Practice Note 5A.4.2, 5A.4.3 — Requirement for Clearing Member to Ensure Compliance of Position Account Rules by Authorized Trading Member
|Issue Date||Cross Reference||Enquiries|
|Added on 1 July 2016.||Rules 5A.4.2., 5A.4.3.||
Please contact Member Supervision:
Facsimile No: 6538 8273
1. Rules 5A.4.2 and 5A.4.3 requires a Clearing Member who authorizes an Authorized Trading Member to open and maintain Authorized Accounts, or to open, maintain and allocate positions to Authorized Accounts, to ensure that the Authorized Trading Member performs the relevant obligations in relation to the Authorized Accounts.
2. There may be circumstances where a Clearing Member is unable to directly ensure that its Authorized Trading Member performs the relevant obligations in relation to the Authorized Accounts in compliance with Rules 5A.1 and 5A.2 or with Rules 5A.1, 5A.2, 5A.3 and 5A.6 (as may be applicable). This Practice Note clarifies the expectations on the Clearing Member in such circumstances.
3. Where a Clearing Member is unable to directly ensure that its Authorized Trading Member complies with the above-mentioned rules, the Clearing Member is to implement reasonable measures to ensure that the Authorized Trading Member complies with the relevant rules. The following are non-exhaustive examples of the steps which the Clearing Member should take: