FIA has submitted its response to ASX on its proposed Dynamic Default Fund Framework. In its response, FIA welcomed the initiative to strengthen resilience and risk management and also urged refinements to better align with international standards and market practice.
FIA raised concerns over the proposal to reduce default waterfall tranches and to include ASX’s skin-in-the-game in clearing participants’ replenishment obligations, noting this would diverge from global norms and place excessive burdens on clearing participants. FIA also recommended that default fund sizing be based on peak stress exposures rather than averages.
FIA further encouraged ASX to enhance transparency through backtesting and allocation analysis, and to maintain robust SITG protections to strengthen the overall framework.
Read full response here.
