2.5.6 Notification of Material Changes to Financial Resources and Adjusted Net Head Office Funds

Versions

2.5.6 Notification of Material Changes to Financial Resources and Adjusted Net Head Office Funds

Past version: Effective up to 21 Apr 2019

The following requirements apply in relation to material changes to Financial Resources, Adjusted Net Head Office Funds and cash and/or Acceptable Government Securities deposited with the Clearing House or CDP pursuant to Rule 2.5.2(c)(i):

(a) a corporate Member is required to immediately notify the Exchange in the event of any material changes to its Financial Resources or Adjusted Net Head Office Funds or cash and/or Acceptable Government Securities deposited with the Clearing House or CDP pursuant to Rule 2.5.2(c)(i), as the case may be, including:

(i) an initial notification if its Financial Resources or Adjusted Net Head Office Funds or cash and/or Acceptable Government Securities deposited with the Clearing House or CDP pursuant to Rule 2.5.2(c)(i), as the case may be, fall below 150% of its Total Risk Requirement;

(ii) a warning notification if its Financial Resources or Adjusted Net Head Office Funds or cash and/or Acceptable Government Securities deposited with the Clearing House or CDP pursuant to Rule 2.5.2(c)(i), as the case may be, fall below 120% of its Total Risk Requirement;

(iii) in the case of a General Trading Member, if its Aggregate Indebtedness exceeds 600% of its Aggregate Resources; or

(iv) in the case of a Clearing Member, if its Financial Resources, Adjusted Net Head Office Funds or cash and/or Acceptable Government Securities deposited with the Clearing House or CDP pursuant to the Clearing Rules or CDP Clearing Rules, as the case may be, is reduced by more than 20% from the previously submitted monthly financial statement;

(b) if the Exchange is notified by a corporate Member under this Rule 2.5.6 or otherwise becomes aware that a corporate Member's Financial Resources or Adjusted Net Head Office Funds or cash and/or Acceptable Government Securities deposited with the Clearing House or CDP pursuant to Rule 2.5.2(c)(i), as the case may be, has fallen or will fall below 120% of its Total Risk Requirement or such higher percentage as the Exchange may have imposed under Rule 2.5.4, the Exchange may direct that Member to comply with any or all of the requirements described under Regulation 7(3) of the Financial and Margin Regulations;

PROVIDED THAT, in the case of a Bank Trading Member, the Exchange shall only require that Member to comply with directions in respect of the Bank Trading Member's business that is governed by this Rules;

(c) if the Exchange is notified by a corporate Member under this Rule 2.5.6 or otherwise becomes aware that a corporate Member's Financial Resources or Adjusted Net Head Office Funds or cash and/or Acceptable Government Securities deposited with the Clearing House or CDP pursuant to Rule 2.5.2(c)(i), as the case may be, has fallen or will fall below 150% of its Total Risk Requirement or such higher percentage as the Exchange may have imposed under Rule 2.5.4, the Exchange shall be entitled to require that Member to:

(i) submit its statements of assets and liabilities, Financial Resources, cash and/or government securities deposited with the Clearing House or CDP pursuant to Rule 2.5.2(c)(i), Total Risk Requirement, Aggregate Indebtedness, and such other statements as required by the Exchange at such interval and for such time frame as determined by the Exchange; and

(ii) operate its business or in the case of a Bank Trading Member, its Business Governed by this Rules, in such manner and on such conditions as the Exchange may impose;

and

(d) if the Exchange is notified by a General Trading Member under this Rule 2.5.6 or otherwise becomes aware that a General Trading Member's Aggregate Indebtedness exceeds or will exceed 600% of its Aggregate Resources, or such lower percentage as the Exchange may have imposed under Rule 2.5.4, the Exchange may direct that Member to comply with any or all of the requirements described under Regulation 17(2) of the Financial and Margin Regulations.

Amended on 25 August 2009 25 August 2009.