Clearing Risk Management at NASDAQ OMX Derivatives Markets

The Clearing Risk Management Department is responsible for professionally managing NASDAQ OMX Derivatives Markets counterparty risks.

This is accomplished through a comprehensive counterparty risk management framework, which is made up of policies, procedures, standards and resources. The resources are human, informational and technological. These resources and the framework that is applied are relied upon to provide the accurate measurement, reasonable control, and desired level of protection from all identifiable counterparty risks and all operational risks arising within the Clearing Risk Management Department’s scope of responsibility. The framework is also designed to meet the counterparty risk management and related corporate governance objectives of Derivatives Markets.

The day-to-day work is directed at achieving the following:

• Supporting the business operations of Derivatives Markets by assessing and managing the counterparty risk associated with existing and/or new products and services.
• Delivering professional risk management via a comprehensive risk management framework.
• Ensuring that executive management and relevant Board of Directors are appropriately informed of all significant counterparty risk control issues which occur.
• Maintaining compliance with international industry standards specific to Risk Management.
• Making continuous improvements to Derivatives Markets counterparty risk management framework.

The Clearing Risk Management Department manages changes in counterparty risk exposures against a range of risk limits on a daily and intra-day basis. The Clearing Risk Management Department relies on a well established margining methodology which is validated regularly by automated margin back testing, standardized and customized risk reporting and a broad range of counterparty reference information. The Clearing Risk Management Department also monitors and responds to noteworthy changes in counterparty risk exposure and changes in the financial markets, which can affect the risk profile of Derivatives Markets counterparties. 

The Clearing Risk Management Department also plays an important role by:

• Screening of the creditworthiness and financial performance capacity of:
  Applicants seeking approval as Derivatives Clearing Members.
  - Custodian Institutions.
  - Guarantors.
  - Prospective and approved Link Clearing Houses.
• Monitoring the performance capacities of the above referenced counterparties.
• Ensuring that the liquidity requirements specific to Derivatives Markets own financial performance obligations are appropriately managed.
• Responding to Regulatory Authority and other significant stakeholder inquiries concerning Derivatives Markets counterparty risk management framework.
• Managing the day-to-day capital and liquidity planning tied to Derivatives Markets cross border margining.
• Providing analysis and recommendations on counterparty risk issues relating to Derivatives Markets business development initiatives as well as those in other areas of NASDAQ OMX if they potentially effect Derivatives Markets counterparty risk and/or require Clearing Risk Management Department specialist input, advisory services and/or support.

For more information on the Clearing Risk Department responsibilities please refer to the reference document: NASDAQ OMX Derivatives Markets as a Counterparty