for more details.
The original contract is replaced with two contracts between each party and a clearing house.
At contract inception, each party transfers to the clearing house an initial margin based on its rules and historical market volatility. If the agreed pricing reference (spot market) rises or falls beyond the agreed limit during the contract, the affected party transfers to the clearing house an additional variation margin.
At contract maturity, the clearing house transfers the settlement amount to the owed party (if any) and refunds residual margins.
At contract inception, two parties insure each other’s non-payment risk against a one-off premium.
Insurance policies are issued by the underwriter promptly after the conclusion of insured contract.
Insurance premiums are paid by the insured parties directly to the underwriter.
At contract maturity, if the owing party fails to pay the settlement amount to the owed party, the underwriter indemnifies the latter up to the insured amount.
Please refer to Model Contracts for more details.
Flexible by design