7A.06 Clearing Fund
7A.06.1 Sources of Funds to Support Losses Borne by Clearing House7A.06.1.1 The clearing fund size shall be determined by the Clearing House7A.06.1.2 The Clearing Fund shall comprise:a. Clearing Fund Deposits;b. Further Assessment Amounts; andc. Aggregate Clearing House Contribution.
7A.06.2 Clearing Fund Deposit7A.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; orb. 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Fund Deposit, as the Clearing House may specify from time to time in its discretion.7A.06.2.4 This deposit may be withdrawn when such Clearing Member ceases to be a Clearing Member if, in the opinion of the Clearing House, all Contracts and obligations of such Clearing Member with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 Amount7A.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.
7A.06.4 Aggregate Clearing House Contributions7A.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; andc. 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; andc. any other financial instrument.
7A.06.6 Use of the Clearing Fund in Respect of Events of Default and/or Trigger Events Occurring Within a Multiple Default Period7A.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; ande. 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 resigning Clearing Member whose Clearing Fund Deposit and Further Assessment Amount have been applied fully as specified in Rule 2.28.2A.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.
7A.06.7 Rights of Clearing House for Recovery of Loss7A.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.
7A.06.8 Clearing Fund Deposits to be Restored7A.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 2.28.2A.1 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.