| 0. Overview | |
| 0.0 Date Finalised and Effective Date | Date Finalized: September 30, 2025Date of Most Recent Update: September 30, 2025 |
| 0.1 Products Cleared | |
| 0.2 Other products and clearing services of the CCP | |
| 0.3 Regulators & Key Statutes/Regulations | |
| 0.4 US/EU registration Status | |
| 0.5 QCCP status | |
| 0.6 Documents Reviewed | |
| 0.7 Reviewing Law Firms | |
| 1. Requirements for Client business services | |
| 1.1 Do the Rules contemplate Client business? | Yes.Hide noteRule 3A |
| 1.2 What are the non-documentary requirements for a CM to offer Client business services? | Status1Any Tier 1 CM that is not an Inter-Dealer Broker CM is eligible to become a sponsoring CM.A CM that is approved as a sponsoring CM by the CCP is able to sponsor an entity that has completed the necessary onboarding membership agreement as a sponsored CM, which then may enter into Sponsored GC Trades or any transaction that is eligible for submission to the CCP for netting (except for netting-eligible auction purchases, brokered transactions and GCF repo transactions) with its sponsoring CM or other CMs.A CM may apply to be a sponsoring CM if it meets the following requirements:it is a Tier 1 CMit is not an Inter-Dealer Broker CMThe CCP may also require potential sponsoring CMs to be a CM for a time period deemed necessary by the CCP, and/or to provide adequate assurances of its financial responsibility and operational capability as a condition to approval of its application. The CCP shall thereafter regularly review such sponsoring CM’s compliance with such adequate assurances, as appropriate.If a sponsoring CM is no longer in compliance with the requirements listed above, then it must inform the CCP, both orally and in writing immediately and no later than two business days from the date on which the sponsoring CM first learns of such non-compliance. The CCP will assess a $1,000 fine against any sponsoring CM that fails to do so.Consents and/or agreements2A sponsoring CM’s books and records relating to the Client’s Contracts must be open to the inspection of the CCP.Additional default fund contribution3Each sponsoring CM is required to make an additional default fund contribution to the CCP supporting the activity in its sponsoring CM omnibus account (the “additional default fund contribution”).Penalties4If, for a sponsoring CM, the sum of the VaR charges of its sponsoring CM omnibus accounts and its proprietary accounts with the CCP exceeds its netting member capital (i.e., net capital of a broker or dealer as defined in applicable SEC rules, net assets or equity capital, as applicable to a CM based on its type of regulation), then such CM will not be permitted to submit activity into its sponsoring CM omnibus accounts, unless otherwise permitted by the CCP in order to promote orderly settlement.Reporting requirements for sponsoring CM5Each sponsoring CM must submit the following to the CCP within the timeframes and in the formats required by the CCP:the reports and information that all CMs are required to submit regardless of the type of CMs, andthe reports and information required to be submitted specifically by bank CMs.A sponsoring CM must inform the CCP immediately, both orally and in writing, if:it is no longer in compliance with the relevant qualifications for applying to become a sponsoring CM (no later than 2 business days from the date on which it first learns of its non-compliance); andthe sponsored CM is insolvent (which the sponsored CM is obligated to inform the sponsoring CM no later than 1 business day from the date on which it first learns of its non-compliance).Hide note1 Section 2 (Qualifications of Sponsoring Members, the Application Process and Continuance Standards), Rule 3A, Rulebook2 Section 2 (Qualifications of Sponsoring Members, the Application Process and Continuance Standards), Rule 3A, Rulebook3 Section 10 (Clearing Fund Obligations), Rule 3A, Rulebook4 Section 2(h) (Qualifications of Sponsoring Members, the Application Process and Continuance Standards), Rule 3A, Rulebook5 Sections 2(e) (Qualifications of Sponsoring Members, the Application process and Continuance Standards), 3(d) (Qualifications of Sponsoring Members, the Application process and Continuance Standards) and 16 (Insolvency of a Sponsoring Member), Rule 3A, Rulebook |
| 1.3 What are the non-documentary requirements for a Client to receive Client business services? | Status1An entity may apply to be a Client if it meets the following requirements:it is sponsored into membership by a sponsoring CM; andit is a qualified institutional buyer or is a legal entity that, although not organized as an entity specifically listed in paragraph (a)(1)(i) of Rule 144A under the Securities Act of 1933, as amended, satisfies the financial requirements necessary to be a “qualified institutional buyer” as specified in that paragraph. Permitted transactions2 A Client that is approved to participate in the sponsorship program is allowed to enter into (1) GCF repo transactions between a Client and its sponsored CM or (2) any type of transaction that is eligible for submission to the CCP for netting with the exception of netting-eligible auction Purchases, brokered Transactions and GCF repo transactions.Required to inform CCP of insolvency 3 A Client and its sponsoring CM (to the extent it has knowledge thereof) are required to inform the CCP immediately if the Client is unable to perform under its Contracts. A Sponsoring CM shall be deemed to have knowledge that a Client is insolvent or will be unable to perform on any of its material contracts, obligations or agreements if one or more duly authorized representatives of the Sponsoring CM, in its capacity as such, has knowledge of such matters.Hide note1 Sections 2(d) (Qualifications of Sponsoring Members, the Application Process and Continuance Standards) and 3(a) (Qualifications of Sponsored Members, the Approval Process and Continuance Standards), Rule 3A, Rulebook2 Section 5 (Sponsored Member Trades), Rule 3A, Rulebook |
| 1.4 What documents must the CCP, CM and Client exchange, enter into or agree to for a CM to offer Client business services to a particular Client? | Documents between CM and CCPSponsoring CMIn addition to an application to become a sponsoring CM, an applicant that is approved to be a sponsoring CM must submit:a Sponsoring Clearing Agreement;a guaranty; anda legal opinion in a form satisfactory to the CCP.Documents between CM and ClientA sponsoring CM and its sponsored CMs are not required to enter into any specific agreements; however, the Rules provide that nothing shall prevent a sponsoring CM from seeking reimbursement from a Client for payments that the sponsoring CM makes pursuant to the guaranty. This is commonly accomplished through a Reimbursement Agreement between a sponsoring CM and its Clients.Documents between CCP and ClientEach person to become a Client shall sign and deliver to the CCP a Sponsored Member Agreement in the form developed by the CCP.Each Client that is a non-U.S. entity for U.S. federal income tax purposes must be FATCA Compliant and provide the CCP with a representation stating as much. For FATCA purposes, each applicant that is a foreign financial institution must agree that it will indemnify the CCP, its affiliates, and each of their respective shareholders, directors, officers, employees, agents and advisors (each, an “Indemnified Person”) for any loss, liability or expense sustained by the Indemnified Person as a result of its failing to be FATCA compliant.Hide noteSection 2(c) (Qualifications of Sponsoring Members, the Application Process and Continuance Standards), Rule 3A, RulebookSection 3(d) (Qualifications of Sponsored Members, the Application Process and Continuance Standards), Rule 3A, Rulebook |
| 1.5 Detail whether these Client clearing arrangements are based on an FCM structure (i.e., agency) or principal to principal arrangements or both. | The sponsorship program is neither an FCM structure nor a back-to-back principal arrangement.Under the sponsorship program, Clients initially enter into Transactions with either its own sponsoring CM or other entities that are CMs of the CCP. Subsequently, such Transactions are then novated to the CCP and are settled between the Client and the CCP through the Client’s sponsoring member omnibus account (which account is opened in the name of the Client’s sponsoring CM).The Client is the primary obligor to the CCP for any payments required pursuant to its Client Transactions; however, the sponsoring CM is required to enter into a guaranty agreement with the CCP, pursuant to which it agrees to guarantee the payment of its Client’s obligations to the CCP. Additionally, the Rules provide that a sponsoring CM may enter into a reimbursement agreement with its Client whereby the Client may be required to satisfy a reimbursement obligation to its sponsoring CM upon the making of any payments by the sponsoring CM under the guaranty agreement (among other things).Hide noteSection 2(c) (Qualifications of Sponsoring Members, the Application Process and Continuance Standards), Rule 3A, RulebookSection 8(a) (Securities Settlement), Rule 3A, Rulebook |
| 2. Required provisions in CM Client Clearing Agreements | |
| 2.1 Do the Rules specify any provisions that must be included in a CM’s Client Clearing Agreement (e.g., provisions specified as Mandatory CCP Provisions)? | No. |
| 2.2 If so, please specify each provision. | N/A |
| 3. Specified Core Provisions | |
| 3.1 Do the Rules specify any provisions as Core Provisions? | No. |
| 3.2 If so, please specify each provision. | N/A |
| 4. Indirect Client business and Indirect Clients | |
| 4.1 Do the Rules contemplate Indirect Client business? | No. |
| 4.2 If so, please describe any specific requirements applicable to Indirect Clients. | N/A |
| 4.3 Please describe the CM’s role, if any, in an Indirect Client obtaining access to the CCP. | N/A |
| 4.4 If Indirect Clients are contemplated in the Rules, do the Rules require a CM to monitor risks associated with these types of arrangements? | N/A |
| 4.5 How does the CCP manage a default of an Indirect Client? | N/A |
| 5. Client default rules and processes | |
| 5.1 Are there any specific rules relating to a Client default? | Yes. |
| 5.2 Are there separate default processes for house business and Client business? | Yes. For details regarding the default process for Client business, please refer to item 5.3. For details regarding the default process for house business please see items 100 to 108 of the Base Module. |
| 5.3 If so, please describe the differences. | Applicability of default process1Clients will not be subject to the loss allocation process described in item 100 of the Base Module, as such process only applies to sponsoring CMs (as well as other types of CMs); however, it is possible that the reimbursement agreement between the sponsoring CM and its Client may require the Client to make a reimbursement payment in such a situation.If there is a default in payment to the CCP caused by the insolvency or default of the sponsoring CM, then the Client shall not be responsible for the allocation of losses caused by such default, and the CCP shall still be required to make any payments owed to the Client through the relevant sponsoring CM omnibus account.Termination of open Contracts2If the CCP ceases to act for a sponsoring CM in its capacity as a sponsoring CM for reasons other than the insolvency of the sponsoring CM, then the mechanics used to terminate open Client Contracts are the same as the mechanics used for house Contracts. See items 100–108 of the Base Module.If the CCP ceases to act for a sponsoring CM in its capacity as a sponsoring CM because of the insolvency of the sponsoring CM, then the CCP shall determine, in its sole discretion, whether to close-out the affected Client Contracts or permit the affected Client to complete the settlement of such Client Contracts.Determination of termination amounts3The mechanics used to determine the termination amount for open Client Contracts are the same as the mechanics used for house Contracts. See items 96-99 of the Base Module.Netting of Contracts and termination amounts4Although the house accounts of a sponsoring CM will be treated separately from the sponsoring CM omnibus account, the CCP may, in its sole discretion, offset any obligation of the sponsoring CM arising from the sponsoring member guaranty to pay the CCP in respect of a Client against any obligation of the CCP to pay the sponsoring CM in respect of the sponsoring CM’s house accounts. However, a sponsoring CM may seek reimbursement from a Client for payments made by the sponsoring CM with respect to the obligations of the Client.Additionally, the Rules provide that all Clients are responsible for any defaults arising from a shared sponsoring CM omnibus account, and thus, without a separate agreement among the sponsoring CM and its Clients, Clients may be exposed to fellow Client risk in a situation where the sponsoring CM omnibus account represents the activity of multiple Clients. If the Client Transactions for each Client are processed through separate sponsoring CM omnibus accounts, then such Clients will not generally be exposed to fellow Client risk.Distribution of remaining Client collateralThe distribution of any remaining Client collateral will be handled pursuant to any reimbursement agreement entered into between the Client and its sponsoring CM.Hide note1 Section 12 (Loss Allocation Obligations), Rule 3A, Rulebook2 Sections 14 (Restrictions on Access to Services by a Sponsoring Member) and 16 (Insolvency of a Sponsoring Member), Rule 3A, Rulebook.3 Section 11 (Right of Offset), Rule 3A, Rulebook; Section 10 (Clearing fund Obligations), Rule 3A, Rulebook4 Section 12(b) (Loss Allocation Obligations), Rule 3A, Rulebook |
| 6. CM rights to reject Client Transactions | |
| 6.1 Will a CM always need to “accept” a Client Transaction for clearing or does the CM have a right of rejection prior to registration of a Contract? | No. A CM may reject a Client Transaction prior to registration. |
| 7. CCP trading limits for Client business | |
| 7.1 Can the CCP impose trading limits in respect of Client business? | Yes.Hide noteSection 2(b)(iv) (Qualifications of Sponsoring Members, the Application Process and Continuance Standard), Rule 3A, Rulebook |
| 7.2 If so, what types of limits may be imposed? | The CCP may at any time or from time to time subject a sponsoring CM to certain restrictions, including restrictions or modifications on the sponsoring CM’s use of any or all of the CCP’s services, that it deems necessary or advisable in order to protect the CCP and its members, to safeguard securities and funds in the custody or control of the CCP and for which the CCP is responsible, or to promote the prompt and accurate clearance and settlement of securities transactions.Hide noteSection 2(b)(iv) (Qualifications of Sponsoring Members, the Application Process and Continuance Standard), Rule 3A, RulebookSection 7 (General Continuance Standards), Rule 3, Rulebook |
| 7.3 Is there a notice period before new limits become effective? | Not addressed in the Rules. |
| 7.4 Is there a shorter (or zero) notice period in special or emergency circumstances, and what are the notice period and circumstances? | Not addressed in the Rules. |
| 7.5 Can separate limits be applied in respect of separate Clients? | Not explicitly addressed in the Rules; however, the Rules grant the CCP broad discretion to restrict or limit a sponsoring CM’s activity.Hide noteSection 7 (General Continuance Standards), Rule 3, Rulebook |
| 8. CM trading limits for Client business | |
| 8.1 Can the CM impose trading limits in respect of one or more of its Clients or Client accounts at the CCP level prior to registration? | No, not under the Rules; however, a sponsoring CM may include such trading limits in a reimbursement agreement with its Clients. |
| 8.2 If so, what types of limits may be imposed? | N/A |
| 8.3 What is the usual notice period before new limits become effective? | N/A |
| 8.4 Is a CM liable for all of its Client accounts? | Yes. The Client is the principal obligor with respect to any obligations to the CCP arising out of its Client Contracts; however, the sponsoring CM is required to execute a guaranty with the CCP whereby it agrees to guarantee the obligations of its Clients to the CCP.Hide noteSection 2(c) (Qualifications of Sponsoring Members, the Application Process and Continuance Standard), Rule 3A, Rulebook |
| 9. Physical Settlement | |
| 9.1 In case of products subject to physical delivery, what are the obligations of a CM in case a Client fails to meet its delivery obligations? | Although the Client is the principal obligor for any physical delivery obligations arising out of its Client Contracts, the sponsoring CM is required to execute a guaranty with the CCP whereby it agrees to guarantee all of the obligations of its Clients to the CCP. Pursuant to the guaranty, the CCP may require the sponsoring CM to perform, and if so, it can require the sponsoring CM to do so on a gross basis.Hide noteSection 2(c) (Qualifications of Sponsoring Members, the Application Process and Continuance Standard), Rule 3A, Rulebook |
| 9.2 Is it mandatory for the CM to ensure physical settlement or can such CM use alternative delivery procedures/cash settle to discharge its obligation on behalf of Clients? | Not addressed in the Rules. |
| 10. Liability of CMs for Clients | |
| 10.1 Is a CM liable for non-compliance by its Clients with the Rules or applicable law in relation to the clearing services? | Broadly, the Rules do not impose any direct obligations on sponsoring CMs to ensure compliance by Clients; however, a sponsoring CM is required to promptly inform the CCP, both orally and in writing, if one of its Clients is no longer in compliance with the requirement that it must be either a “qualified institutional buyer” as defined by Rule 144A under the Securities Act of 1933, as amended, or is a legal entity that, although not organized as an entity specifically listed in paragraph (a)(1)(i) of Rule 144A under the Securities Act of 1933, as amended, satisfies the financial requirements necessary to be a “qualified institutional buyer” as specified in that paragraph.A sponsoring CM will be subject to $1,000 fine if it does not notify the CCP (i) within one (1) Business Day of becoming aware that a sponsored CM does not meet the requirements for being a sponsored CM as described in the paragraph above; or (ii) at least 90 calendar days prior to the effective date of any “Reportable Event” (as defined in the Rules) applicable to a sponsored CM, unless the sponsoring CM demonstrates that it could not have reasonably provided notice in such timeframe, in which case notice must be provided as soon as possible. A “Reportable Event” under the Rules refers to a substantial impact on such CM’s business and/or financial condition, including but not limited to: (i) material changes in ownership, control or management; (ii) material changes in business lines, including but not limited to new business lines undertaken; or (iii) participation as a defendant in litigation which could reasonably be anticipated to have a direct negative impact on the CM’s financial condition or ability to conduct business. Hide noteSection 3(d) (Qualifications of Sponsored Members, Approval Process and Continuance Standard), Rule 3A, Rulebook |
| 10.2 Is a CM required to make any representations on behalf of its Clients or confirm that its Clients meet certain criteria? | No.Hide noteSection 2(d) (Qualifications of sponsoring Members, the Application Process and Continuance Standards), Rule 3A, Rulebook |
| 11. CM indemnities for its Client | |
| 11.1 Does the CM provide an indemnity for the conduct of its Client? | No, but pursuant to the guaranty the CCP may require the sponsoring CM to satisfy its Clients’ obligations. |
| 12. Compression services in respect of Client business | |
| 12.1 If the CCP offers compression services, does it apply to Client business in the same way as to house business? Please explain any differences. | N/A |
| 13. Participants in the CCP that are not CMs | |
| 13.1 Are there specific rules relating to participants in the CCP that are not CMs? | No. |
| 13.2 Are such participants treated as Clients or is there additional documentation that CMs must sign? | N/A |
| 14. Types of Client accounts | |
| 14.1 What types of Client account are made available by the CCP for the CM (omnibus vs. individual account)? | A sponsoring CM is permitted to provide Client business to its Clients, on an “omnibus segregated account basis”, by the opening of one or more sponsoring CM omnibus accounts.The CCP settles all Client Transactions through the sponsoring CM omnibus accounts, which are maintained by the sponsoring CM in its own name. If multiple Clients are represented in a single omnibus account, then the sponsoring CM will be responsible for tracking their separate activity on its own books and records. Accordingly, the CCP does not maintain separate house and Client accounts for CMs.Hide noteRule 1 (Definitions), RulebookParagraph II(B) (Description of Proposed Rule Change), Approval of FICC Rule Change Filing with the SEC (March 29, 2019)Principle 14 (Segregation and portability), PFMI |
| 14.2 For each type of Client account please provide the account structure for Contracts, both cash and securities with respect to Client collateral along with related margining processes, i.e., Client omnibus gross model, Client omnibus net model, individual segregation of Clients, detail of whether Client is known to CCP, etc. | Sponsoring CM omnibus accountsAccount structure 1The Rules grant the sponsoring CM discretion in how it wishes to set up its sponsoring CM omnibus accounts. It can set up just one sponsoring CM omnibus account that contains all of the activity of all of its Clients, or it can set them up on a Client-by-Client basis. Additionally, a sponsoring CM could set up separate sponsoring CM omnibus accounts on the basis of the different type of Client Transactions, e.g., it could set up separate sponsoring CM omnibus accounts for Client Transactions with the sponsoring CM and for Client Transactions with other CMs.The CCP will calculate a single funds-only or securities settlement amount for each sponsoring CM omnibus account(s). Each Client within a sponsoring CM omnibus account will be responsible for satisfying its allocable portion of the securities and funds-only settlement amount using its sponsoring CM as a processing agent.As discussed in item 5.3 above, Clients may be exposed to fellow Client risk if the Client Transactions for multiple Clients are all processed through the same sponsoring CM omnibus account.Risk mutualisation; collateral pooling; calculation of margin requirements 2Each sponsoring CM must make an additional default fund contribution that represents the sum of the default fund contribution calculations for all the Clients whose activity is represented in the sponsoring CM omnibus account (or accounts). The sponsoring CM is principally liable for making such additional default fund contributions to the CCP, and may seek reimbursement from its Clients under a separate agreement.Identity of Client 3The PFMI Disclosure notes that for the CCP, as an SEC-registered cash market clearing agency, the applicable Client protection regime is the SEC’s Client protection rules, promulgated by the SEC under the Exchange Act in 1972 (the CCP does not clear security-based swaps). This regulation applies to sponsoring CMs, and provides for Client segregation requirements with respect to transactions processed through the CCP to be accounted for on the books and records of the sponsoring CM, and not at the clearing agency level. The CCP is not able to identify the positions or of a sponsoring CM’s Clients; however, it may request such information from the sponsoring CM at any time.Hide note1 Rule 1 (Definitions), Rulebook; Paragraph II(B) (Description of Proposed Rule Change), Approval of FICC Rule Change Filing with the SEC (March 29, 2019); Sections 8 (Securities Settlement) and 9 (Funds-Only Settlement), Rule 3A, Rulebook2 Section 10 (Clearing Fund Obligations), Rule 3A, Rulebook3 Principle 14 (Segregation and Portability), PFMI; Section 2(f) (Qualification of Sponsoring Members, the Application Process and Continuance Standards), Rule 3A, Rulebook |
| 14.3 In whose name (Client/CM/CCP) are these accounts held? | Each Client account is in one or more sponsoring CM omnibus accounts in the name of such sponsoring CM, in respect of which the CM acts as the processing agent vis-à-vis the CCP and that relates to either a single Client or a group of Clients.Hide noteRule 1 (Definitions), Rulebook |
| 15. Segregation of Client accounts | |
| 15.1 If segregated Client account structures exist, are they mandated by the Rules or is such segregation applied at the discretion of each CM? | The Rules require the CM to have at least one separate sponsoring CM omnibus account apart from its proprietary account to contain the activity of its Clients.Hide noteRule 1 (Definitions), Rulebook |
| 15.2 Do CMs or Clients have to sign any particular documentation in order to achieve the requisite segregation of collateral? | No agreements other than the Sponsoring Clearing Agreement and the Sponsored Member Agreement are required under the Rules. |
| 15.3 Does the CCP have to sign any particular documentation in order to achieve the requisite segregation of collateral? | No agreements other than the Sponsoring Clearing Agreement and the Sponsored Member Agreement are required under the Rules. |
| 16. CCP segregation of Client margin | |
| 16.1 Is the CCP obligated to segregate collateral received through margin calls on CMs for Client accounts from the CM’s house margin, the margin of other CMs, or the margin of other Clients? | Segregation from assets of Carrying CM or from collateral of other Clients of Carrying CM1The CCP settles all Client Transactions through the relevant sponsoring CM omnibus account, each of which is separate from the account through which the sponsoring CM settles its house Contracts. The legal regime for cash CCPs provide for the protection of customer securities at the broker/dealer level. All Client activity has to be done through the sponsoring CM omnibus account, and the sponsoring CM may decide how it wants to segregate such activity on its books and records.Segregation from assets of CCP2Not addressed in the Rules; however, the PFMI Disclosure states that additional default fund contributions and the CCP’s own assets are maintained and accounted for separately, so there is no commingling.Hide notePrinciple 14 (Segregation and portability), PFMIPrinciple 16 (Custody and investment risks), PFMI |
| 17. Margining of Client Contracts | |
| 17.1 Are Clients’ Contracts margined differently (i.e., higher confidence interval, longer holding period, etc.) than those of CMs? | Yes.Hide noteSection 10(c) (Clearing Fund Obligations), Rule 3A, Rulebook |
| 17.2 If so, please elaborate on these differences. | There are two differences: (1) the additional default fund contribution is calculated by taking the sum of the VaR charges applicable for each of the Clients whose activity is contained in the sponsoring CM omnibus account, whereas, in the ordinary course, the VaR charges are calculated at the account level, and various activity within the account may be netted together in order to reach the final sum; and (2) for Clients that clear through multiple accounts sponsored by multiple sponsoring CMs, if the margin liquidity adjustment charge of the its consolidated portfolio is higher than the sum of all margin liquidity adjustment charges for each account of such Client, then such Client will be charged the amount of such difference.Hide noteSection 10(c) (Clearing Fund Obligations), Rule 3A, Rulebook; Rule 1 (Definitions), Rulebook |
| 18. Provision of cash collateral in respect of Client business | |
| 18.1 How is cash collateral in respect of Client business provided to the CCP (by way of title transfer or by way of security interest)? | There is no separate Client margin required under the Rules; however, the sponsoring CM may require Clients to post separate Client margin to the sponsoring CM pursuant to a reimbursement agreement. |
| 19. Provision of non-cash collateral in respect of Client business | |
| 19.1 How is non-cash collateral in respect of Client business provided to the CCP (by way of title transfer or by way of security interest)? | There is no separate Client margin required under the Rules; however, the sponsoring CM may require Clients to post separate Client margin to the sponsoring CM pursuant to a reimbursement agreement. |
| 20. Posting of house collateral in respect of Client Contracts | |
| 20.1 Can the CCP require CMs to post house collateral in respect of Client Contracts? | No; however, it is the sponsoring CM’s obligation to post an additional default fund contribution in order to support the activity contained in its sponsoring CM omnibus account(s). The sponsoring CM may set up a separate agreement with its Clients whereby its Clients are responsible for reimbursing the sponsoring CM for such additional default fund contributions.Hide noteSection 10(a) (Clearing Fund Obligations), Rule 3A, Rulebook |
| 20.2 If so, under what circumstances? | N/A |
| 21. Use of collateral belonging to Clients of a defaulting CM to cover losses of such defaulting CM | |
| 21.1 Could the CCP, under the Rules, utilise collateral belonging to the Clients of a defaulting CM (cash and securities) to cover losses incurred by that CM, or do segregated Client account structures ensure that this would not happen? | No, because the Clients do not actually post collateral to the CCP and the CCP does not have a security interest over the omnibus account(s), and thus any settlement amounts posted to the omnibus account(s) for the benefit of Clients may not be applied by the CCP to cover losses incurred by the sponsoring CM.Under the Rules, it is the sponsoring CM’s obligation to provide an additional default fund contribution in order to support the activity in its sponsoring CM omnibus account. A sponsoring CM may enter into a reimbursement agreement with its Clients whereby Clients are obligated to reimburse a sponsoring CM for such additional default fund contributions, but such an arrangement is not required by the Rules.Hide noteSection 10(b) (Clearing Fund Obligations), Rule 3A, Rulebook |
| 22. Use of collateral of the non-defaulting Clients of a defaulting CM to cover losses of such defaulting CM’s defaulting Client | |
| 22.1 Could the CCP, under the Rules, utilise collateral of the non-defaulting Clients of a defaulting CM to cover losses incurred by that member’s defaulting Client? | No, because Clients are not required to post collateral to the CCP; however, the Rules provide that all Clients are responsible for any defaults arising from a shared sponsoring CM omnibus account, and thus, without a separate agreement among the sponsoring CM and its Clients, Clients may be exposed to fellow Client risk in a situation where the sponsoring CM omnibus account represents the activity of multiple Clients. If the Transactions for each Client are processed through separate sponsoring CM omnibus accounts, then such Clients will not generally be exposed to fellow Client risk.Hide noteSection 12 (Loss Allocation Obligations), Rule 3A, Rulebook |
| 23 Close-out of Client Contracts upon Client default | |
| 23.1 Upon the default of a Client, do the Rules permit the transfer of Client Contracts from a Client account into a CM’s house account or the creation of offsetting Contracts between a Client account and the CM’s house account to effect a close-out of one or more Client Contracts? | Yes; a sponsoring CM, in its sole discretion, can elect, by way of written notice to the CCP, to initiate the immediate termination and liquidation of all of its Client’s positions in transactions that were originally entered into between such sponsoring CM and its Client prior to novation to the CCP, as long as (i) such sponsoring CM is not a defaulting CM and the CCP has not ceases to act for such sponsoring CM and (ii) the CCP itself has not defaulted. Upon such an election, such sponsoring CM is responsible for calculating a liquidation amount for both its own and its Clients final net settlement positions with respect to such Client transactions. The sponsoring CM may base such calculation on prices obtained from a generally recognized source or the most recent closing bid or offer quotation from such a source and may include any losses (including costs such as fees, expense and or commissions) or gains realized by such sponsoring CM in entering into replacement transactions or terminating hedge transactions in connection with or as a result of the liquidation of such sponsoring CM’s related final net settlement positions with the CCP, including any loss, damage, cost or expense directly arising or resulting from such liquidation. The sponsoring CM’s calculation of any Client liquidation amount or sponsoring CM liquidation amount shall be conclusive and binding on all relevant parties, absent manifest error and subject to any indemnity rights held by the CCP under the RulesHide noteSection 18 (Liquidation of Sponsored Member and Related Sponsoring Member Positions), Rule 3A, Rulebook |
| 24. Return of net/surplus amounts in relation to Client accounts after resolution of a CM default | |
| 24.1 To whom does the CCP return net/surplus amounts in relation to Client accounts after the resolution of a CM default and when does that occur? | Not addressed in the Rules.Assuming that the defaulting CM is subject to the SEC’s customer protection rules, surplus amounts will be returned to the trustee responsible for administrating the estate of the defaulted CM to be held in trust for the affected Clients. |
| 24.2 How do the Rules address fluctuations in the value of the collateral in such cases? | Not addressed in the Rules. |
| 25. Pre-default porting | |
| 25.1 Does the CCP offer pre-default porting? | No. |
| 25.2 If so, what does it cover (Contracts or Contracts and collateral)? | N/A |
| 25.3 If a Client in an omnibus account wishes to port its Contracts to a Receiving CM, is that Client also able to port any collateral associated to those Contracts? | N/A |
| 26. Process for pre-default porting of Client Contracts | |
| 26.1 For pre-default porting, what steps must a Client and/or the relevant CMs take and what conditions must be satisfied in order for such Client’s Contracts to be transferred from one CM to another? | N/A |
| 26.2 What is the timeline for pre-default porting of Client Contracts? | N/A |
| 27. Process for pre-default porting of Client collateral | |
| 27.1 For pre-default porting, what steps must a Client and/or the relevant CMs take and what conditions must be satisfied in order for such Client’s collateral to be transferred from one CM to another? | N/A |
| 27.2 What is the timeline for pre-default porting of Client’s collateral? | N/A |
| 28. How the CCP and CMs effect pre-default porting of Client Contracts | |
| 28.1 How do the CCP and relevant CMs effect the pre-default porting of Client Contracts? | N/A |
| 29. How the CCP and CMs effect pre-default porting of collateral | |
| 29.1 How do the CCP and relevant CMs effect the pre-default porting of collateral? | N/A |
| 30. Partial pre-default porting | |
| 30.1 For pre-default porting, is partial porting (of some but not all Contracts and/or collateral) permitted? | N/A |
| 31. Post-default porting | |
| 31.1 Is post-default porting of Client Contracts to another CM mandated by the CCP within a specified timeframe? | No, the Rules do not provide for post-default porting. |
| 31.2 If so, what conditions must be satisfied before a Client may port its Contracts? | N/A |
| 31.3 If a Client in an omnibus account wishes to port its Contracts to a Replacement CM, is that Client also able to port any collateral associated to those Contracts? | N/A |
| 32. How the CCP and CMs effect post-default porting of Client Contracts | |
| 32.1 How do the CCP and relevant CMs effect the post-default porting of Contracts? | N/A |
| 33. How the CCP and CMs effect post-default porting of collateral | |
| 33.1 How do the CCP and relevant CMs effect the post-default porting of collateral? | N/A |
| 34. Basis for post-default porting | |
| 34.1 Does the CCP allow for Client post-default porting on a per Contract basis or is post-default porting conducted on a bulk/omnibus basis? | N/A |
| 35. Liquidation of non-defaulting Client Contracts | |
| 35.1 Does the CCP liquidate non-defaulting Client Contracts if post-default porting does not occur within specified timeframes? | If the CCP has ceased to act for the sponsoring CM, then the CCP, in its sole discretion, will determine whether to close-out the affected Client Contract and/or permit the relevant Clients to complete their settlement.Hide noteSection 16 (Insolvency of a Sponsoring Member), Rule 3a, Rulebook |
| 36. Simultaneous porting of Client Contracts and collateral | |
| 36.1 Is Client collateral ported simultaneously with the post-default porting of Client Contracts? | N/A |
| 37. Post-default porting consent procedures and back-up porting arrangements | |
| 37.1 For post-default porting, how does the CCP obtain the consent of the CMs to which Client Contracts and collateral are to be ported? | N/A |
| 37.2 Are the consent procedures set out in the Rules? | No. |
| 37.3 If so, please describe them, including any exceptions. | N/A |
| 37.4 Are Clients required to have backup porting arrangements in place at all times? | No. |
| 37.5 If so, are these backup arrangements subject to acknowledgement by the backup CM and subsequent vetting by the CCP? | N/A |
| 38. CCP role in identifying Replacement CMs for Client Contracts | |
| 38.1 Do the Rules indicate that the CCP will assist Clients in identifying an alternate CM that would be willing to take Client Contracts and clear going forward? | No. |
| 39. Execution of Client Contracts during post-default porting process | |
| 39.1 What Contracts of ‘portable’ Clients (i.e., ones with verified porting arrangements) if any are allowed to be executed during the post-default porting process (assuming their CM has defaulted)? | Clients that have multiple sponsoring CM’s can continue to execute Transactions through their non-defaulted sponsoring CMs.Hide noteSection 16 (Insolvency of a Sponsoring Member), Rule 3a, Rulebook |
| 40. Client ability to post collateral directly to CCP upon CM default | |
| 40.1 Is there a way for the Client to continue to post collateral directly to the CCP if the Client is facing a defaulting CM and Contracts have not yet been ported? | No. |
| 41. Netting and set-off of Client and house Contracts upon a CCP default | |
| 41.1 What are the rules with respect to the netting and set off of obligations with respect to Client and house Contracts in the event of a CCP default? | Client and house Contracts are netted separately. Specifically, settlement positions are not calculated on a net basis for the sponsoring CM’s omnibus account(s). Instead, net settlement positions are calculated on a Client-by-Client basis.Hide noteSection 10(c) (Clearing Fund Obligations), Rule 3A, Rulebook |
| 42. Allocation of investment profits/losses in respect of Client collateral | |
| 42.1 Are investment profits/losses in respect of Client collateral borne by the CCP or are they distributed back to CMs? | N/A |
| 42.2 If they are distributed to CMs, what is the basis of distributing profits/losses? | N/A |
| 43. CCP investment of Client cash collateral | |
| 43.1 Do the Rules permit the CCP to invest Client cash collateral? | N/A |
| 43.2 If so, what investments are permissible? | N/A |
| 44. CCP rehypothecation of Client non-cash collateral | |
| 44.1 Does the CCP have the right to rehypothecate Client non-cash collateral under the Rules? | N/A |
| 44.2 If so, are there any restrictions on this ability? | N/A |
| 44.3 Will the proceeds or instruments received by the CCP be held in the same manner as the cash or non-cash collateral invested or rehypothecated by the CCP? | N/A |
| 45. Name under which CCP investment/rehypothecation of CM/Client collateral is made | |
| 45.1 In case the CCP has the ability to invest/rehypothecate CM/Client collateral (per the items 43 – 44 above), please clarify if such investments/rehypothecations are made, in the name of the CM or Client or in the name of the CCP. | N/A |
| 46. Allocation of liability in respect of Client Contracts and collateral upon a CCP default | |
| 46.1 Upon a CCP default, do the Rules or other documentation specify any allocation of liability between the CM and Client in respect of the Client’s Contracts (or Client related Contracts in the principal model) and collateral? | N/A |
| Global Glossary of Terms and CCP Specific Glossary of Terms | |
| Archive – yearly blacklines | FICC – Sponsorship Program – CCM (12.31.24 against 12.31.23)FICC – Sponsorship Program – CCM (12.31.23 against 12.31.22) |
| Archive spreadsheet | FICC – Sponsorship Program – CCM – (9.30.25 against 6.30.25)FICC – Sponsorship Program – CCM – (6.30.25 against 3.31.25)FICC – Sponsorship Program – CCM – (3.31.25 against 12.31.24)FICC – Sponsorship Program – CCM – (12.31.24 against 9.30.24)FICC – Sponsorship Program – CCM – (9.30.24 against 6.30.24)FICC – Sponsorship Program – CCM – (6.30.24 against 3.31.24)FICC – Sponsorship Program – CCM – (3.31.24 against 12.31.23)FICC – Sponsorship Program – CCM – (12.31.23 against 9.30.23)FICC – Sponsorship Program CCM (9.30.23 against 6.30.23)FICC – Sponsorship Program CCM – (06.30.23 against 03.31.23)FICC – Sponsorship Program CCM – (03.31.23 against 12.31.22)FICC – Sponsorship Program CCM – (12.31.22 against 09.30.22)FICC – Sponsorship Program CCM – (09.30.22 against 06.30.22)FICC – Sponsorship Program CCM – (06.30.22 against 03.31.22)FICC – Sponsorship Program CCM – (03.31.22 against 12.31.21)FICC – Sponsorship Program CCM – (12.31.21 against 09.30.21)FICC – Sponsorship Program CCM – (09.30.21 against 06.30.21)FICC – Sponsorship Program CCM – (06.30.21 against 03.31.21)FICC – Sponsorship Program CCM – (03.31.21 against 12.31.20)FICC – Sponsorship Program CCM – (12.31.20 against 09.30.20)FICC – Sponsorship Program CCM – (09.30.20 against 06.30.20)FICC – Sponsorship Program CCM – (06.30.20 against 03.31.20)FICC – Sponsorship Program CCM – (03.31.20 against 12.31.19)FICC – Sponsorship Program CCM – (12.31.19 against 09.30.19)FICC – Sponsorship Program CCM – (09.30.19 against 08.01.19) |
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