The Singapore Exchange (SGX) has launched a consultation paper with the aim of refining rules and improving transparency for clearing in its securities and derivatives markets.
Potential amendments to the SGX clearing rules will cover topics including collateral management and ways to deal with clearing member defaults, giving members a better understanding of their rights and obligations.
Rules on collateral and trust arrangements will be consolidated with separate guidance from Singapore’s Central Depository and SGX’s derivatives clearing house that cover the storing of collateral and clearing fund contributions, providing ease of reference for clearing members and customers.
The rules will also lay out trust arrangements that protect members’ funds held at clearing houses if one were to become insolvent and sets rules on central counterparties’ (CCPs) use of collateral.
SGX claimed the proposed amendments go further than just having segregated arrangements.
The proposals also include processes and measures for handling a clearing member default, to better protect the market overall and how depositories deal with customers that need to settle trades in the event of bankruptcy.
The new rules are set out in two separate consultation papers for the securities market and derivatives market and will be open for comment until 8 November.
Earlier this month, SGX said it plans to become the first Asian exchange to offer clearing of OTC derivatives for clients of its members. The bourse has allowed clearing of members' proprietary OTC derivatives trades since November 2010.