The CT Clear Workflow
Clearing is the process that happens after a trade is agreed but before it is settled. It ensures that both sides of a transaction meet their obligations; safely, efficiently, and without unnecessary risk.
To achieve this, ClearToken acts as a Central Counterparty (CCP). This means we step in between buyers and sellers to become the legal counterparty to both. We become the buyer to every seller and the seller to every buyer. This process is called novation, and it eliminates the risk that one party might default on their side of the deal.
Matched trades flow from connected venues to our systems
ClearToken becomes the counterparty to both sides of every trade
Real-time margining using proven VaR methodologies
Positions compressed across all venues and participants
To learn more about clearing and its role in capital markets visit our Introduction to Clearing or learn more about our CCP at our Services Overview page.
Connection to Trade Sources
ClearToken CCP is designed to operate as a horizontal clearing house, meaning that we connect to multiple trading venues and OTC platforms rather than being vertically integrated with a single exchange. ClearToken connects to a wide range of approved trade sources, including exchanges and OTC venues. These sources send matched trades to ClearToken’s clearing systems, where positions are aggregated against clearing member accounts.
This flexible model allows ClearToken to support both central limit order books and bilateral OTC trades, ensuring broad market coverage and seamless integration with existing trading workflows.
ClearToken is venue-agnostic and connects to a wide range of trading platforms and OTC venues.
This horizontal model allows us to:
- Accept trades from multiple sources: We accept matched trades from approved exchanges, ECNs, and OTC platforms. These trades are enriched, validated, and checked for clearing eligibility.
- Support client and principal models: ClearToken can clear trades where clearing members act on their own behalf or on behalf of clients, offering flexibility for brokers, market makers, and institutional participants.
- Calculate margin against portfolio risk: Eligible trades are passed to ClearToken’s position manager, where they are novated and netted before settlement. Margin offsets are applied against non-fungible positions to optimise capital efficiency.
- Enable multilateral netting across venues: By aggregating trades from multiple sources, ClearToken calculates net obligations for each clearing member across all positions, reducing the number of settlements and freeing up capital.
This flexible service design ensures broad market access and seamless integration with existing trading workflows, whilst allowing ClearToken to replicate the benefits of traditional CCPs while remaining venue-agnostic and interoperable across the digital asset ecosystem.
Trade Matching and Registration
ClearToken validates all received trades to ensure they meet eligibility criteria for clearing and once accepted, trades are:
- Registered into the ClearToken CCP (central counterparty) system.
- Assigned to the appropriate clearing member account (GCM or ICM).
- Novated, whereby ClearToken becomes the buyer to every seller and the seller to every buyer, eliminating bilateral counterparty risk.
This process is near real-time and continuous, allowing for efficient aggregation and risk management across venues.
Risk Framework
- Initial and variation margin requirements
- Default fund contributions from all members
- ClearToken capital commitment (“skin in the game”)
- Multi-layered default waterfall structure
Where Assets Are Held: Custody and Settlement
ClearToken uses a network of digital asset custodians and banks to facilitate Delivery-versus-Payment (DvP)/Payment-versus Payment (PvP). Participants deliver assets to designated settlement accounts, and AML screening is performed at the point of transfer.
ClearToken’s model is designed to support both traditional and digital assets, with a focus on regulatory compliance, operational efficiency, and risk mitigation.
Key features include:
We partner with a network of regulated traditional and digital custodians to:
- Hold client assets securely
- Facilitate Delivery-versus-Payment (DvP) settlement
- Support segregation of client and house assets in line with EMIR requirements
We are developing our own Central Securities Depository (CSD) to:
- Tokenise traditional securities for on-chain settlement
- Support 24/7 settlement
- Maintain a proprietary ledger for digital assets
- Provide proof-of-reserve reconciliation between custodians and our blockchain infrastructure
- ClearToken calculates net obligations at the end of each trading window
- Clearing Members transfer assets from their custodians to ClearToken’s designated accounts
- Assets are delivered to the counterparty’s custodian, completing the DvP process
ClearToken then delivers the corresponding assets to the counterparty’s custodian, completing the DvP process.
- Custody instructions are only accepted from whitelisted wallets and accounts.
- Wallet screening, SSI management, and escalation protocols are codified in ClearToken’s operations manual.
- Settlement failures are managed through predefined rules, and finality is auditable for regulatory compliance.
Trades then move through to ClearToken’s Digital Settlement Service. Learn more on how our Digital Settlement Service works.
