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SINGAPORE, July 23, 2012 - (ACN Newswire) - Singapore Exchange (SGX) is enhancing the rules to strengthen its default management framework to protect its derivatives market against systemically destabilising events, which include the possibility of multiple member defaults. This enhancement follows a public consultation issued in September 2011.
Clearing Houses globally have been called upon to provide greater clarity and transparency in their default management practices. Their members would like to have more certainty with regard to their obligations in the event of default of other participants.
The move to make it mandatory to clear over-the-counter ("OTC") derivatives through a central counterparty ("CCP") by early 2013, concentrates more risks in CCPs and increased participation of global institutions in CCP clearing raises the risk of contagion effects arising from the interconnectedness of financial markets. SGX is making a timely change in anticipation of expansion in the scope of its clearing business and to address the needs of its members.
The rule enhancements include the following:
- Establishing the Clearing Member's liabilities in circumstances of multiple defaults (i.e. where several defaults occur in quick succession) if the Clearing Member resigns.
- Allowing SGX-Derivatives Clearing ("SGX-DC") to apply the Clearing Fund continually to meet the losses arising from all defaults which occur within a fixed period of 90 days.
- Various clarifications and refinements to SGX-DC's powers in managing a default, including clarifying SGX-DC's authority to transfer and manage customer positions and margins from the defaulted Clearing Member to a non-defaulting Clearing Member.
The rule enhancements that will be effective on 7 August 2012 and details will be available on SGX website www.sgx.com.
Contact:
Joan Lew
Tel: +65 6236 8658
Email: joan@sgx.com
Carolyn Lim
Tel: +65 6236 8139
Email: Carolyn.lim@sgx.com
Topic: Production report
Source: Singapore Exchange (SGX)
Sectors: Daily Finance
http://www.acnnewswire.com
From the Asia Corporate News Network
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