Eligible Collateral

Collateral Type

AD Clear prioritizes maintaining a robust risk management framework by requiring Clearing Members to meet margin requirements using approved collateral, which are designed to ensure high liquidity and minimal risk.

Clearing Members must provide initial collateral upon admission to the AD Clear and on demand to ensure they can cover their obligations in the clearing process.

AD Clear accepts the following collateral:

• Cash (AED): Easily liquidated to meet margin requirements promptly.

Haircut

To further manage risk, AD Clear applies haircuts to the collateral provided by Clearing Members. A haircut is a percentage reduction applied to the value of collateral to account for market risk, ensuring that the collateral’s value remains sufficient to cover potential exposures even in adverse market conditions. The specific haircut rates depend on the type and quality of the collateral, with higher-risk assets receiving larger haircuts.

• No haircut for cash collateral denominated in AED.

Concentration limits

This refers to the maximum allowable percentage or amount of a specific type of collateral that a clearing member can use to cover their margin requirements. These limits are imposed to reduce the risks associated with relying heavily on a single type of asset class for collateral.

• No concentration limits will be applied on cash collateral denominated in AED.