On April 24, ISDA responded to the Singapore Exchange’s (SGX) consultation paper on revised limit on clearing members’ liability for multiple defaults. In its consultation paper, SGX proposed to limit a non-defaulting clearing member’s liability to meet multiple default losses arising within a 30-day period to three times the aggregate of its funded and unfunded clearing fund contributions (Prescribed Contribution) as determined at the start of the 30-day period and is independent of a clearing member’s resignation.
In the response, ISDA highlighted that while members appreciate SGX’s effort to cap clearing members’ liability without resignation, members feel that the limit of three times a clearing members’ prescribed contribution is high and recommend a lower cap in line with other established central counterparties and industry best practice, which is one or two times of the clearing member’s funded default fund. Members also feel that the calculation methodology of the clearing member’s clearing fund contribution available to meet losses arising from multiple defaults is complex and would welcome a simpler framework.
Documents (1) for ISDA Response to Clearing Member Default Liability Consultation
Latest
Safe, Efficient Markets for SFTs
Securities financing transactions (SFTs) – including repurchase agreements (repo), securities lending, buy/sell backs and margin lending – are foundational to the functioning of modern financial markets. They support the day-to-day distribution of liquidity, enable collateral to move efficiently across cash...
ISDA, GFXD, UK Finance, LMA Respond to HMT on UK BMR Reform
On March 11, ISDA, the Global Foreign Exchange Division of the Global Financial Markets Association, UK Finance and the Loan Market Association responded jointly to a consultation from His Majesty’s Treasury on the future regulatory regime for benchmarks and benchmark...
ISDA Recommendations to Simplify EU Regulation
On March 9, ISDA submitted a paper to the European Commission setting out focused proposals to improve the functioning of the EU regulatory framework for derivatives. The paper comprises eight targeted recommendations to simplify selected Level 1 provisions in a...
New Selection Process for Standard Reference Obligations (SROs) FAQs
This Frequently Asked Questions (“FAQ”) document gives information about the new selection process for Standard Reference Obligations (SROs). Note that ISDA may update these FAQs on occasion. Please check back periodically for new versions.
