SGX looks to impose new margin rules
The Singapore Exchange (SGX) is proposing to introduce new margining rules for securities cleared by its Central Depository (CDP).
The proposed margin framework seeks to align CDP’s practices
with new international standards established by the Committee on Payment and
Settlement Systems (CPSS) and the International Organisation of Securities
Commissions (IOSCO) for central counterparties.
CDP presently maintains a clearing fund comprising
contributions from CDP and members. This fund covers losses which arise from
the liquidation of a defaulting member’s position.
Under the proposal, CDP will hold additional financial
resources from individual members and if margins are insufficient, the
remaining losses will be covered by the clearing fund. Margins will be imposed
on a member’s portfolio of outstanding transactions and those of their
customers. The exchange said margin payments will vary based on the risk the
portfolio of trades bring to the clearing system.
A member’s margin requirement must be met by its own funds.
Consultation with the public will run until 21 August.