Past version: Effective from 26 Apr 2013 to 28 Jul 2013
7.04.5A.1 Subject to Rule 7.04.5A.3, when a contract registered as an Eligible OTCF Transaction pursuant to Rule 7.02AA.2 between a Clearing Member who is or who represents the First Original OTCF Contract Counterparty ("First Clearing Member") and a Clearing Member who is or who represents the Second Original OTCF Contract Counterparty ("Second Clearing Member") is cleared through the Clearing House, the original contract between the First Clearing Member and Second Clearing Member shall be discharged and replaced with two separate and distinct Contracts as described below, both of which are on the same terms as the original contract:
a. the First Clearing Member shall enter into a Contract with the Clearing House, which assumes the rights and obligations of the Second Clearing Member as against the First Clearing Member in the original Contract, and
b. the Second Clearing Member shall enter into a Contract with the Clearing House, which assumes the rights and obligations of the First Clearing Member as against the Second Clearing Member in the original Contract.
7.04.5A.2 Subject to Rule 7.04.5A.3, when an open position in an OTCF Contract is transferred from a Clearing Member ("Original Party") to another Clearing Member ("New Party") pursuant to this Rules, the original OTCF Contract between the Original Party and the Clearing House in respect of the open position shall be discharged and replaced by a separate and distinct Contract between the New Party and Clearing House on the same terms as the original OTCF Contract between the Original Party and the Clearing House, wherein the New Party assumes the rights and obligations of the Original Party as against the Clearing House in the original Contract.
For the purposes of Rule 7.04.5A.2, "Original Party" and "New Party" shall be as defined herein.
7.04.5A.3 The events described under Rule 7.04.5A.1 and 7.04.5A.2 shall take place only upon the latest in time occurrence of the following:
a. the successful registration of the Eligible OTCF Transaction or approval of transfer of OTCF Contract;
b. the provision of sufficient Collateral by the Clearing Members to the Clearing House to meet margin requirements and any Settlement Variation; and
c. the fulfilment of such other requirements prescribed by the Clearing House from time to time.
7.04.5A.4 Upon the occurrence of the events described under Rule 7.04.5A.1 or 7.04.5A.2, each OTCF Transaction to which such OTCF Contract relates shall be governed by the OTCF Contract Terms as set out in the OTCF Clearing Member Handbook and by Circulars issued by the Clearing House from time to time.
7.04.5A.5 A Clearing Member in whose name an Eligible OTCF Transaction is to be registered:
a. shall not be subject to Rule 7.04.5A.3; and
b. shall be required to provide the Clearing House with sufficient Collateral to meet margin requirements and any Settlement Variation, and to fulfil such other requirements prescribed by the Clearing House from time to time immediately upon becoming a counterparty to the Clearing House or within such time prescribed by the Clearing House,
if such Eligible OTCF Transaction is entered into or transferred to such Clearing Member for the purpose of executing the default proceedings pursuant to Rule 7A.02.1.
7.04.5A.6 Notwithstanding that an Eligible OTCF Transaction has been successfully registered pursuant to Rule 7.02AA.2 and is pending novation, the Clearing House may, in its sole discretion, disallow the novation of the OTCF Contract relating to such Eligible OTCF Transaction if any of the events of default set out in Rule 7A.06.5.1 occurs or is, in the reasonable opinion of the Clearing House, about to occur in relation to the Clearing Member in whose name such Eligible OTCF Transaction has been registered.
Added on 3 November 20103 November 2010 and 26 April 201326 April 2013.