Faced with increased derivatives trading volumes and market volatility, Singapore Exchange Limited proposes component revisions to SGX-DC Clearing Fund structure. New model should response to scale of market activity and risks.
SGX proposes a “risk-based approach” for individual Clearing Members with the SGX-DC Clearing Fund structure. The proposed changes relate to the following aspects:
– Equitable Contributions to the Clearing Fund from Clearing Members. These contributions include Clearing Members’ security deposits and SGX-DC’s ability to call on Clearing Members for funding, proportionate to their clearing exposure; and
– The utilisation of the Clearing Fund in the event of a Clearing Member’s default.
The Clearing Fund, comprising resources contributed by the SGX-DC and its Clearing Members, will be activated in the event of a default by a Clearing Member and only if the defaulting Clearing Member’s financial resources such as margins, assets and securities are insufficient to meet its payment obligations to SGX-DC.
L.D.