How Does the ADL System Differ from the Clawback Mechanism Used in Some Traditional Finance Settings?

The ADL system is an automated, real-time risk management process in futures trading that forces a position reduction to cover a specific counterparty loss. It is a systemic solution to negative equity.

A clawback mechanism in traditional finance is usually a contractual provision that allows an employer to recover past bonuses or compensation, often related to misconduct or misstated earnings, making it a retrospective penalty rather than a real-time risk tool.