Skip to main content

Credit System

The AEX credit system controls how much exposure trading entities can take on with each counterparty. Every potential trade is checked against bilateral credit limits before a fill can occur. If either side lacks sufficient credit, the order is rejected.

Credit limit types​

AEX supports three ways to measure credit exposure:

TypeWhat it measuresCalculation
NotionalDollar value exposure (NZD)price × quantity (MW) × contract hours
MWMegawatt capacityRaw quantity in MW
MWhMegawatt-hour volumequantity × contract hours

You can configure multiple limit types simultaneously for a counterparty relationship. All configured limits must pass for a trade to proceed.

tip

Notional limits are the most common choice for general credit risk management. MW limits are useful when your concern is peak capacity exposure; MWh limits suit volumetric energy exposure tracking.

Credit limit scope​

Each limit can apply at one of two scopes:

  • Total — a single limit applies across all contracts with that counterparty
  • Per contract — a separate limit applies for each individual contract

Per-contract limits give you fine-grained control when exposure differs significantly between delivery periods or products.

Margin percentage​

An optional marginPercent (0–100) can be applied to any limit configuration. When set, the margin increases the effective exposure calculated for each trade:

effective impact = raw impact × (1 + marginPercent / 100)

For example, a 10% margin on a notional limit means a $100,000 trade consumes $110,000 of credit capacity. This provides a safety buffer against market movements.

Bilateral credit checking​

Credit checks on AEX are bilateral — both sides of a potential trade must have sufficient credit. When an order would result in a fill between Entity A and Entity B:

  1. Entity A's limits with Entity B are checked
  2. Entity B's limits with Entity A are checked
  3. Both must pass for the fill to proceed

This means each entity independently controls how much exposure it is willing to take on with any counterparty. One entity setting a zero limit with another blocks all trading between them, regardless of what the counterparty has configured.

Credit allocated vs credit used​

The credit system tracks two distinct components of credit consumption:

  • Credit allocated — credit reserved during an auction clearing cycle (pre-open and open sessions). This is transient state that resets on engine restart and is released when the auction resolves.
  • Credit used — credit committed by confirmed fills. This persists until the fill is settled or limits are adjusted by an administrator.

Credit available is calculated as: limit − used − allocated

Credit panel in AEM​

Navigate to Management Panel → Credit to view your entity's credit positions.

The panel displays:

  • Credit Summary — aggregate totals at the top: Total Limit, Used, and Available across all counterparty relationships
  • Documentation Status — ISDA documentation status for each counterparty (see ISDA Documentation)
  • Credit Limits — per-counterparty table showing:
    • Counterparty — the trading entity name
    • Limit — configured credit limit value
    • Used — credit currently consumed by fills
    • Avail — remaining available credit
    • Usage — a visual utilisation bar

Counterparties with docs_in_place documentation status appear at the top of the list. Counterparties without documentation are grouped in a collapsed Counterparties without Docs section.

note

The Credit panel requires the Credit.View permission. Editing limits requires Credit.Manage.

Editing credit limits​

Users with Credit.Manage permission can request limit changes from the Credit panel:

  1. Locate the counterparty row in the Credit Limits table
  2. Click the edit icon on that row
  3. In the Edit Credit Limit dialog, set:
    • Limit Type — Notional ($), MW, or MWh
    • Scope — Total or Per Contract
    • Limit Value — the maximum exposure amount
    • Margin % — optional buffer percentage (leave blank for none)
  4. Click Request Change to submit

Most limit changes enter an approval workflow (see Credit Approval Workflow). Administrators with bypass approval permission can apply changes immediately.

Next steps​