Rule 10 — The Clearing Bank
10.1 The Clearing Bank
The Clearing Bank shall agree to abide by these DVP Rules and shall enter into a Clearing Bank Deed with CDP.
On any Settlement Day, the Clearing Bank shall be liable, as principal and primary obligor, to pay to CDP the Net-Net Debit Balance or any shortfall in the Net-Net Debit Balance of any Settlement Bank who has defaulted in its payment obligations to CDP pursuant to Rule 8.3.4. Subject to Rule 13.3, the Net-Net Debit Balance of any Settlement Bank shall not exceed its SB Net Debit Cap.
10.2 SB Default Notice to Clearing Bank on DVP Settlement Payment
On each Settlement Day, CDP shall issue an Advice to Clearing Bank on the DVP Settlement Payment of each Settlement Bank for that Settlement Day and transmit the same to the Clearing Bank via SWIFT or any other modes of communication.
Where a Settlement Bank has defaulted on its payment obligations to CDP pursuant to Rule 8.3.4, CDP shall give the Clearing Bank a SB Default Notice. The Clearing Bank shall pay to CDP the Net-Net Debit Balance or any shortfall thereof, as set out in the SB Default Notice by such time on the same Settlement Day as agreed between CDP and the Clearing Bank.
Notwithstanding any manifest error in the SB Default Notice, the Clearing Bank shall pay the Net-Net Debit Balance as stated in the SB Default Notice or any shortfall thereof on behalf of the Settlement Bank to CDP by such time on the same Settlement Day as agreed between CDP and the Clearing Bank. Any disputes as to the amounts stated in the SB Default Notice may be considered by CDP only after CDP has completed payment of Net-Net Credit Balances to Settlement Banks and any monies to be refunded shall be refunded free of interest to the Clearing Bank on the next Settlement Day after the Settlement Day on which the dispute is resolved.
10.3 SB Net Debit Cap
The Clearing Bank may establish an SB Net Debit Cap for each Settlement Bank and shall notify CDP of the amount at the time the Settlement Bank applies for admission in DVP Settlement as a Settlement Bank through the duly executed Letter of Guarantee and Indemnity given to CDP by the Clearing Bank under Rule 2.6.1.
The SB Net Debit Cap shall not be greater than the aggregate of all the Principal Net Debit Caps of the Principals represented by the Settlement Bank.
Subject to Rule 13.3, at any time during the Settlement Day, the aggregate of all the net debit balances of all the Principals represented by the Settlement Bank shall not exceed the SB Net Debit Cap.
A Settlement Bank who wishes to have its SB Net Debit Cap adjusted may apply to CDP in accordance with the procedures found in the DVP Procedures Handbook.
10.4 All Principal Affirmations Subject to SB Net Debit Cap
Notwithstanding anything to the contrary in Rule 7.4, at any time during a Settlement Day, any receiving instruction submitted by a Principal that would have the effect of causing the aggregate of all the net debit balances of all the Principals represented by the Settlement Bank to exceed the SB Net Debit Cap shall not be matched and validated.
10.5 [Rule has been deleted.]
10.6 Setting Settlement Bank Net Debit Cap to Zero
In the event that the Clearing Bank desires to withdraw credit, guarantee or payment facilities to the Settlement Bank, the Clearing Bank may set the SB Net Debit Cap to zero. When the SB Net Debit Cap has been set to zero, all subsequent instructions submitted by the Principals represented by the Settlement Bank which are matched and validated shall be restricted to delivery instructions. Rule 8.5 shall apply, mutatis mutandis, to subsequent submissions for delivery or receiving instructions (advance or otherwise) by all Principals represented by the Settlement Bank.