SGX to refine rules on default loss exposures

3 weeks ago 39

/Mathieu Stern from Unsplash

The proposed cap aims to provide certainty.

The Singapore Exchange (SGX Group) is proposing a refinement to the existing cap on clearing members' liability for default losses stemming from multiple default events. 

Currently, clearing members of SGX Group's central counterparties (CCPs) are subject to a cap imposed by The Central Depository Limited (CDP) and Singapore Exchange Derivatives Clearing Limited (SGX-DC). 

"Our proposed rule changes align the interests of non-defaulting clearing members and the market. Limiting default loss liability without requiring resignation offers greater certainty and strengthens CCPs' recovery processes." Agnes Koh, Chief Risk Officer at SGX Group said in a local bourse announcement.

The proposed change, pending market feedback, will restrict a non-defaulting clearing member's liability for multiple default losses occurring within a 30-day period to three times its aggregate funded and unfunded clearing fund contributions (prescribed contribution) determined at the period's onset.

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