A junior risk analyst at a consulting firm is analyzing the operational structures of bilateral netting versus central clearing when handling derivative trades. In the process, the analyst investigates the following bilateral trade exposures among three firms:

• Firm 1's exposure to Firm 2: AUD 90 million

• Firm 2's exposure to Firm 1: AUD 60 million

• Firm 1's exposure to Firm 3: AUD 12 million

• Firm 3's exposure to Firm 1: AUD 70 million

• Firm 2's exposure to Firm 3: AUD 57 million

• Firm 3's exposure to Firm 2: AUD 0 million

Evaluate the accuracy of the following statement:

Party	No Netting	Bilateral Netting	Central Clearing
Firm 1	90 + 12 = 102	90 - 60 + 12 - 70 = 30 - 58 = 30	30 - 58 = -28 = 0
Firm 2	60 + 57 = 117	60 - 90 + 57 - 0 = 27	27
Firm 3	70	70 - 12 + 0 - 57 = 58 - 57 = 58	58 - 57 = 1
CCP	27 + 1 = 28	Total	289

Firm 1’s exposure to the CCP is 90 + 12 = AUD 102 million; the CCP’s exposure to Firm 1 is 60 + 70 = AUD 130 million. Therefore, Firm 1’s exposure to the CCP is AUD 0 million (= 102m - 130m = -28m = 0). Firm 3’s exposure to the CCP is AUD 70 million; the CCP’s exposure to Firm 3 is 12 + 57 = AUD 69 million. Therefore, Firm 3’s exposure to the CCP is AUD 1 million (= 70m - 69m). Firm 2’s exposure to the CCP is 60 + 57 = AUD 117 million; the CCP’s exposure to Firm 2 is AUD 90 million. Therefore, the CCP’s exposure to Firm 2 is AUD 27 million (= 117m - 90m).