Clearing
ICDX has established a wholly owned subsidiary, Identrust Security International (ISI Clearing House) for undertaking all clearing, settlement & risk management functions.
ISI Clearing House becomes the Central Counterparty for all trades executed on ICDX trading platform through the process of novation, whereby it acts as a Seller to all Buyers and Buyer to all Sellers on the Exchange. ICDX provides Settlement Guarantee for all deals executed on ICDX platform. This provides a tremendous confidence to market participants as the counter-party risk is eliminated in this process.
In order to protect market participants from any counter party credit risk, ICDX has established a Settlement Guarantee Fund (SGF). The settlement guarantee provided by ICDX is underpinned by a system of initial margin, daily marking-to-market procedures and additional margins.
Trade is facilitated on a pre-margin basis, thus reducing the need for a large Guarantee Fund for the Clearing Corporation. As a result, ISI Clearing House is capitalised (as required by COFTRA) to US$ 2 million. Each clearing member is required by ISI Clearing House to deposit collaterals. As the Exchange goes forward and becomes profitable, it will retain earnings and contribute to the Guarantee Fund.
