Clearing Model Disclosures

Direct-Access, Fully Collateralized Clearing Model

ProphetX operates a fully collateralized, direct-access clearing model. Under this model, all market participants transact directly on the exchange without the use of intermediaries such as Futures Commission Merchants (FCMs). Each participant's positions are fully collateralized at the time of trade, meaning no credit exposure is extended to any party at any point during the life of a contract.

No Margin-Setting Methodology

Because all contracts traded on ProphetX are fully collateralized at the time of execution, ProphetX does not employ a margin-setting methodology. There are no initial margin requirements, variation margin calls, or maintenance margin thresholds. The maximum possible loss on any position is collected upfront, eliminating the need for margining procedures traditionally associated with derivatives clearing.

No Guaranty Fund or Mutualized Default Resources

ProphetX does not maintain a guaranty fund, default fund, or any form of mutualized default resources. Because each contract is fully collateralized on an individual basis, the default of any single participant does not create financial exposure for other market participants or for the exchange itself. There is no loss-sharing arrangement, waterfall mechanism, or mutualized risk pool of any kind.

Direct-Access Model

Unlike traditional futures exchanges that require market participants to access clearing services through registered FCMs, ProphetX provides direct access to all eligible participants. As a result, ProphetX does not publish a roster of FCMs or clearing members because none are required under this model. Each participant holds their own positions directly with the exchange, posts their own collateral, and bears only the risk associated with their own trading activity. No intermediary stands between the participant and the clearinghouse, and no third party guarantees or assumes any portion of a participant's obligations.