11.4 Aggregate Indebtedness Requirement
This Rule 11.4 shall apply to a Trading Member that holds a Capital Markets Services Licence.
A Trading Member shall not cause or permit its aggregate indebtedness to exceed 1200% of its aggregate resources.
If a Trading Member fails to comply or becomes aware that it will fail to comply with the aggregate indebtedness requirement prescribed under Rule 11.4, or such lower percentage of aggregate indebtedness over aggregate resources as SGX-ST may have imposed under Rule 11.4, it shall immediately notify SGX-ST.
Regardless of whether or not there has been any notification by a Trading Member under Rule 11.4.2, if the aggregate indebtedness of the Trading Member exceeds 1200% of its aggregate resources prescribed under Rule 11.4, or such lower percentage of aggregate indebtedness over aggregate resources as SGX-ST may have imposed under Rule 11.5, it shall be deemed a breach of a provision of the SGX-ST Rules by the Trading Member. SGX-ST may refer the matter to the Disciplinary Committee, and may take such interim control measures, including but not limited to do all or any of the following, as SGX-ST deems fit and appropriate:—(1) require the Trading Member to operate its business subject to such restrictions or conditions as SGX-ST decides;(2) suspend the Trading Member for a period SGX-ST decides. The suspension may be announced to all Trading Members. During the suspension, the Trading Member:—(a) must not enter into a new transaction without the approval of SGX-ST;(b) remains liable to complete all contracts outstanding at the time of suspension. However, it must not deliver any securities or settle any transaction without the approval of SGX-ST.(3) require a Director to step down from day-to-day conduct of the business affairs of the Trading Member; and(4) appoint a person or persons (which may include a firm of auditors) as Manager to manage the business of the Trading Member. SGX-ST will fix the remuneration of the Manager, which must be paid by the Trading Member. The Trading Member is solely responsible for the Manager's acts and defaults. The Manager must carry out directions given by SGX-ST in relation to the business of the Trading Member, including carrying on the business of the Trading Member in accordance with instructions.
11.4.4 Early Warning for Aggregate Indebtedness Requirement
A Trading Member shall immediately notify SGX-ST if its aggregate indebtedness exceeds 600% of its aggregate resources.
If SGX-ST is notified by a Trading Member under Rule 11.4.4 or becomes aware (whether or not there has been any notification by the Trading Member under Rule 11.4.4) that the Trading Member's aggregate indebtedness has exceeded or will exceed 600% of its aggregate resources, or such lower percentage as SGX-ST may have imposed under Rule 11.5, SGX-ST shall be entitled to require the Trading Member to comply with any or all of the directions prescribed under Regulation 17(2) of the SFR (Financial and Margin Requirements).
11.4.6 Qualifying Letter of Credit(1) For the purpose of Rule 11.4, a Trading Member may include 1 or more Qualifying Letter(s) of Credit in its calculation of aggregate resources, subject to the total amount payable under the Qualifying Letter(s) of Credit or 50% of the Trading Member's total risk requirement, whichever is lower.(2) For the purpose of Rule 11.4.6(1), a Qualifying Letter of Credit is a legally enforceable and irrevocable letter of credit that is made:—(a) (i) in the case of a Trading Member who is not a Clearing Member, in favour of SGX-ST; or (ii) in the case of a Trading Member who is also a Clearing Member, in favour of CDP; and(b) issued by a bank approved by, and in a form acceptable to SGX-ST or CDP, as the case may be;but does not include any letters of credit provided by the Clearing Member to satisfy Rule 7 of the Clearing Rules of CDP or any other requirement imposed by CDP.(3) SGX-ST shall reserve the right to call on any of the letter(s) of credit made in favour of SGX-ST pursuant to Rule 11.4.6 and apply the proceeds thereof in respect of the Trading Member's default to SGX-ST.