Whole Section

  • Rule 8 — Default Rules

    • 8.1 Events of Default

      • 8.1.1

        In the event that:—

        (1) a Clearing Member fails duly to perform or is, in the opinion of CDP, in breach of any provision of these Clearing Rules or Clearing Directives or of any agreement, understanding or arrangement which the Clearing Member has from time to time with CDP;
        (2) a Clearing Member, not being an Exempt Person, ceases to hold a valid Capital Markets Services Licence under the SFA or ceases to be authorised to conduct banking business in Singapore pursuant to section 4 of the Banking Act 1970;
        (3) a Clearing Member is insolvent or is deemed insolvent pursuant to Rule 8.1A.;
        (4) in view of the Clearing Member's financial or operating conditions, CDP, in its absolute discretion, considers it necessary or desirable to protect its own interests, the interests of other Clearing Members and/or the interests of the customers of the Clearing Member; or
        (5) conversion, theft, breach of trust, embezzlement, or any other similar cause, caused or suffered by or in connection with a Clearing Member,

        CDP shall be entitled, at its absolute discretion, then or at any time thereafter, whether or not such event is, in the opinion of CDP, continuing, to declare that an Event of Default has occurred and to give notice thereof to all Clearing Members.

        Amended on 1 July 20081 July 2008, 21 January 201321 January 2013, 22 April 201322 April 2013 and 18 January 2022.

      • 8.1.2

        Immediately upon CDP declaring that an Event of Default has occurred in respect of any Clearing Member, such Clearing Member (the "Defaulting Clearing Member") shall be deemed:—

        (1) to be in breach of its obligations to CDP under its Novated Contracts; and
        (2) to be unable to meet its obligations to CDP

        and to the extent permitted by law, Rules 8.2 to 8.9 herein shall apply.

        Added on 23 January 200923 January 2009 and 22 April 201322 April 2013.

      • 8.1.3

        Without prejudice to the generality of Rule 1 or Rule 10, CDP shall not be liable to any Clearing Member or any Third Party in respect of any damage, loss, cost or expense of whatsoever nature (whether direct, indirect, special or consequential, including without limitation any loss of business, revenue, goodwill, bargain or profit), suffered or incurred by such Clearing Member or Third Party, arising out of or in connection with the declaration or non-declaration of an event of default by CDP.

        Added on 26 April 201326 April 2013.

    • 8.1A Insolvency and Deemed Insolvency

      • 8.1A.1

        For the purpose of these Clearing Rules, a Clearing Member becomes insolvent or shall be deemed to be insolvent on the occurrence of any of the following events:—

        (1) it fails to fulfil or meet margins or settlement requirements for all or any of its Novated Contracts;
        (2) it defaults upon any levy owing to CDP arising out of Rule 7.2.1 or Rule 7.10.3;
        (3) it is or is at risk of being in material default under the term of any loan or other agreement relating to its indebtedness;
        (4) it fails, is unable, admits its inability, or is deemed for the purposes of any law to be unable, to pay its debts as they fall due;
        (5) a composition, assignment or arrangement is proposed or made for the benefit of its creditor;
        (6) the value of its assets is less than its liabilities, taking into account contingent and prospective liabilities;
        (7) by reason of its financial integrity having been or anticipated to be compromised, it proposes, or commences negotiations with one or more of its creditors, to suspend, stop, defer or reschedule payments on any of its indebtedness, or announces an intention to do so;
        (8) it or any of its directors or other officers seeks or gives notice of its or his intention to seek, or if it or any of its assets becomes subject to, the appointment of an administrator, provisional liquidator, receiver, administrative receiver, judicial manager, judicial custodian, compulsory manager, trustee, trustee in bankruptcy, conservator, custodian or other similar officer, whether out of court or otherwise;
        (9) a moratorium is declared in respect of any of its indebtedness;
        (10) the enforcement of any security over any of its assets, or any distress, execution, attachment, sequestration or other legal process levied, enforced or served upon any of its assets;
        (11) any corporate action, legal proceedings or other procedure or step is taken, including without limitation the presentation of a petition, the making of an application, the filing of documents with a court, the convening of a meeting of the Clearing Member, its directors or its members, the giving of a notice of a proposal or the passing of a resolution, in relation to or with a view to:
        (a) the winding up, liquidation, dissolution, or seeking of a judgment of insolvency or other relief under any insolvency law or other similar law affecting creditors' rights in respect of the Clearing Member, whether voluntary or involuntary; or
        (b) the administration, whether out of court, with a registrar or otherwise, judicial management or reorganisation, whether by way of voluntary arrangement, scheme of arrangement or otherwise, of the Clearing Member, whether voluntary or involuntary;
        (12) it causes or is subject to any event which, under the applicable laws of any jurisdiction, has an effect analogous to any of the events specified above;
        (13) it takes any action or step in furtherance of, or indicating its consent to, approval of or acquiescence in, any of the foregoing acts; or
        (14) if CDP considers in its absolute discretion that the occurrence of any such events or their equivalent is imminent or likely in any jurisdiction.

        Added on 22 April 201322 April 2013.

    • 8.2 Effect of Default on Novated Contracts other than in respect of Marginable Futures Contracts

      Amended on 10 December 201810 December 2018.

      • 8.2.2

        Immediately upon such breach under Rule 8.1.2:—

        (1) [Rule has been deleted.]
        (2) [Rule has been deleted.]
        (3) [Rule has been deleted.]
        (3A) CDP shall be entitled (but not obliged) to settle any or all obligations of the Defaulting Clearing Member to deliver securities to CDP (including any obligation to deliver securities as compensation for corporate action entitlements as provided in these Clearing Rules) where such obligations are in respect of Novated Contracts for House Accounts. Settlement shall be in accordance with these Clearing Rules and shall take place on such day as CDP may determine regardless of the due date for settlement. For the avoidance of doubt, there shall be no such settlement in respect of Novated Contracts for Customer Accounts.
        (3B) CDP will be under no obligation to deliver any securities to the Defaulting Clearing Member in respect of any Novated Contract (including as compensation for corporation action entitlements as provided in these Clearing Rules).
        (3C) CDP shall be entitled (but not obliged) to set-off, regardless of the due date for settlement, (a) any or all unsettled obligations of the Defaulting Clearing Member to deliver a security in respect of Novated Contracts against (b) any or all unsettled rights that the Defaulting Clearing Member would have had to receive that security in respect of Novated Contracts but for its default.
        (3D) Where any rights that the Defaulting Clearing Member would have had to receive securities in respect of Novated Contracts but for its default are not set-off in accordance with Rule 8.2.2(3C):
        (a) CDP shall force-sell the securities that the Defaulting Clearing Member would have been entitled to receive to off-set any loss suffered by CDP in connection with the Defaulting Clearing Member’s default.
        (b) The Defaulting Clearing Member accepts that securities may be force-sold in such manner (including through agents appointed by CDP), at such time and at such price as CDP or its agents may in their sole discretion deem appropriate, regardless of the due date for settlement of the Defaulting Clearing Member’s right(s).
        (c) Any proceeds, costs or expenses resulting from the above, including any costs or expenses incurred by CDP in connection with the force-sale, shall be accounted for and included in the losses suffered by CDP in connection with the Defaulting Clearing Member’s default.
        (d) Where any of the securities are not force-sold by the seventh (7th) Settlement Day after an Event of Default is declared under Rule 8.1.2:
        (i) CDP shall, on the next Settlement Day, take any purchase consideration paid by CDP for those securities as a loss suffered by CDP due to the Defaulting Clearing Member's default;
        (ii) CDP shall thereafter have absolute discretion to deal with those securities as it deems appropriate;
        (iii) any amount recovered by CDP shall be applied to make good any loss that was suffered by CDP due to the Defaulting Clearing Member's default and that was not met by the Clearing Fund; and
        (iv) any amount that remains thereafter shall be credited to the Clearing Fund in accordance with Rule 7.12.
        (e) CDP and its agents shall have no liability for any losses to the Defaulting Clearing Member arising from any force-sale or attempted force-sale, including the manner, time or price of any force-sale or attempted force-sale, of securities.
        (3E) Where any obligations of the Defaulting Clearing Member to deliver securities in respect of Novated Contracts are not settled in accordance with 8.2.2(3A) or set off in accordance with Rule 8.2.2(3C):
        (a) CDP shall be entitled (but not obliged) to acquire any or all of the securities that the Defaulting Clearing Member would have been obliged to deliver, to meet any obligation of CDP to deliver those securities.
        (b) The Defaulting Clearing Member accepts that securities may be acquired in such manner (including through agents appointed by CDP), at such time and at such price as CDP or its agents may in their sole discretion deem appropriate, regardless of the due date for settlement of the Defaulting Clearing Members’ obligation(s).
        (c) CDP reserves the right not to attempt any acquisition and to determine for how long, not exceeding seven (7) Settlement Days after an Event of Default is declared under Rule 8.1.2 unless otherwise determined, any acquisition will be attempted. If any securities are not acquired by such time as CDP determines, CDP shall, on the next Settlement Day, cash settle in accordance with these Clearing Rules its obligation to deliver those securities.
        (d) Any costs or expenses resulting from the above, including any costs or expenses incurred by CDP in connection with the acquisition, shall be accounted for and included in the losses suffered by CDP in connection with the Defaulting Clearing Member’s default.
        (e) CDP and its agents shall have no liability for any losses to the Defaulting Clearing Member arising from any acquisition or attempted acquisition, including the manner, time or price of any acquisition or attempted acquisition, of securities.

        Amended on 23 January 200923 January 2009, 22 April 201322 April 2013, 10 December 201810 December 2018, 17 July 201917 July 2019 and 6 September 2021.

      • 8.2.2A

        Upon such breach under Rule 8.1.2, CDP shall be entitled to take such administrative or operational action as is necessary to manage the default, including to transfer securities from the Defaulting Clearing Member’s Clearing Account to a different Securities Account in the name of the Defaulting Clearing Member.

        Added on 22 April 201322 April 2013 and amended on 10 December 201810 December 2018 and 6 September 2021.

      • 8.2.4

        For the purposes of Rule 8.2:

        (1) "Customer Account" means a Position Account for a Customer except where such Customer is:
        (a) a director or officer of the Clearing Member; or
        (b) a related corporation of the Clearing Member.
        For the avoidance of doubt, a Clearing Member's own proprietary account is not a Customer Account; and
        (2) "House Account" means a Position Account which is not a Customer Account (as such term is defined in Rule 8.2.4(1)).

        Amended on 22 April 201322 April 2013, 10 December 201810 December 2018 and 6 September 2021.

    • 8.6A Effect of Default on Novated Contracts in respect of Marginable Futures Contracts

      Amended on 10 December 201810 December 2018.

      • 8.6A.1

        This Rule shall apply only to Novated Contracts in respect of Marginable Futures Contracts (hereafter "novated Marginable Futures Contracts").

        Added on 23 January 200923 January 2009.

      • 8.6A.2

        For positions in novated Marginable Futures Contracts, immediately upon such breach under Rule 8.1.2, CDP may:—

        (1) transfer all positions in relation to any Customer Account held by the Defaulting Clearing Member to another Clearing Member designated by CDP. When such positions are so transferred, the following shall apply:
        (a) subject to Rule 8.6A.2(1)(c), margins deposited with CDP in respect of the positions shall be entrusted to the designated Clearing Member;
        (b) the margins entrusted to a designated Clearing Member pursuant to this Rule 8.6A.2(1) may not be in such form as was originally deposited with the CDP;
        (c) CDP shall have the discretion not to entrust all or any part of the margins to a designated Clearing Member as described in Rule 8.6A.2(1)(a) if Collateral deposited with CDP in relation to such Customer Accounts may be applied pursuant to Rule 8.6B.1. Where margins are not entrusted to the designated Clearing Member, the designated Clearing Member shall be required to collect the required margins from the relevant customer in accordance with these Clearing Rules; and
        (d) the margins not entrusted to the designated Clearing Member shall be retained by CDP and may be applied in accordance with Rule 8.6B.1. Any unused margins shall be returned to the Defaulting Clearing Member, or entrusted to the designated Clearing Member, as CDP deems appropriate:
        (i) following the settlement of losses arising from the Event of Default; or
        (ii) at such time that CDP determines that the margins may not be used;
        (2) borrow securities or execute buying-in on behalf of and at the risk of the Defaulting Clearing Member, for the purpose of meeting settlement obligations;
        (3) execute hedging transactions, on behalf of and at the risk of the Defaulting Clearing Member, to eliminate or reduce market risk resulting from such positions; and
        (4) appoint 1 or more Trading Members to liquidate such positions on the behalf of and at the risk of the Defaulting Clearing Member.

        Added on 23 January 200923 January 2009 and amended on 21 January 201321 January 2013, 22 April 201322 April 2013 and 6 September 2021.

      • 8.6A.3

        All costs and expenses sustained by CDP in connection with any steps which are or may be taken by CDP pursuant to Rule 8.6A.2, including losses incurred from authorised hedging transactions and the unwinding of such hedging transactions, shall be charged to the account of the Defaulting Clearing Member.

        Added on 23 January 200923 January 2009 and amended on 21 January 201321 January 2013.

    • 8.6AA

      Added on 10 December 201810 December 2018.

      • 8.6AA.1

        Unless otherwise determined by CDP, any money that has been paid to CDP by a Defaulting Clearing Member pursuant to the CDP Settlement Rules shall be held by CDP as Collateral deposited by the Defaulting Clearing Member other than in relation to a Customer Account and applied in accordance with these Clearing Rules and the Security Deed.

        Added on 10 December 201810 December 2018.

    • 8.6B Application of Collateral

      Amended on 21 January 201321 January 2013.

      • 8.6B.1

        Without prejudice and subject to the other provisions of these Clearing Rules, in particular Rule 7.9.1:

        (1) where a Clearing Member has failed promptly to discharge any of its obligations to CDP, CDP may apply Collateral, including without limitation letters of credit procured by the Clearing Member to be issued to CDP, deposited or provided by the Clearing Member, except where such margins or other Collateral were deposited solely in relation to a Customer Account;
        (2) notwithstanding Rule 8.6B.1(1), where a Clearing Member has failed promptly to discharge any of its obligations to CDP, and CDP has reasonable grounds for forming an opinion that the failure is directly attributable to the failure of any Customer Account holder to meet its obligations, CDP may apply:
        (a) margins or other Collateral, (including without limitation letters of credit procured by the Clearing Member to be issued to CDP) deposited or provided by the Clearing Member solely in relation to Customer Accounts provided that the conditions in the SFA are satisfied; and
        (b) any qualifying letters of credit deposited with or provided to CDP by a Trading Member sponsored by the Clearing Member, provided that the Clearing Member's default is attributable to such Trading Member's act or omission.

        Added on 23 January 200923 January 2009 and amended on 21 January 201321 January 2013.

      • 8.6B.1A

        In exercising its powers under Rule 8.6B.1, CDP may liquidate any non-cash Collateral deposited with it by a Clearing Member. Such Clearing Member shall be liable to CDP for any costs and expenses incurred in connection with the liquidation. CDP shall not be liable for any losses to any person arising from such liquidation.

        Added 21 January 201321 January 2013.

      • 8.6B.2

        The Clearing Member shall not take any action or do anything that will directly or indirectly interfere with, prohibit, restrict or inhibit the ability of CDP to so apply such Contributions, margins or other Collateral and CDP shall, except where it has acted in bad faith, be under no liability to the Clearing Member or any other person whatsoever in so applying such Contributions, margins or other Collateral and the Clearing Member shall fully indemnify and keep indemnified CDP and hold CDP harmless against any such liability.

        Added on 23 January 200923 January 2009 and amended on 21 January 201321 January 2013.

      • 8.6B.3

        Where the Clearing Member has failed to settle its financial obligations to SGX-DC, CDP shall be entitled to retain any Collateral deposited or provided by the Clearing Member which have not been utilised pursuant to this Rule 8.6B, except where such Collateral were deposited with or provided to CDP solely in relation to Customer Accounts.

        Added on 21 January 201321 January 2013 and amended on 22 April 201322 April 2013.

    • 8.6E Exclusion of Liability

      • 8.6E.1

        Without prejudice to the generality of Rule 1 or Rule 10, CDP shall not be liable to any customer in respect of any damage, loss, cost or expense of whatsoever nature (whether direct, indirect, special or consequential, including without limitation any loss of business, revenue, goodwill, bargain or profit), suffered or incurred by such customer, arising out of or in connection with any act or omission of CDP in the performance of CDP's obligations in Rule 8 or the exercise or non-exercise of its powers under Rule 8.

        Added on 26 April 201326 April 2013 and Amended on 6 September 2021.

    • 8.7 Certification of Net Sum Due

      • 8.7.1

        Upon CDP declaring that an Event of Default has occurred, CDP shall as soon as reasonably practicable certify the net sum payable by the Defaulting Clearing Member in respect of its rights and obligations arising under these Clearing Rules. The Defaulting Clearing Member shall pay any net amount so payable by it to CDP forthwith.

    • 8.9 Clearing Members to Render Assistance

      • 8.9.1

        To facilitate the operation of a safe and efficient clearing facility, the Defaulting Clearing Member shall:

        (1) render all assistance as CDP requires, including without limitation making available the Defaulting Clearing Member's premises, systems and officers;
        (2) provide CDP with information, books and records which CDP requires; and
        (3) comply with all other requirements that CDP may specify.

        Added on 22 April 201322 April 2013 and Amended on 6 September 2021.