Rulebooks: Contents

Rulebooks
Mainboard Rules
Catalist Rules
SGX-ST Rules
CDP Clearing Rules
CDP Settlement Rules
DVP Rules [Entire Rulebook has been deleted]
CDP Depository Rules
Futures Trading Rules
SGX-DC Clearing Rules
Chapter 1 Application of Rules
Chapter 2 Clearing Membership
Chapter 3 Committees
Chapter 4 Enforcement of Rules
Chapter 5 Arbitration
Chapter 6 Delivery and Related Matters
Chapter 7 Clearing and Margins
Chapter 7A Suspension and Default
7A.02 Open Positions of Defaulted /Suspended Clearing Members
Chapter 7B Payments
Chapter 8 Mutual Offset System
Chapter 9 Definitions and Interpretation
Chapter 10 Transitional Provisions
Directives
Practice Notes
Appendices
Schedules
SIAC DT Arbitration Rules
SIAC DC Arbitration Rules
Archive
Rule Amendments

BackText onlyPrint

You need the Flash plugin.

Download Macromedia Flash Player



  • 7A.02 Open Positions of Defaulted /Suspended Clearing Members

    • 7A.02.1

      When a Clearing Member having open positions has defaulted upon its obligation to the Clearing House, or has been suspended, the Clearing House may:—

      7A.02.1.1 transfer or facilitate the transfer of all or any part of positions in Customer Contracts held by the defaulted or suspended Clearing Member to one (1) or more Clearing Members designated by the Clearing House in accordance with applicable laws, provided that all or any part of positions held in Cleared Swaps Customer Accounts may be transferred only to one (1) or more FCM Clearing Members designated by the Clearing House. When such positions are so transferred, the following shall apply:
      a. subject to Rule 7A.02.1.1.c. and to the extent permitted by applicable laws, margins deposited with the Clearing House in respect of the positions shall be entrusted to the designated Clearing Member or Clearing Members;
      b. the margins entrusted to a designated Clearing Member pursuant to this Rule 7A.02.1.1 may not be in such form as was originally deposited with the Clearing House;
      c. the Clearing House shall have the discretion not to transfer all or any part of the margins to a designated Clearing Member as described in Rule 7A.02.1.1.a., if:
      i. those margins cannot be attributed to the positions that are transferred to that Clearing Member; or
      ii. those margins may be applied pursuant to Rule 7A.05.1.2 or 7A.05.1.2A,
      provided that where margins are not transferred to the designated Clearing Member, the designated Clearing Member shall be required to collect the required margins from its Customer; and
      d. The margins not entrusted to designated Clearing Members shall be retained by the Clearing House and may be applied in accordance with Rule 7A.05.1.2 or 7A.05.1.2A. Any unused margins shall be returned to the defaulted or suspended Clearing Member, or entrusted to the designated Clearing Members, as the Clearing House deems appropriate:
      i. following the settlement of losses arising from the event of default; or
      ii. at such time that the Clearing House determines that the margins may not be used.
      7A.02.1.1A transfer or facilitate the transfer of all or any part of positions in Affiliate Contracts held by the defaulted or suspended Clearing Member to one (1) or more Clearing Members designated by the Clearing House in accordance with applicable laws. When such positions are so transferred, the following shall apply:
      a. subject to Rule 7A.02.1.1A.c. and to the extent permitted by applicable laws, margins deposited with the Clearing House in respect of the positions shall be entrusted to the designated Clearing Member or Clearing Members;
      b. the margins entrusted to a designated Clearing Member pursuant to this Rule 7A.02.1.1A may not be in such form as was originally deposited with the Clearing House;
      c. the Clearing House shall have the discretion not to transfer all or any part of the margins to a designated Clearing Member as described in Rule 7A.02.1.1A.a., if:
      i. those margins cannot be attributed to the positions that are transferred to that Clearing Member; or
      ii. those margins may be applied pursuant to Rule 7A.05.1.1A, 7A.05.1.2 or 7A.05.1.2A,
      provided that where margins are not transferred to the designated Clearing Member, the designated Clearing Member shall be required to collect the required margins from the Affiliate; and
      d. The margins not entrusted to designated Clearing Members shall be retained by the Clearing House and may be applied in accordance with Rules 7A.05.1.1A, 7A.05.1.2 and 7A.05.1.2A. Any unused margins shall be returned to the defaulted or suspended Clearing Member, or entrusted to the designated Clearing Members, as the Clearing House deems appropriate:
      i. following the settlement of losses arising from the event of default; or
      ii. at such time that the Clearing House determines that the margins may not be used.
      7A.02.1.2 execute hedging transactions, on behalf of and at the risk of the defaulted or suspended Clearing Member, to eliminate or reduce market risk resulting from such open positions;
      7A.02.1.3
      a. close out or liquidate any such open positions as well as positions resulting from any hedging transaction executed pursuant to Rule 7A.02.1.2;
      b. appoint one or more Inter Dealer Brokers, Clearing Members or members of the applicable Relevant Market to close out any such open positions as well as positions resulting from any hedging transaction executed pursuant to Rule 7A.02.1.2, all on the behalf of and at the risk of the defaulted or suspended Clearing Member; or
      c. conduct an auction of such open positions, as well as positions resulting from any hedging transaction executed pursuant to Rule 7A.02.1.2, in such manner as prescribed by the Clearing House;
      7A.02.1.4 where the open positions relate to a Non-Relevant Market Transaction or a Contract subject to physical delivery prior to re-novation in Rule 6.02A.7, and it is in the Clearing House's good faith opinion impossible or impracticable for the open positions to be transferred or closed out pursuant to Rules 7A.02.1.1, 7A.02.1.1A and 7A.02.1.3 respectively, the Clearing House may, in addition to any other power or right it may have, invoice back such positions to the defaulting or suspended Clearing Member. The Clearing House shall then simultaneously invoice back the equivalent number of positions or as nearly equivalent number of such positions as the Clearing House may deem practical to the following:—
      a. in the case of a Non-Relevant Market Transaction or a Contract subject to physical delivery prior to the matching process in Rule 6.02A.7, to other non-defaulting and non-suspended Clearing Members, and/or any other non-defaulting Relevant Market (or its clearing house) holding appropriate opposite positions (whether reported to the Clearing House as being House or Customer positions) as at the date of such invoicing back, on a pro-rata basis, calculated as the proportion of such gross opposite positions of each non-defaulting and non-suspended Clearing Member and/or Relevant Market (or its clearing house) at the date of such transfer relative to the aggregate value of such open positions held by all non-defaulting and non-suspended Clearing Members (to be rounded down or up if the number of lots is not a whole number at the Clearing House's absolute discretion); or
      b. in the case of a Contract subject to physical delivery after the matching process in Rule 6.02A.7 and before re-novation in Rule 6.02A.7, to the non-defaulting and non-suspended Clearing Members and/or clearing member of another Relevant Market (or its clearing house), with which the defaulting or suspended Clearing Member has been matched in accordance with Rule 6.02A.7 (whether reported to the Clearing House as being House or Customer positions).
      The invoicing back shall be carried out by the Clearing House effecting and registering opposite positions between itself and each of the relevant affected persons. The Clearing House shall then settle the open positions against such opposite positions, at a price determined by it. The Clearing House's actions, including the timing of the transfer and the price determined by the Clearing House shall be binding on all affected Clearing Members;
      7A.02.1.5 [Rule has been deleted.]
      7A.02.1.5A
      a. In the event that:
      i. the Clearing House is unsuccessful in closing out or liquidating such open positions;
      ii. an auction of such open positions has failed; or
      iii. the Clearing House is of the good faith opinion that it is impossible or impracticable for such open positions to be closed out, liquidated, or auctioned;
      the Clearing House may, subject to Rule 7A.02.1.5A.b, terminate the open positions and simultaneously terminate an equivalent number of opposite positions held by the other Clearing Members in such manner and at such price as prescribed by the Clearing House.
      b. In determining the opposite positions of the other Clearing Members that are to be terminated, the Clearing House shall:
      i. select positions on a pro-rata basis to the extent practicable, based on the number of positions in the relevant Contracts held by each Clearing Member across its House Accounts and Customer Accounts; and
      ii. provide each such Clearing Member an opportunity to re-assign which of its positions from its House Accounts and Customer Accounts are to be terminated, provided that:
      (1) the Clearing Member submits to the Clearing House an allocation of its positions which are to be terminated, in accordance with the manner prescribed by the Clearing House and within the timeframe set by the Clearing House; and
      (2) the termination of positions set out in that allocation would not increase the Clearing House's exposure to the Clearing Member to an extent that is unacceptable to the Clearing House in its absolute discretion.
      7A.02.1.6 if a defaulted or suspended party:
      a. has offsetting positions with another defaulted or suspended party; or
      b. has offsetting positions between his own accounts,
      the Clearing House may net such positions before undertaking any action pursuant to Rules 7A.02.1.3 to 7A.02.1.5A. The net loss calculated may be attributable to either or both defaulted or suspended party's account in whatever proportion as the Clearing House deems fit; and/or
      7A.02.1.7undertake any action which is ancillary or incidental to activities set out under Rule 7A.02.1.

      Added on 7 August 2012 and amended on 8 November 2012, 26 April 2013, 31 December 2013, 30 June 2014, 2 May 2016, 19 September 2016 and 17 July 2019.

    • 7A.02.2

      7A.02.2.1 The Clearing Member that has defaulted upon its obligation to the Clearing House, or has been suspended, shall cooperate with the Clearing House and non-defaulting Clearing Members in respect of any of the actions that the Clearing House may take pursuant to Rule 7A.02.1.
      7A.02.2.2 Where an auction is held pursuant to Rule 7A.02.1.3.c in respect of the Contract Class specified in Rule 7A.01A.5.a, a Required Participant shall participate in such auction, and shall comply with all requirements and procedures as prescribed by the Clearing House in relation to such auctions.

      Added on 7 August 2012 and amended on 17 July 2019.

    • 7A.02.3

      All costs and expenses sustained by the Clearing House in connection with any steps which are or may be taken by the Clearing House pursuant to Rule 7A.02.1, including losses incurred from authorized hedging transactions and the unwinding of such hedging transactions, shall be charged to the account of the defaulted Clearing Member after all outstanding rights and liabilities in respect of all its Contracts with the Clearing House have been determined, and shall be set off against all other amounts owed and owing between the defaulted Clearing Member and the Clearing House, to produce a net sum payable by either party to the other.

      Added on 7 August 2012 and amended on 25 May 2015.