SGX-DC Clearing Rules
7A.01.1
The Clearing House shall be entitled to restrict the activities of the Clearing Member on the Clearing House or suspend the Clearing Member without prior notice if:
7A.01.1.1 the Clearing Member becomes insolvent or is deemed insolvent;
7A.01.1.2 unless exempted, the Clearing Member ceases to hold a valid Capital Markets Services Licence as prescribed under the SFA, or ceases to be authorised to conduct banking business in Singapore pursuant to section 4 of the Banking Act 1970, where applicable;
7A.01.1.3 the Clearing House is of the opinion that the integrity of the Clearing Member, in relation to its financial integrity or conduct, or the Clearing House's ability to operate a safe and efficient clearing facility is, or may be, materially compromised in any of the following events:
a. the parent company or related corporation of the Clearing Member becomes insolvent or is deemed insolvent;
b. the Clearing Member is suspended or expelled from membership of any Relevant Market or its clearing house;
c. the Clearing Member fails to comply with or settle any of its financial obligations under the rules and regulations of any exchange or clearing house of which it is a member;
d. the Clearing Member fails duly to perform or is, in the opinion of the Clearing House, in breach of:
i. any provision of this Rules;
ii. any Directive which is in force from time to time; or
iii. any agreement, understanding or arrangement which the Clearing Member has with the Clearing House from time to time; or
7A.01.1.4 the Clearing House, 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.
Added on 7 August 20127 August 2012 and amended on 26 April 201326 April 2013, 29 December 201429 December 2014, 18 January 2022 and 29 July 2022.
7A.01.2
In restricting the activities of a Clearing Member pursuant to Rule 7A.01.1, the Clearing House may impose such conditions or requirements for the carrying on of its business on the Clearing House as it deems appropriate, including, without limitation, the following:
7A.01.2.1 prohibiting the Clearing Member from increasing its positions in one or more Contracts;
7A.01.2.2 prohibiting the Clearing Member from taking on positions in one or more Contracts which may increase its margin requirements;
7A.01.2.3 require the Clearing Member to close out positions in one or more Contracts; and
7A.01.2.4 prohibiting the repatriation of funds to any other person, unless the prior approval of the Clearing House has been obtained.
Added on 7 August 20127 August 2012.
7A.01.3
A Clearing Member or its parent company or its related corporation becomes insolvent or shall be deemed to be insolvent on the occurrence of any of the following events:—
7A.01.3.1 in the case of a Clearing Member only, it fails to fulfil or meet margins or settlement requirements for all or any of its Contracts;
7A.01.3.2 in the case of a Clearing Member only, it fails to post Performance Deposits with the Clearing House within the time specified in the relevant Contract Specifications;
7A.01.3.3 in the case of a Clearing Member only, it defaults upon any levy owing to the Clearing House arising out of Rule 7A.01A;
7A.01.3.4 it is or is at risk of being in material default under the term of any loan or other agreement relating to its indebtedness;
7A.01.3.5 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;
7A.01.3.6 a composition, assignment or arrangement is proposed or made for the benefit of its creditor;
7A.01.3.7 the value of its assets is less than its liabilities, taking into account contingent and prospective liabilities;
7A.01.3.8 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;
7A.01.3.9 it, its directors or other officers seek or give notice of their 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;
7A.01.3.10 a moratorium is declared in respect of any of its indebtedness;
7A.01.3.11 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;
7A.01.3.12 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 or its parent company, 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 or its parent company, whether voluntary or involuntary.
7A.01.3.13 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;
7A.01.3.14 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
7A.01.3.15 if the Clearing House considers in its absolute discretion that the occurrence of any such events or their equivalent is imminent or likely in any jurisdiction.
Added on 7 August 20127 August 2012 and amended on 29 July 201329 July 2013.
7A.01.4
A Clearing Member shall immediately notify the Clearing House upon the occurrence of any of the events stated in Rule 7A.01.1.
Added on 7 August 20127 August 2012.
7A.01.5
Where the Clearing House becomes aware of the occurrence of any of the events stated in Rule 7A.01.1, the Clearing House may take any of the following actions:
7A.01.5.1 request a Relevant Market to suspend the Clearing Member or otherwise restrict its activities on the Relevant Market if the Clearing Member's activities on the Clearing House are restricted or the Clearing Member has been suspended; or
7A.01.5.2 notify any other exchanges, operators of trade registration systems or clearing houses of any action or proceedings taken against the Clearing Member.
Added on 7 August 20127 August 2012.
7A.01A.1
On the occurrence of any of the following events, or if the Clearing House in its discretion determines that any of the following events has occurred, the Clearing House may declare an event of default:—
a. the insufficiency of a Clearing Member's Collateral to discharge such Clearing Member's obligations to the Clearing House; or
b. the insufficiency of the Collateral of any other Relevant Market (other than the Connect Market), including a Participating Market, available to the Clearing House to fully meet such other Relevant Market's and/or its clearing house's obligations to the Clearing House; or
c. the insolvency of a Clearing Member (as determined by Rule 7A.01.3), any other Relevant Market which clears the opposite side of any Contract, including a Participating Market, and/or its clearing house or any depository (as defined in Rule 2.35.4); or
d. conversion, theft, breach of trust, embezzlement, or any other similar cause, caused or suffered by or in connection with a Clearing Member.
Added on 26 April 201326 April 2013 and Amended on 29 July 2022.
7A.01A.2B Application of the Clearing Fund
7A.01A.2B.1 The Clearing Fund shall be applied in the manner set out in Rule 7A.01A.2B.2 to meet losses suffered by the Clearing House, arising from or in connection with, an event of default or a Trigger Event, provided always that the defaulted Clearing Member's Collateral, or in the case of a Trigger Event, the Connect Counterparty’s collateral, has been fully applied in accordance with Rule 7A.05.1.
7A.01A.2B.2 Save as provided in Rule 7A.06.6.4 on the application of the Clearing Fund in a Multiple Default Period, and subject to the application of Rule 7A.01A.2F when a Trigger Event has been declared, the Clearing Fund shall be applied in the following order of priority, with each source of funds to be exhausted before the next source is applied:
a. first, the Clearing House First Loss Contribution, in the manner set out in Rule 7A.01A.2C;
b. second, the Clearing Fund Deposits of Active Clearing Members, in the manner set out in Rule 7A.01A.2D;
c. third, the Clearing House Intermediate Contribution, in the manner set out in Rule 7A.01A.2E;
d. fourth, the Clearing Fund Deposits of non-defaulting Clearing Members that are not available for use pursuant to Rule 7A.01A.2B.2.b, which will be applied on a pro-rata basis, calculated as the proportion of the Clearing Fund Deposit requirement of that Clearing Member relative to the aggregate Clearing Fund Deposit requirements of all such Clearing Members;
e. fifth, the Further Assessment Amounts of all non-defaulting Clearing Members, which will be applied on a pro-rata basis, calculated as the proportion of the Further Assessment Amount requirement of that Clearing Member relative to the aggregate Further Assessment Amount requirements of all such Clearing Members; and
f. sixth, any other contributions to the Clearing Fund.
Added on 17 July 201917 July 2019 and Amended on 29 July 2022.
7A.01A.2C Application of the Clearing House First Loss Contribution
7A.01A.2C.1 Subject to Rule 7A.01A.2C.2, the Clearing House First Loss Contribution shall be apportioned, in such proportion as the Clearing House determines, to meet losses in each Contract Class in which an event of default and/or Trigger Event has occurred.
7A.01A.2C.2 Where one or more auctions in respect of a Contract Class are held, the Clearing House First Loss Contribution apportioned to that Contract Class shall be further apportioned to each auction in such proportion as the Clearing House determines, and applied in the following manner:
a. the Clearing House First Loss Contribution apportioned to each auction shall be applied to meet losses arising from or in connection with that auction; and
b. any unused apportioned Clearing House First Loss Contribution for an auction shall be applied to meet any losses outstanding in the same Contract Class in such manner as the Clearing House determines.
7A.01A.2C.3 Where an event of default has occurred in more than one Contract Class, any unused apportioned Clearing House First Loss Contribution for one Contract Class shall be applied to meet any losses outstanding in the other Contract Class(es).
Added on 17 July 201917 July 2019 and Amended on 29 July 2022.
7A.01A.2D Application of Clearing Fund Deposits of Active Clearing Members
7A.01A.2D.1 Subject to Rule 7A.01A.2D.2 and Rule 7A.01A.2D.4, the Clearing Fund Deposits deposited by Active Clearing Members to clear the Contract Class in which an event of default and/or Trigger Event has occurred shall be applied to meet the losses in that Contract Class.
7A.01A.2D.2 Where an auction is held in relation to the Contract Class specified in Rule 7A.01A.5.a, the Clearing Fund Deposit of each Required Participant shall be further apportioned to that auction in such proportion as the Clearing House determines, to be applied to meet the losses arising from or in connection with that auction, in the following order of priority and manner, with each level to be exhausted before the next level is applied:
a. first, the apportioned Clearing Fund Deposits of Required Participants who did not submit a bid;
b. second, the apportioned Clearing Fund Deposits of Required Participants who had submitted bids that were below the Winning Bid Price, which will be applied on a pro-rata basis based on the product of:
i. the distance between such Required Participant's bid price and the Winning Bid Price; and
ii. the amount of such Required Participant's Clearing Fund Deposit apportioned to the auction;
c. third, the unused apportioned Clearing Fund Deposits of Required Participants who had submitted bids that were below the Winning Bid Price, which are not applied in Rule 7A.01A.2D.2.b; and
d. fourth, the apportioned Clearing Fund Deposits of Required Participants who had submitted the Winning Bid Price.
7A.01A.2D.3 Where an auction is held in relation to the Contract Class specified in Rule 7A.01A.5.a, any unused apportioned Clearing Fund Deposits for that auction shall be aggregated with the remaining Clearing Fund Deposits apportioned to the Contract Class, and applied to meet any outstanding losses in that Contract Class (including outstanding losses in any other such auction(s)) in such manner as the Clearing House determines.
7A.01A.2D.4 Where an event of default has occurred in more than one Contract Class, any unused apportioned Clearing Fund Deposits for a Contract Class (regardless of whether this follows the application of Rule 7A.01A.2D.3) shall be applied to meet any losses outstanding in the other Contract Class(es).
Added on 17 July 201917 July 2019 and Amended on 29 July 2022.
7A.01A.2E Application of the Clearing House Intermediate Contribution
7A.01A.2E.1 Subject to Rule 7A.01A.2E.2, the Clearing House Intermediate Contribution shall be apportioned, in such proportion as the Clearing House determines, to meet losses in each Contract Class in which an event of default and/or Trigger Event has occurred.
7A.01A.2E.2 Where one or more auctions in respect of a Contract Class are held, the Clearing House Intermediate Contribution apportioned to that Contract Class shall be further apportioned to each auction in such proportion as the Clearing House determines, and applied in the following manner:
a. the Clearing House Intermediate Contribution apportioned to each auction shall be applied to meet losses arising from or in connection with that auction; and
b. any unused apportioned Clearing House Intermediate Contribution for an auction shall be applied to meet any losses outstanding in the same Contract Class in such manner as the Clearing House determines.
7A.01A.2E.3 Where an event of default has occurred in more than one Contract Class, any unused apportioned Clearing House Intermediate Contribution for one Contract Class shall be applied to meet any losses outstanding in the other Contract Class(es).
Added on 17 July 201917 July 2019 and Amended on 29 July 2022.
7A.01A.2F Application of the Connect Layer upon the declaration of Trigger Event
7A.01A.2F.1 The Connect Layer shall be applied in the following order of priority, with each source of funds to be exhausted before the next source is applied, to meet losses suffered by the Clearing House arising out of the management, including termination or liquidation, of the Connect Broker’s positions in the Connect Contract, when a Trigger Event has been declared, provided the Connect Counterparty’s collateral has been fully applied in accordance with Rule 7A.05.1.6:
a. first, the Clearing House Connect Layer First Loss Contribution;
b. second, the Clearing Member Connect Layer Contribution Requirement, in the manner set out in Rule 7A.01A.2G; and
c. third, any other Clearing House contribution to the Connect Layer.
7A.01A.2F.2 Where the Connect Layer has been exhausted and there are residual losses remaining, the Clearing Fund shall be applied in accordance with Rule 7A.01A.2B.2.
Added on 29 July 2022.
7A.01A.2G Application of the Clearing Member Connect Layer Contribution Requirement
Where the Clearing House Connect First Loss Contribution has been exhausted and there are residual losses outstanding, the Clearing Member Connect Layer Contribution Requirement will be applied to cover the losses. The Clearing Members’ liability for the residual loss will be on a pro-rata basis, calculated based on their respective contribution requirement.
Added on 29 July 2022.
7A.01A.3
Where Clearing Members' Clearing Fund Deposits or Further Assessment Amounts are used and applied in accordance with Rules 7A.01A.2B.2 and 7A.01A.2D, the limits to one or more Clearing Members' liabilities in respect of such funds as set out in Rule 7A.06.6.6 or Rule 7A.06.9 may be reached. As a consequence of the foregoing, the contributions of Clearing Members which remain liable in respect of the relevant source of funds may remain unexhausted, while outstanding losses remain following such use and application of the source of funds. In such instances, the following shall apply:
- a. the remaining contributions of Clearing Members in respect of the relevant source of funds shall be applied to meet the outstanding loss, subject to their limits set out in Rule 7A.06.6.6 and Rule 7A.06.9; and
- b. the liability of each Clearing Member for such loss shall be determined as described in Rules 7A.01A.2B.2 and 7A.01A.2D, whichever is applicable, subject always to the operation of Rule 7A.06.6.5.
Added on 26 April 201326 April 2013, amended on 30 June 201430 June 2014, 12 November 201812 November 2018, 17 July 201917 July 2019 and 31 October 2024.
7A.01A.4
If the Clearing House is unable to ascertain any of its losses in relation to a potential Flat Rate adjustment promptly after an event of default, the Clearing House may estimate its loss as if such estimated loss has already been ascertained, and apply the Clearing Fund accordingly. Upon ascertaining its actual loss suffered in relation to a Flat Rate adjustment, the Clearing House will debit or credit the monies to the Clearing Fund accordingly.
Added on 26 April 201326 April 2013.
7A.01A.5
An event of default can occur in one or more Contract Classes. Each of the following limbs comprises a Contract Class:
a. Contracts that are listed for trading on the Exchange or Relevant Market and Non-Relevant Market Contracts; or
b. [Deleted]
c. [Deleted].
Added on 26 April 201326 April 2013, amended on 12 November 201812 November 2018 and 17 July 201917 July 2019.
7A.01A.6
An event of default shall be deemed to have fallen within a particular Contract Class if the defaulting Clearing Member had open commitment or outstanding obligations to the Clearing House in that Contract Class at the time of such default.
Added on 26 April 201326 April 2013.
7A.01A.7
An event of default that is due to the insufficiency of a Clearing Member's Collateral deposited with, provided to or otherwise made available to the Clearing House to fully discharge such Clearing Member's obligations to the Clearing House, or is due to the insolvency of a Clearing Member, shall be deemed for the purpose of Chapter 7A to have occurred in each Contract Class that Clearing Member was clearing or had open commitment in at the time of default.
Added on 26 April 201326 April 2013 and amended on 17 July 201917 July 2019.
7A.01A.8
Where an event of default is due to:
(i) the insufficiency of the Collateral of any Relevant Market including a Participating Market, available to the Clearing House to fully meet the obligations of such Relevant Market and/or its clearing house to the Clearing House; or
(ii) the insolvency of the Relevant Market;
a default shall be deemed to have occurred in the class of Contracts that are listed for trading on the Exchange or the Relevant Market.
Added on 26 April 201326 April 2013 and Amended on 29 July 2022.
7A.01A.9
An event of default that is due to conversion, theft, breach of trust or embezzlement of a Clearing Member, or any other cause shall be deemed to have occurred in each Contract Class that Clearing Member was clearing or had open commitment in at the time of default.
Added on 26 April 201326 April 2013.
7A.01A.10
While application of the Clearing Fund shall be mandatory, the detailed implementation of Rule 7A.05 and 7A.06 shall be the responsibility of the Clearing House.
Added on 26 April 201326 April 2013.
7A.01A.11
Without prejudice to the generality of Chapter 1, the Clearing House 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 the Clearing House.
Added on 26 April 201326 April 2013.
7A.01C Trigger Events under the Connect
The Clearing House may declare that a Trigger Event has occurred in respect of the Connect Counterparty and/or Connect Broker when it determines, in its sole discretion, that any of the following has occurred:
a. Failure of the Connect Counterparty to provide collateral to meet the margin or collateral requirements within the agreed timelines; or
b. The Connect Counterparty fails to meet its settlement obligations to the Connect Broker, whether partially or wholly, and such failure results in the Connect Broker failing to meet its settlement obligations to the Clearing House.
Added on 29 July 2022.
7A.02.1
When a Clearing Member having open positions has defaulted upon its obligation to the Clearing House, or has been suspended, the Clearing House may:—
7A.02.1.1 transfer or facilitate the transfer of all or any part of positions in Customer Contracts held by the defaulted or suspended Clearing Member to one (1) or more Clearing Members designated by the Clearing House in accordance with applicable laws, provided that all or any part of positions held in Cleared Swaps Customer Accounts may be transferred only to one (1) or more FCM Clearing Members designated by the Clearing House. When such positions are so transferred, the following shall apply:
a. subject to Rule 7A.02.1.1.c. and to the extent permitted by applicable laws, margins deposited with the Clearing House in respect of the positions shall be entrusted to the designated Clearing Member or Clearing Members;
b. the margins entrusted to a designated Clearing Member pursuant to this Rule 7A.02.1.1 may not be in such form as was originally deposited with the Clearing House;
c. the Clearing House shall have the discretion not to transfer all or any part of the margins to a designated Clearing Member as described in Rule 7A.02.1.1.a., if:
i. those margins cannot be attributed to the positions that are transferred to that Clearing Member; or
ii. those margins may be applied pursuant to Rule 7A.05.1.2 or 7A.05.1.2A,
provided that where margins are not transferred to the designated Clearing Member, the designated Clearing Member shall be required to collect the required margins from its Customer; and
d. The margins not entrusted to designated Clearing Members shall be retained by the Clearing House and may be applied in accordance with Rule 7A.05.1.2 or 7A.05.1.2A. Any unused margins shall be returned to the defaulted or suspended Clearing Member, or entrusted to the designated Clearing Members, as the Clearing House deems appropriate:
i. following the settlement of losses arising from the event of default; or
ii. at such time that the Clearing House determines that the margins may not be used.
7A.02.1.1A transfer or facilitate the transfer of all or any part of positions in Affiliate Contracts held by the defaulted or suspended Clearing Member to one (1) or more Clearing Members designated by the Clearing House in accordance with applicable laws. When such positions are so transferred, the following shall apply:
a. subject to Rule 7A.02.1.1A.c. and to the extent permitted by applicable laws, margins deposited with the Clearing House in respect of the positions shall be entrusted to the designated Clearing Member or Clearing Members;
b. the margins entrusted to a designated Clearing Member pursuant to this Rule 7A.02.1.1A may not be in such form as was originally deposited with the Clearing House;
c. the Clearing House shall have the discretion not to transfer all or any part of the margins to a designated Clearing Member as described in Rule 7A.02.1.1A.a., if:
i. those margins cannot be attributed to the positions that are transferred to that Clearing Member; or
provided that where margins are not transferred to the designated Clearing Member, the designated Clearing Member shall be required to collect the required margins from the Affiliate; and
d. The margins not entrusted to designated Clearing Members shall be retained by the Clearing House and may be applied in accordance with Rules 7A.05.1.1A, 7A.05.1.2 and 7A.05.1.2A. Any unused margins shall be returned to the defaulted or suspended Clearing Member, or entrusted to the designated Clearing Members, as the Clearing House deems appropriate:
i. following the settlement of losses arising from the event of default; or
ii. at such time that the Clearing House determines that the margins may not be used.
7A.02.1.2 execute hedging transactions, on behalf of and at the risk of the defaulted or suspended Clearing Member, to eliminate or reduce market risk resulting from such open positions;
7A.02.1.3
a. close out or liquidate any such open positions as well as positions resulting from any hedging transaction executed pursuant to Rule 7A.02.1.2;
b. appoint one or more Inter Dealer Brokers, Clearing Members or members of the applicable Relevant Market to close out any such open positions as well as positions resulting from any hedging transaction executed pursuant to Rule 7A.02.1.2, all on the behalf of and at the risk of the defaulted or suspended Clearing Member; or
c. conduct an auction of such open positions, as well as positions resulting from any hedging transaction executed pursuant to Rule 7A.02.1.2, in such manner as prescribed by the Clearing House;
7A.02.1.4 where the open positions relate to a Non-Relevant Market Transaction or a Contract subject to physical delivery prior to re-novation in Rule 6.02A.7, and it is in the Clearing House's good faith opinion impossible or impracticable for the open positions to be transferred or closed out pursuant to Rules 7A.02.1.1, 7A.02.1.1A and 7A.02.1.3 respectively, the Clearing House may, in addition to any other power or right it may have, invoice back such positions to the defaulting or suspended Clearing Member. The Clearing House shall then simultaneously invoice back the equivalent number of positions or as nearly equivalent number of such positions as the Clearing House may deem practical to the following:—
a. in the case of a Non-Relevant Market Transaction or a Contract subject to physical delivery prior to the matching process in Rule 6.02A.7, to other non-defaulting and non-suspended Clearing Members, and/or any other non-defaulting Relevant Market (or its clearing house) holding appropriate opposite positions (whether reported to the Clearing House as being House or Customer positions) as at the date of such invoicing back, on a pro-rata basis, calculated as the proportion of such gross opposite positions of each non-defaulting and non-suspended Clearing Member and/or Relevant Market (or its clearing house) at the date of such transfer relative to the aggregate value of such open positions held by all non-defaulting and non-suspended Clearing Members (to be rounded down or up if the number of lots is not a whole number at the Clearing House's absolute discretion); or
b. in the case of a Contract subject to physical delivery after the matching process in Rule 6.02A.7 and before re-novation in Rule 6.02A.7, to the non-defaulting and non-suspended Clearing Members and/or clearing member of another Relevant Market (or its clearing house), with which the defaulting or suspended Clearing Member has been matched in accordance with Rule 6.02A.7 (whether reported to the Clearing House as being House or Customer positions).
The invoicing back shall be carried out by the Clearing House effecting and registering opposite positions between itself and each of the relevant affected persons. The Clearing House shall then settle the open positions against such opposite positions, at a price determined by it. The Clearing House's actions, including the timing of the transfer and the price determined by the Clearing House shall be binding on all affected Clearing Members;
7A.02.1.5 [Rule has been deleted.]
7A.02.1.5A
a. In the event that:
i. the Clearing House is unsuccessful in closing out or liquidating such open positions;
ii. an auction of such open positions has failed; or
iii. the Clearing House is of the good faith opinion that it is impossible or impracticable for such open positions to be closed out, liquidated, or auctioned;
the Clearing House may, subject to Rule 7A.02.1.5A.b, terminate the open positions and simultaneously terminate an equivalent number of opposite positions held by the other Clearing Members in such manner and at such price as prescribed by the Clearing House.
b. In determining the opposite positions of the other Clearing Members that are to be terminated, the Clearing House shall:
i. select positions on a pro-rata basis to the extent practicable, based on the number of positions in the relevant Contracts held by each Clearing Member across its House Accounts and Customer Accounts; and
ii. provide each such Clearing Member an opportunity to re-assign which of its positions from its House Accounts and Customer Accounts are to be terminated, provided that:
(1) the Clearing Member submits to the Clearing House an allocation of its positions which are to be terminated, in accordance with the manner prescribed by the Clearing House and within the timeframe set by the Clearing House; and
(2) the termination of positions set out in that allocation would not increase the Clearing House's exposure to the Clearing Member to an extent that is unacceptable to the Clearing House in its absolute discretion.
7A.02.1.6 if a defaulted or suspended party:
a. has offsetting positions with another defaulted or suspended party; or
b. has offsetting positions between his own accounts,
the Clearing House may net such positions before undertaking any action pursuant to Rules 7A.02.1.3 to 7A.02.1.5A. The net loss calculated may be attributable to either or both defaulted or suspended party's account in whatever proportion as the Clearing House deems fit; and/or
7A.02.1.7undertake any action which is ancillary or incidental to activities set out under Rule 7A.02.1.
Added on 7 August 20127 August 2012 and amended on 8 November 20128 November 2012, 26 April 201326 April 2013, 31 December 201331 December 2013, 30 June 201430 June 2014, 2 May 20162 May 2016, 19 September 201619 September 2016 and 17 July 201917 July 2019.
7A.02.2
7A.02.2.1 The Clearing Member that has defaulted upon its obligation to the Clearing House, or has been suspended, shall cooperate with the Clearing House and non-defaulting Clearing Members in respect of any of the actions that the Clearing House may take pursuant to Rule 7A.02.1.
7A.02.2.2 Where an auction is held pursuant to Rule 7A.02.1.3.c in respect of the Contract Class specified in Rule 7A.01A.5.a, a Required Participant shall participate in such auction, and shall comply with all requirements and procedures as prescribed by the Clearing House in relation to such auctions.
Added on 7 August 20127 August 2012 and amended on 17 July 201917 July 2019.
7A.02.3
7A.02.3.1 All costs and expenses sustained by the Clearing House in connection with any steps which are or may be taken by the Clearing House pursuant to Rule 7A.02.1, including losses incurred from authorized hedging transactions and the unwinding of such hedging transactions, shall be charged to the account of the defaulted Clearing Member after all outstanding rights and liabilities in respect of all its Contracts with the Clearing House have been determined, and shall be set off against all other amounts owed and owing between the defaulted Clearing Member and the Clearing House, to produce a net sum payable by either party to the other.
7A.02.3.2 All costs and expenses incurred by the Clearing House in connection with any steps which may be taken by the Clearing House in pursuant to Rule 7A.02A to liquidate the position of the Connect Broker in the event of a Trigger Event will be charged to the Connect Counterparty and be satisfied by the use of the Connect Counterparty’s collateral.
Added on 7 August 20127 August 2012 and amended on 25 May 201525 May 2015 and 29 July 2022.
7A.02A Open Positions of Connect Broker and Clearing Members holding Positions in Connect Contracts
7A.02A.1 Upon the declaration of a Trigger Event or where the Clearing House determines, in its sole discretion, that it will cease to clear the Connect Contracts due to a termination or discontinuation of the Connect, the Clearing House may require Clearing Members to close out or liquidate all or such part of positions in Connect Contracts. Notwithstanding the preceding, the Clearing House may at its discretion, at any time by notice in writing to the Connect Broker and/or Clearing Members holding positions in Connect Contracts, specify one or more date(s) for the termination of any or all of the Connect Contracts to which it is a party.
7A.02A.2 The Clearing House may prescribe termination price(s) for any or all of the Connect Contracts by reference to the prices derived from the Connect Market or such other prices as it may determine in its sole discretion.
7A.02A.3 The Clearing House shall on the termination date(s) specified in Rule 7A.02A.1 terminate positions in any or all Connect Contracts at the termination price(s) prescribed in Rule 7A.02A.2.
7A.02A.4 Notwithstanding the above, the Clearing House may undertake any additional action it deems necessary in relation to the management of the open positions for the Connect Contracts, including those which are ancillary or incidental to activities set out under Rule 7A.02A.
Added on 29 July 2022.
7A.03.1
When a Clearing Member is suspended (including on a voluntary basis) or expelled for a violation of this Rules, other than for insolvency or default on its obligations to the Clearing House, the Clearing House may designate one (1) or more Clearing Members to deal with the open contracts cleared by the suspended or expelled Clearing Member in accordance with the Clearing House's direction.
Added on 7 August 20127 August 2012.
7A.04.1
A Clearing Member suspended for whatsoever reasons including on a voluntary basis shall not have any of the rights of a Clearing Member during the time of his suspension. A suspended Clearing Member may be reinstated upon such conditions as the Clearing House may impose.
Added on 7 August 20127 August 2012.
7A.04.2
Any Clearing Member suspended or expelled pursuant to any other provision of this Rules shall not take on or clear any new Contracts or trades and shall have any or all of the open contracts cleared by it transferred out or closed out pursuant to this Rules as may be appropriate.
Added on 7 August 20127 August 2012.
7A.05.1 Failure by Clearing Member and any other Relevant Market (or its Clearing House) to discharge its obligations to the Clearing House in respect of Contracts
Without prejudice and subject to the other provisions of this Rules:
7A.05.1.1 Where a Clearing Member has failed promptly to discharge any of its obligations to the Clearing House in respect of a House Contract (that is not an Affiliate Contract), the Clearing House may apply any or all of the following to discharge such obligations:
a. the Clearing Member's Collateral deposited with or provided to the Clearing House (except such Collateral deposited or provided in relation to (i) Customer Contracts and (ii) Affiliate Contracts); and
b. in the case of a Bank Clearing Member incorporated outside Singapore which has satisfied Rule 2.02B.1.11.a or b, the Collateral deposited or provided by the Bank Clearing Member pursuant to Rule 2.08.1B.1.
7A.05.1.1A Where a Clearing Member has failed promptly to discharge any of its obligations to the Clearing House in respect of an Affiliate Contract, the Clearing House may apply any or all of the following to discharge such obligations:
a. the Clearing Member's Collateral deposited with or provided to the Clearing House (except such Collateral deposited or provided in relation to Customer Contracts); and
b. in the case of a Bank Clearing Member incorporated outside Singapore which has satisfied Rule 2.02B.1.11.a or b, the Collateral deposited or provided by the Bank Clearing Member pursuant to Rule 2.08.1B.1,
provided that Collateral deposited by the Clearing Member in relation to Affiliate Contracts shall not in any case be applied to discharge any of the Clearing Member's obligations to the Clearing House in respect of a House Contract (that is not an Affiliate Contract).
7A.05.1.2 Where a Clearing Member has failed promptly to discharge any of its obligations to the Clearing House in respect of a Customer Contract other than an Applicable Customer Contract, the Clearing House may apply any or all of the following to discharge such obligations:
a. the Clearing Member's Collateral deposited with or provided to the Clearing House (except such Collateral deposited or provided in relation to Customer Contracts);
b. Collateral deposited or provided by the Clearing Member in relation to Customer Contracts other than an Applicable Customer Contracts provided that the conditions in the SFA in relation to the permissible use of customers' money and assets are satisfied;
b1. Collateral deposited or provided by the Clearing Member in relation to Applicable Customer Contracts, provided Rule 7A.05.1.8 applies;
c. in the case of a Bank Clearing Member incorporated outside Singapore which has satisfied Rule 2.02B.1.11.a or b, the Collateral deposited or provided by the Bank Clearing Member pursuant to Rule 2.08.1B.1; and
d. the qualifying letters of credit deposited with the Exchange by a Trading Member sponsored by the Clearing Member, pursuant to Rule 7.3.6 of the Trading Rules, provided that the Clearing Member's default is attributable to such Trading Member's act or omission,
provided that (i) Collateral deposited by the Clearing Member in relation to Applicable Customer Contracts shall not in any case be applied to discharge any of the Clearing Member's obligations to the Clearing House in respect of a Customer Contract other than an Applicable Customer Contract, save as provided by Rule 7A.05.1.8; and (ii) Collateral deposited by the Clearing Member in relation to Affiliate Contracts shall not in any case be applied to discharge any of the Clearing Member's obligations to the Clearing House in respect of a House Contract (that is not an Affiliate Contract).
7A.05.1.2A Where a Clearing Member has failed promptly to discharge any of its obligations to the Clearing House in respect of an Applicable Customer Contract, the Clearing House may apply any or all of the following to discharge such obligations:
a. the Clearing Member's Collateral deposited with or provided to the Clearing House (except such Collateral deposited or provided in relation to Customer Contracts);
b. [This rule is deleted].
c. Collateral deposited or provided by the Clearing Member in relation to the Applicable Customer Contracts of the Customer to whom the relevant defaulted Applicable Customer Contract belongs only;
c1. Collateral deposited or provided by the Clearing Member in relation to Customer Contracts other than Applicable Customer Contracts, provided 7A.05.1.8 applies;
d. in the case of a Bank Clearing Member incorporated outside Singapore which has satisfied Rule 2.02B.1.11.a or b, the Collateral deposited by the Bank Clearing Member pursuant to Rule 2.08.1B.1; and
e. the qualifying letters of credit deposited with the Exchange by a Trading Member sponsored by the Clearing Member, pursuant to Rule 7.3.6 of the Trading Rules, provided that the Clearing Member's default is attributable to such Trading Member's act or omission,
provided that (i) Collateral deposited by the Clearing Member in relation to Customer Contracts other than Applicable Customer Contracts, or in relation to the Applicable Customer Contracts of any other Customer, shall not in any case be applied to discharge any of the Clearing Member's obligations to the Clearing House in respect of an Applicable Customer Contract, save as provided by Rule 7A.05.1.8; and (ii) Collateral deposited by the Clearing Member in relation to Affiliate Contracts shall not in any case be applied to discharge any of the Clearing Member's obligations to the Clearing House in respect of a House Contract (that is not an Affiliate Contract).
7A.05.1.3 The Clearing House may liquidate any non-cash Collateral deposited with it by a Clearing Member:
a. in respect of Collateral in relation to House Contracts (that are not Affiliate Contracts), where the Clearing Member has failed to promptly discharge its obligations to the Clearing House in respect of any Contract;
a1. in respect of Collateral in relation to Affiliate Contracts, where the Clearing Member has failed to promptly discharge its obligations in respect of an Affiliate Contract and/or a Customer Contract;
b. in respect of Collateral in relation to Customer Contracts, where the Clearing Member has failed to promptly discharge its obligations in respect of a Customer Contract and the conditions in the SFA in relation to the permissible use of customers' money and assets are satisfied; and
c.in respect of assets in relation to House Contracts or Customer Contracts, if the Clearing House is of the opinion that such liquidation of non-cash assets is necessary to protect the Clearing House from depreciation of the value of Collateral, pending transfer of such House Contracts or Customer Contracts, as the case may be,
provided that (i) the Clearing House shall not be liable for any losses arising from such liquidation and any such losses will be borne by the House Account or Customer Account in respect of which the non-cash assets were liquidated; and (ii) Collateral deposited by the Clearing Member in relation to Affiliate Contracts shall not in any case be liquidated or applied to discharge any of the Clearing Member's obligations to the Clearing House in respect of a House Contract (that is not an Affiliate Contract).
7A.05.1.4 Without prejudice to the rights of the Clearing House in respect of failure by the Clearing Member to promptly discharge any of its obligations to the Clearing House, the Clearing Member shall immediately make up any deficiencies in its Clearing Fund Deposit resulting from such applications.
7A.05.1.5 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 the Clearing House to so apply the Collateral and the Clearing House 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 Collateral and the Clearing Member shall fully indemnify and keep indemnified the Clearing House and hold the Clearing House harmless against any such liability.
7A.05.1.6 If a Relevant Market, including a Participating Market and Connect Market, and/or its clearing house as the case may be (i) fails to promptly discharge any of its obligations to the Clearing House arising out of any arrangement relating to the clearing of Contracts, including the Mutual Offset System and the Connect, or (ii) is liable to the Clearing House for any losses arising out of its default, the Collateral of such Relevant Market, and in the case of the Connect, the Connect Counterparty’s collateral, shall be applied by the Clearing House to discharge the obligation.
7A.05.1.7 Where the Clearing Member which is also a clearing member of CDP has failed to settle its financial obligations to CDP, the Clearing House shall be entitled to retain any Collateral deposited or provided by the Clearing Member in relation to House Contracts (excluding Affiliate Contracts) which have not been utilised pursuant to this Rule 7A.05.
7A.05.1.8 Where the Clearing House is acting pursuant to Rule 7A.05.1.2 and/or Rule 7A.05.1.2A in respect of a Customer Account, the Clearing House may, in discharge of obligations relating to such Customer Account, apply the Collateral deposited for any other Customer Account(s) held on the books of the Clearing Member for the same Customer.
Added on 7 August 20127 August 2012 and amended on 26 April 201326 April 2013, 31 December 201331 December 2013, 2 May 20162 May 2016, 12 November 201812 November 2018 and 29 July 2022.
7A.06.1 Sources of Funds to Support Losses Borne by Clearing House
7A.06.1.1 The clearing fund size shall be determined by the Clearing House
7A.06.1.2 The Clearing Fund shall comprise:
a. Clearing Fund Deposits;
b. Further Assessment Amounts; and
c. Aggregate Clearing House Contribution.
Added on 7 August 20127 August 2012 and amended on 12 November 201812 November 2018.
7A.06.2 Clearing Fund Deposit
7A.06.2.1 Upon being granted eligibility by the Clearing House to clear a relevant Contract Class, each Clearing Member wishing to clear that Contract Class shall deposit with the Clearing House as security for its obligations to the Clearing House ("Clearing Fund Deposit") the following amounts:
A. for clearing Contracts which are listed for trading on the Exchange or any Relevant Market and/or Non-Relevant Market Contracts, the higher of:
a. S$1,000,000 or such lower amount as prescribed by the Clearing House from time to time in its discretion; or
b. the Clearing Member's proportionate share of the total Clearing Fund Deposits required from all Clearing Members in this Contract Class, which shall be an amount determined by the Clearing House. Each Clearing Member's proportionate share of the total Clearing Fund Deposits shall be determined based on the exposure that the Clearing Member brings to the clearing system, taking into account factors including, but not limited to, the Clearing Member's average margin requirements over the preceding three month period;
B. [deleted]
C. [deleted]
7A.06.2.2 The Clearing Fund Deposit shall be in cash, government securities or any other forms of Collateral acceptable to the Clearing House from time to time.
7A.06.2.3 Government securities or any other form of Collateral acceptable to the Clearing House shall not exceed a prescribed proportion of the Clearing Fund Deposit, as the Clearing House may specify from time to time in its discretion.
7A.06.2.4 This deposit may be withdrawn when such Clearing Member ceases to be a Clearing Member if, in the opinion of the Clearing House, all Contracts and obligations of such Clearing Member with the Clearing House have been settled and all sums owing to the Clearing House have been paid.
Added on 7 August 20127 August 2012 and amended on 8 November 20128 November 2012, 26 April 201326 April 2013, 30 June 201430 June 2014, 19 October 201519 October 2015, 12 November 201812 November 2018 and 17 July 201917 July 2019.
7A.06.3 Further Assessment Amount
7A.06.3.1 The aggregate Further Assessment Amount that a Clearing Member is required to furnish pursuant to Rule 7A.06.3.3 shall be an amount up to one (1) time of a Clearing Member's Clearing Fund Deposit requirement, as prescribed by the Clearing House from time to time in its discretion.
7A.06.3.2 [Deleted]
7A.06.3.3 In the use and application of the Further Assessment Amounts pursuant to Rule 7A.01A.2B.2.e in an event of default, the Clearing House shall be entitled to call for payment of the Further Assessment Amount in such portions at such times as it deems appropriate. A Clearing Member shall immediately furnish such amounts to the Clearing House, prior to the close of business on the Business Day immediately following such call.
Added on 7 August 20127 August 2012 and amended on 8 November 20128 November 2012, 26 April 201326 April 2013, 29 July 201329 July 2013, 12 November 201812 November 2018 and 17 July 201917 July 2019.
7A.06.4 Aggregate Clearing House Contributions
7A.06.4.1 Subject to Rule 7A.06.4.2, the total contribution by the Clearing House to the Clearing Fund (“Aggregate Clearing House Contribution”) shall be at least an amount equivalent to 25% of the Clearing Fund size, and allocated as follows:
a. [This rule has been deleted]
a1. an amount of not less than 15% of the Clearing Fund size shall form the Clearing House First Loss Contribution as referred to in Rule 7A.01A.2B.2.a;
b. [This rule has been deleted]
b1. an amount of not less than 10% of the Clearing Fund size shall form the Clearing House Intermediate Contribution as referred to in Rule 7A.01A.2B.2.c; and
c. any remaining amount shall form any other contributions to the Clearing Fund as referred to in Rule 7A.01A.2B.2.f.
7A.06.4.2 In the event that any part of the Aggregate Clearing House Contribution is applied in accordance with Rule 7A.01A.2B.2, such that it falls below the Minimum Aggregate Clearing House Contribution, the Clearing House shall restore the Aggregate Clearing House Contribution up to the Minimum Aggregate Clearing House Contribution. The Clearing House shall thereafter maintain Aggregate Clearing House Contribution equivalent to the Minimum Aggregate Clearing House Contribution.
7A.06.4.3 Aggregate Clearing House Contribution shall comprise the following, where such funds are available:
a. the capital of the Clearing House;
b. the net proceeds of such financial guarantee and/or default insurance; and
c. any other financial instrument.
Added on 7 August 20127 August 2012 and amended on 29 July 201329 July 2013, 30 June 201430 June 2014 and 17 July 201917 July 2019.
7A.06.6 Use of the Clearing Fund in Respect of Events of Default and/or Trigger Events Occurring Within a Multiple Default Period
7A.06.6.1 A Multiple Default Period shall be a fixed period of 90 days commencing on the day an event of default and/or a Trigger Event occurs as declared by the Clearing House, where such event of default and/or a Trigger Event results in the use and application of the Clearing Fund.
7A.06.6.2 An event of default and/or a Trigger Event occurring within a Multiple Default Period shall not trigger the commencement of a new Multiple Default Period.
7A.06.6.3 The Clearing House shall notify Clearing Members of the commencement date of any Multiple Default Period.
7A.06.6.4 The Clearing Fund in the order of priority listed in Rule 7A.01A.2B.2 shall be used and applied in the following manner in respect of events of default and/or a Trigger Event occurring within a Multiple Default Period:
a. The Clearing Fund shall only be drawn upon (i) in the case of an event of default, after the monies of the defaulted Clearing Member with the Clearing House; or (ii) in the case of a Trigger Event, the Connect Counterparty’s collateral and Connect Layer, have been exhausted in accordance with this Rules;
b. The Clearing Fund shall be utilised in respect of each event of default and/or a Trigger Event occurring within the Multiple Default Period in the order of priority listed in Rule 7A.01A.2B.2 irrespective of the number of draw downs on the Clearing Fund;
c. In the event that a utilisation of the Clearing Fund draws on only part of the funds available at any source under Rule 7A.01A.2B.2, the next utilisation of the Clearing Fund in connection with the next event of default and/or Trigger Event occurring within the same Multiple Default Period, shall:
i. subject to Rule 7A.06.6.4.c.ii, draw first from the remaining funds available at the unexhausted source before drawing from the next source, taking into account, at all times, the relevant Contract Class;
ii. where the next event of default and/or Trigger Event occurs in one or more Contract Classes in which all preceding events of defaults and/or Trigger Event in that same Multiple Default Period were not involved, the draw down will revert to the start of the sequence of priority listed in Rule 7A.01A.2B.2 and:
(1) the source of funds provided for in Rule 7A.01A.2B.2.a will consist of any remaining resources in the Clearing House First Contribution or any remaining resources in the Clearing House Intermediate Contribution, whichever amount is the higher; and
(2) the source of funds provided for in Rule 7A.01A.2B.2.c will consist of any remaining contributions to the Clearing Fund as referred to in Rule 7A.01A.2B.2.f, after which, either any remaining resources in the Clearing House Intermediate Contribution or any remaining resources in the Clearing House First Contribution, whichever has not already been used as the source of fund provided for in Rule 7A.01A.2B.2.a pursuant to (1) above.
d. Once all the sources of the Clearing Fund have been exhausted, any current or subsequent utilisation of the Clearing Fund in connection with an event of default and/or Trigger Event occurring within the same Multiple Default Period shall revert to the start of the sequence of the priority listed in Rule 7A.01A.2B.2 in respect of the replenished Clearing Fund; and
e. Upon the commencement of a new Multiple Default Period, the first draw down on the Clearing Fund in connection with an event of default and/or Trigger Event occurring in the new Multiple Default Period shall commence from the first source of funds listed in Rule 7A.01A.2B.2, subject to Rule 7A.06.8.2, and the subsequent sources of funds shall follow accordingly. This applies regardless of the source from which the last payment out of the Clearing Fund was made in connection with an event of default and/or Trigger Event which occurred in any previous Multiple Default Period.
7A.06.6.5 The Clearing House, in its application of the Clearing Fund in accordance with Rules 7A.01A.2B.2, and 7A.01A.2D, shall exclude a Clearing Member whose Clearing Fund Deposit and Further Assessment Amount have been applied fully as specified in Rule 7A.06.9.
7A.06.6.6 Nothing in this Rule 7A.06.6 shall be construed as permitting the Clearing House to apply more than the Clearing Member's Clearing Fund Deposit and Further Assessment Amount as at the time of the event of default, to meet losses arising from or in connection with any individual event of default and/or Trigger Event.
Added on 7 August 20127 August 2012 and amended on 29 July 201329 July 2013, 30 June 201430 June 2014, 12 November 201812 November 2018, 17 July 201917 July 2019, 29 July 2022 and 31 October 2024.
7A.06.7 Rights of Clearing House for Recovery of Loss
7A.06.7.1 If a Clearing Member's Collateral available to the Clearing House are insufficient to fully discharge all of such Clearing Member's obligations to the Clearing House, including all claims against or expenses incurred by the Clearing House by reason of its substitution for that Clearing Member pursuant to Rule 7.04, the Clearing House shall nonetheless pay all such claims and expenses related to any of the action which the Clearing House may take pursuant to Rule 7A.02.1 (including drawings from the Clearing Fund and expenses), which shall be deemed a loss to it and which shall be a debt from the defaulting Clearing Member to the Clearing House, which the Clearing House may collect from the assets or securities of such Clearing Member available to it or by process of law.
7A.06.7.2 If any amount paid out of the Clearing Fund pursuant to Rule 7A.01A.2B.2 is subsequently recovered by the Clearing House in whole or in part, the Clearing House shall credit the amount so received to the Clearing Fund in the reverse of the order in which it was paid out.
7A.06.7.3 If a loss in respect of which a levy has been made against Clearing Members pursuant to Rules 7A.01A.2B.2 and 7A.01A.2D is afterward recovered by the Clearing House in whole or in part, the net amount of such recovery shall be credited to such persons (whether or not they are Clearing Members at the time of recovery) in proportion to the amount of the assessment paid by such persons.
Added on 7 August 20127 August 2012 and amended on 26 April 201326 April 2013, 29 July 201329 July 2013 and 17 July 201917 July 2019.
7A.06.8 Clearing Fund Deposits to be Restored
- 7A.06.8.1 In the event that it shall become necessary as provided in Rule 7A.06 to apply all or part of the Clearing Fund Deposits to meet obligations to the Clearing House (other than a Clearing Member's own obligation resulting from the substitution of the Clearing House on its trades), the Clearing Member shall immediately make good any such deficiency in Clearing Fund Deposits prior to the close of business on the Business Day immediately following such application.
- 7A.06.8.2 In the event that the limits to the application of the Clearing Member's Clearing Fund Deposit under Rule 7A.06.9 have been reached, the Clearing Fund Deposits restored in accordance with Rule 7A.06.8.1 shall be applied only to meet the Clearing Member's own obligations to the Clearing House, resulting from the substitution of the Clearing House on its trades.
Added on 7 August 20127 August 2012 and amended on 12 November 201812 November 2018 and 31 October 2024.
7A.06.9 Limit on Non-defaulting Clearing Members’ Liability for Multiple Events of Default
7A.06.9.1 Notwithstanding Rule 7A.01A.2B.2 and subject to Rule 7A.06.9.2, the aggregate amount of a non-defaulting Clearing Member’s Clearing Fund Deposit and Further Assessment Amount that can be applied to meet losses arising from or in connection with all events of default occurring within a period of thirty (30) calendar days shall not exceed an amount equal to three (3) times of that Clearing Member's Prescribed Contributions as at the start of that 30-day period.
7A.06.9.2 Where an event of default occurs, the amount of a non-defaulting Clearing Member’s Clearing Fund Deposit and Further Assessment Amount that is available to meet losses suffered by the Clearing House arising from or in connection with that default is the lower of:
- an amount equal to three (3) times of the Clearing Member’s Prescribed Contributions as at the start of the 30-day period that ends on the day of the event of default less the aggregate amount of that Clearing Member’s Clearing Fund Deposit and Further Assessment Amount that has already been utilised to meet losses arising from or in connection with all other preceding events of default that had occurred in that 30-day period; or
- where the Clearing Member’s Clearing Fund Deposit was adjusted during the aforementioned 30-day period, an amount (“Adjusted Amount”) equal to three (3) times of the consequently adjusted Prescribed Contributions less the aggregate amount of the Clearing Member’s Clearing Fund Deposit and Further Assessment Amount that has already been utilised to meet losses arising from or in connection with events of default that occurred after the day of that adjustment but before the event of default.
In the event the Clearing Member’s Clearing Fund Deposit is adjusted multiple times during the 30-day period, a separate Adjusted Amount shall be calculated for each adjustment and the lowest Adjusted Amount shall apply for the purpose of this Rule 7A.06.9.2.b.
Refer to Practice Note 7A.06.9.
Added on 31 October 2024.
7A.06A.1 Sources of Funds to Support Losses Borne by Clearing House
7A.06A.1.1 The Connect Layer fund size shall be determined by the Clearing House.
7A.06A.1.2 The Connect Layer shall comprise:
a. the Clearing House Connect Layer Contribution; and
b. the Clearing Member Connect Layer Contribution Requirement.
7A.06A.1.3 The Clearing Member's proportionate share of the total Connect Layer required from all Clearing Members participating in the Connect Contracts (“Clearing Member Connect Layer Contribution Requirement”), shall be an amount determined by the Clearing House. Each Clearing Member's proportionate share of the total Connect Layer shall be determined based on the exposure that the Clearing Member brings to the Clearing House for their Connect positions, as well as its exposure relative to the Connect Broker’s net positions, taking into account factors including, but not limited to, the average stress loss of the Clearing Member’s Connect positions over a preceding period of up to three months.
Added on 29 July 2022.
7A.06A.2 Clearing House Connect Layer Contribution
7A.06A.2.1 The total contribution by the Clearing House to the Connect Layer (“Aggregate Clearing House Connect Layer Contribution”) shall be at least an amount equivalent to 25% of the Connect Layer size, and allocated as follows:
a. an amount of not less than 15% of the Connect Layer size shall form the Clearing House Connect Layer First Loss Contribution as referred to in Rule 7A.01A.2F.1.a; and
b. any remaining amount shall form any other Clearing House contribution to the Connect Layer referred to in Rule 7A.01A.2F.1.c.
7A.06A.2.2 Aggregate Clearing House Connect Layer Contribution shall comprise the following, where such funds are available:
a. the capital of the Clearing House;
b. the net proceeds of financial guarantee and/or default insurance; and
c. any other financial instrument.
Added on 29 July 2022.
7A.07.1
A non-defaulting Clearing Member may exercise its rights under Rule 7A.07 if the Clearing House:
a. fails to make a payment to a non-defaulting Clearing Member for a period of 30 days from the date the obligation to pay under a Contract fell due; or
b. commences a procedure seeking or proposing liquidation on the ground of its inability to pay its debts, receivership, judicial management, or a scheme of arrangement involving a compromise with its creditors or any class thereof, or other similar relief with respect to itself or to its debts under any bankruptcy, insolvency, regulatory, supervisory or similar law, or if any of the foregoing cases or procedures is commenced in relation to the Clearing House by any other person which results in liquidation or winding up of the Clearing House on the ground of its inability to pay its debts, or if the Clearing House takes corporate action to authorise any of the foregoing, in any such case other than for the purposes of corporate restructuring (including any consolidation, amalgamation or merger).
Added on 7 August 20127 August 2012.
7A.07.2
While any of the circumstances set out in Rule 7A.07.1 continue, the nondefaulting Clearing Member may, at any time by notice in writing to the Clearing House, specify a date (the "Termination Date") for the termination and liquidation of all Contracts to which it is a party in accordance with Rule 7A.07.4 below.
Added on 7 August 20127 August 2012.
7A.07.3
In the event a Clearing Member exercises its rights under Rule 7A.07.2, the Clearing House may, in its absolute discretion and by notice in writing, take any steps necessary to terminate any related Contract or close out any related positions held with any other Clearing Member, notwithstanding that such Clearing Member is not in default of any of its obligations.
Added on 7 August 20127 August 2012.
7A.07.4
Upon the specification of a Termination Date:
a. all obligations of the Clearing House and the Clearing Member in respect of any Contract between them shall cease to exist from the Termination Date, provided that such termination shall have no effect upon the rights and obligations under such Contract, which rights and obligations shall survive such termination, and any obligations to make further payments or deliveries which would otherwise have fallen due shall be satisfied by settlement (whether by payment, set-off or otherwise) of the Termination Amount;
b. the Clearing House shall (on, or as soon as reasonably practicable after, the Termination Date) determine the Clearing Member's total loss or total gain (as the case may be) in respect of each Contract, in each case expressed in Singapore Dollars (the "Base Currency");
c. the Clearing House shall treat each gain to the Clearing Member as a positive amount and each loss by that Clearing Member as a negative amount and shall, in accordance with Rule 7A.07.4, aggregate all of such amounts to produce a single, net positive or negative amount, denominated in the Base Currency (the "Termination Amount"); and
d. where a Clearing Member has one or more House Accounts and Customer Accounts:
(i) the Clearing House shall determine net amounts under Rule 7A.07.4 (c) as follows: one net amount for each Applicable Customer Account; one net amount for all Customer Accounts that are not Applicable Customer Accounts; one net amount for all Affiliate Accounts; and one net amount for all other accounts; and
(ii) the net amounts determined under Rule 7A.07.4(d)(i) each shall constitute Termination Amounts.
Added on 7 August 20127 August 2012 and amended on 2 May 20162 May 2016.
7A.07.5
If a Termination Amount determined pursuant to Rule 7A.07.4 above is a positive amount, the Clearing House shall pay it to the Clearing Member and if any such Termination Amount is a negative amount, the Clearing Member shall pay it to the Clearing House, in either case in accordance with Rule 7A.07.6. The Clearing House shall notify the Clearing Member of each such Termination Amount, and by which party it is payable, as soon as practicable after the calculation thereof.
Added on 7 August 20127 August 2012.
7A.07.6
A Termination Amount shall be paid in the Base Currency by the close of business on the business day following notification pursuant to Rule 7A.07.5 above.
Added on 7 August 20127 August 2012.
7A.07.7
For the purposes of any calculation required to be made under this Rule 7A.07, the Clearing House may convert amounts denominated in any other currency into the Base Currency at such rate prevailing at the time of the calculation as it shall reasonably select.
Added on 7 August 20127 August 2012.
7A.07.8
The rights of the Clearing House and the Clearing Members under this Rule 7A.07. shall be in addition to, and not in limitation or exclusion of, any other rights which the Clearing House or the Clearing Member may have.
Added on 7 August 20127 August 2012.