SGX seeks opinion on proposed CDP margining framework and clearing fund changes

Amongst the changes proposed include the introduction of margin offsets.

Singapore Exchange Regulation (SGX RegCo) is seeking market opinion on the proposed changes to the Central Depository’s (CDP) margining framework and Clearing Fund.

The public consultation can be found on SGX Group’s website and will close on 5 December 2022.

“CDP collects margins and Clearing Fund contributions to mitigate the impact a Clearing Member default could have on the rest of the financial system,” SGX RegCo explained.

The proposed margin changes include the introduction of margin offsets, enhancement of anti-procyclicality measures, and offering differentiated margin rates for groups of securities with different risk profiles.

Meanwhile, proposed changes on the clearing fund include the deferment of the use of Clearing Members’ contingent contributions until after all other sources of the Clearing Fund have been used; changing the approach for sizing the Clearing Fund and Clearing Members’ contribution; placement of a cap on Clearing Members’ Clearing Fund liability.