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.
