Whole Section

  • 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.