mobile search

OTC Clear

Rules

OTC Clear Rules

OTC Clear Rates and FX Derivatives Clearing Rules

OTC Clear Rates and FX Derivatives Clearing Rules

Table of Contents
Preface

PART I 

GENERAL PROVISIONS

Chapter 1

Definitions and Interpretation

101 Definitions
102-110 

Interpretation

Chapter 2

General Provisions

201 Amendment
202-205 Liability
206-211 Force Majeure Events and Illegality
212-214  Disclosure of Information
215-218 Governing Law
219-223 Notice
224 Process Agent
225 Time Reference
226-227 Calculations and Currency
228

 

Third Party Rights

 

PART II 

MEMBERSHIP

Chapter 3

General Provisions

301 OTC Clear Membership
302 Clearing Members
303 Qualification
304-309

Applications and Approval

Chapter 4

Legal Obligations

401-402 Continuing Obligations
403-404 Capital Requirement
405-408 Transfer of Membership
409-412

 

Reporting Obligation

 

Chapter 5

Information Obligations

501 Notifications by Clearing Members
502 Right to Demand Documents
503 Organization Structure
504  Financial Information
505

Record Keeping

Chapter 6

Suspension and Termination of Membership

601-603 Suspension
604-606 Resignation
607 Termination
608-612  Resignation and Termination
613

Former Clearing Members

Chapter 7

Designated Person

701-707 General
708 Continuing Authority of a Designated Person
709

Acknowledgment by a Designated Person

PART III  

CLEARING OPERATIONS

Chapter 8

Clearing by OTC Clear

801-805 Acceptance for Registration of Original Transactions
806-811 Creation of Contracts through Submission of Original Transactions by Clearing Members or Clients
812 Clearing Members’ Representations as at Registration Time
813 Creation of Contracts other than through Submission of Original Transaction by Clearing Members or Clients
814-814B Termination of Contracts relating to Ineligible Original Transactions after Registration
815 Transfers of Contracts
816-818 Client Clearing
819-822 Types of Client Clearing Categories
823-824  Segregation of Client Accounts
825-829 Porting of Contracts relating to Clients
830 Full Portfolio Porting
831 Partial Portfolio Porting
832 Porting of Client Collateral
833 Conditions Precedent to Porting of Contracts relating to Clients
834-835

 

Completion of Porting

 

Chapter 9

Accounts

901 Accounts
902 Position Accounts
903-904 Collateral Accounts
905-906 GF Accounts
907 Multiple Client Accounts
908-909

 

Accounts for Holding of Non-Cash Collateral

 

Chapter 10

Payments

1001 Contract Payments
1002 Margin and Rates and FX Contribution
1002A Reimbursement of Costs and Expenses
1003 Default Interest
1004 Interest Rates
1005 Income on Cash Collateral
1006-1008C Income and Redemption Proceeds on Non-Cash Collateral
1009-1011 Fees, Levies and Charges
1012-1015

Payments Calculation

Chapter 11

Tax

1101-1105

Tax

PART IV

RISK MANAGEMENT AND DEFAULT PROCEDURES

Chapter 12

Margin

1201-1203 Margin and Collateral
1204-1208 Initial Margin, Additional Margin, Variation Margin, and Intra-day Variation Margin
1209-1213 Margin Settlement
1214-1218 Acceptable Collateral for Margin and Rates and FX Contribution
1219-1221 Rights relating to Collateral in respect of Margin and Rates and FX Contribution and Representations of Clearing Members
1222-1224 

Position Limits

Chapter 13

Default Procedures

1301-1302 Clearing Member Event of Default
1303-1305 Termination following a Clearing Member Event of Default
1306-1310 Calculations of Net Payment following a Clearing Member Event of Default
1311 Termination of the Membership of a Defaulting Clearing Member
1312-1315 General Provisions relating to Clearing Member Event of Default
1316 Indemnity
1317-1321 OTC Clear Failure to Pay Event
1322-1323 OTC Clear Insolvency Event
1324-1325

Calculations of Net Payment following OTC Clear Default

Chapter 14

Disciplinary Actions and Proceedings

1401-1402 Situations Calling for Disciplinary Action
1403 Co-operation
1404 Notification
1405 Disciplinary Actions
1406-1408 Procedures relating to Disciplinary Committee
1409-1410 Appeals to the Disciplinary Appeals Committee
1411-1414 Grounds for Appeal
1415-1417

Order as to Costs

Chapter 15

Rates and FX Guarantee Resources

1501-1502 Rates and FX Guarantee Resources Purpose
1503 Calculations relating to the Rates and FX Guarantee Fund, Rates and FX Assessments and Rates and FX Contribution Balance
1504 Initial Rates and FX Contribution
1505  Further Rates and FX Contribution
1506-1507 Rates and FX Assessments Demand
1508-1511 Rates and FX Contribution due to Recalculations or Replenishments
1512-1513 Changes to Calculations relating to the Rates and FX Guarantee Fund and Rates and FX Assessments
1514 OTC Clear Use of the Rates and FX Guarantee Resources
1515-1518 Reduction of Losses on a DMP Event and Application of the Rates and FX Guarantee Resources
1519-1521 Accounts of Rates and FX Guarantee Resources
1522 Recoveries
1523-1528 Loss Distribution Process
1529 Rates and FX Clearing Service Limited Recourse
1530-1540  Winding Down of the Rates and FX Clearing Services
1541-1543 Voluntary Recapitalisation
1544-1545 Multiple DMP Events
1546-1549

Terms of Redelivery or Repayment of Rates and FX Contribution

PART V 

DEFAULT MANAGEMENT PROCESS

Chapter 16

Default Management Process

1601-1604 Default Management Process
1605-1608 Default Management Group
1609  Undertaking by Clearing Members
1610-1612

Amendments to Default Management Process

Chapter 17

Porting

1701-1709

Porting

Chapter 18

Hedging

1801-1804

Hedging

Chapter 19

Auction

1901-1904 Auction Portfolios
1905 Auction for Multiple Auction Portfolios
1906-1909 Conduct of Auction
1910-1912 Bidding
1913-1913C Initial Allocation of Resources
1914-1917 Loss Allocation
1918-1919 Successive Auction
1920  OTC Clear Financial Resources
1921-1922  Registration of Auction Contracts
1923-1924

Failed Registration

Chapter 20

Confidentiality Obligations relating to Receipt of DMP Information

2001-2004 Confidentiality
2005 Term
2006 Rights to DMP Information
2007 Liability of OTC Clear
2008-2009

Relief

Chapter 21

Obligations, Undertaking and Liability of Clearing Members relating to Participation in the Default Management Group

2101-2103 Confidentiality Obligations
2104 Conflict of Interest
2105 Representations and Warranties
2106

No Liability

PART VI 

PRODUCT SPECIFIC TERMS

Chapter 22

Product Specific Terms for Standard Rates Derivatives Contracts

2201-2202 Product Specific Terms for Standard Rates Derivatives Contracts
2203-2210 Interpretation
2211-2215 Economic Terms
2216 General Terms
2217 Clearing Rules
2218-2221 Economic and Monetary Union (EMU) Provisions
2222 Negative Interest Rates
2223 Standard Rates Derivatives Contracts Denominated in Hong Kong dollar
2224 Rounding
2225 Tax Provisions
2226 Calculation Agent
2227

Governing Law

Chapter 23

Product Specific Terms for Non Deliverable Rates Derivatives Contracts

2301-2302 Product Specific Terms for Non Deliverable Rates Derivatives Contracts
2303-2310 Interpretation
2311-2315 Economic Terms
2316 General Terms
2317 Clearing Rules
2318 Calculation Agent
2319 Negative Interest Rates
2320 Rounding
2321 Tax Provisions
2322

Governing Law

Chapter 24

Product Specific Terms for FX Derivatives Contracts

2401-2402 Product Specific Terms for FX Derivatives Contracts
2403-2411 Interpretation
2412-2416 Economic Terms
2417 General Terms
2418 Clearing Rules
2419 Calculation Agent
2420 Rounding
2421 Tax Provisions
2422 

Governing Law

Chapter 25

 

Product Specific Terms for Standard Cross-currency Rates Derivatives Contracts

 

2501-2502 Product Specific Terms for Standard Cross-currency Rates Derivatives Contracts
2503-2510 Interpretation
2511-2515 Economic Terms
2516 General Terms
2517 Clearing Rules
2518 Negative Interest Rates
2519 Rounding
2520 Tax Provisions
2521 Calculation Agent
2522

 

Governing Law

 

Appendix I

Chapter XVII - (deleted)

OTC Clearing Hong Kong Limited (“OTC Clear”) has obtained a legal opinion from an independent law firm in respect of the enforceability of certain provisions of the Clearing Rules under Hong Kong law. To promote confidence among Clearing Members and transparency in the clearing system, the opinion may be disclosed to Clearing Members on request for information purposes only, on the basis that it may not be relied upon.   Further, each Clearing Member who requests and receives a copy of the opinion from OTC Clear agrees not to transmit the opinion to anyone else or quote or refer to it in any public document filed with anyone. Please contact OTC_Operations@hkex.com.hk if you wish to receive a copy of the opinion.

For previous updates: please click here

Updated 16 Oct 2017

Loading