Superannuation funds use OTC derivatives and exchange-traded futures to hedge risk, manage exposures and implement investment strategies. Yet the route from trade to clearing often depends heavily on one clearing bank. A second clearer can give a fund a practical alternative, but appointing another provider is only the beginning. The real questions are whether the fund can route the right trades there, how quickly it can do so, and whether that route makes sense over the life of the portfolio.
In this paper, Ajay Chavda, Partner and Head of Derivatives, APAC, explains why the lowest quoted fee may not be the lowest-cost route, what makes a second clearer usable in practice, and why CPS 230 is a foundation rather than a routing strategy. He also outlines a framework that combines investment and operational criteria, with each routing decision tested against the interests of members.
Read the first in our latest series of reports, available below.
WHITEPAPER
A Second Clearer: A Resilience Measure and a Member-cost Decision
Saving $10,000 on clearing fees could cost a super fund $250,000 in funding.
