Singapore legislation
Regulation 45
of Securities and Futures (Clearing Facilities) Regulations 2013
Regulation 45
Permissible use of customers’ money and assets by recognised clearing house
Subregulation 1
Where the books for the money or assets deposited or paid for or in relation to the contracts of the customers of a member of a recognised clearing house are kept by the recognised clearing house in accordance with regulation 44(3), and the member fails to meet its obligations to the recognised clearing house that arise from the contracts of those customers (referred to in this paragraph as the subject obligations), the recognised clearing house may use the money or assets held by the recognised clearing house in accordance with regulation 44(3) to meet the subject obligations, only if —
the recognised clearing house is of the opinion, formed in good faith, that the failure of the member to meet the subject obligations is directly attributable to the failure of any such customer of the member to meet that customer’s obligations under any market contract;
either —
both of the following have been wholly utilised to meet the subject obligations:
the money and assets deposited with or paid to the recognised clearing house for or in relation to the contracts of the member itself;
the money and assets (not being any money or assets of any customer of the member) deposited by the member with the recognised clearing house as collateral or guarantee for the purpose of satisfying all obligations of the member to the recognised clearing house; or
the recognised clearing house has reasonable grounds for forming an opinion that the failure to use the customers’ money or assets to meet the subject obligations may jeopardise the financial integrity of the recognised clearing house;
the recognised clearing house has made provision in its business rules for requirements in addition to those referred to in sub-paragraphs (a) and (b);
the additional requirements referred to in sub-paragraph (c) are not inconsistent with the requirements in sub‑paragraphs (a) and (b); and
the money or assets are used in accordance with the provisions of the business rules referred to in sub‑paragraph (c).
Subregulation 2
Where the books for the money or assets deposited or paid for or in relation to the contracts of a customer of a member of a recognised clearing house are kept by the recognised clearing house in accordance with regulation 44(2), and the member fails to meet its obligations to the recognised clearing house that arise from those contracts (referred to in this paragraph as the subject obligations), the recognised clearing house shall not use any money or assets deposited with or paid to the recognised clearing house for or in relation to the contracts of any other customer of the member (including any such money or assets held by the recognised clearing house in accordance with regulation 44(2) or (3)) to meet the subject obligations.
Subregulation 3
For the avoidance of doubt, where any money or assets deposited or paid for or in relation to a contract of a customer of a member of a recognised clearing house are held by the recognised clearing house in accordance with regulation 44(2), the recognised clearing house is not prevented from using the money or assets if —
the member fails to meet its obligations to the recognised clearing house; and
the failure of the member to meet its obligations to the recognised clearing house is directly attributable to the failure of that customer to meet its obligations under any market contract.
Subregulation 4
A recognised clearing house shall notify the Authority before using any customer’s money or assets in the circumstances specified in paragraph (1) or (3).