The Singapore Exchange’s clearinghouse plans to strengthen its protections against a clearing member default by increasing its own contribution to the clearing fund as well as clearing member contributions.
The exchange’s contribution will increase by S$50 million to S$200 million, which will maintain its 25% share of the overall amount in the clearing fund, according to a circular issued on Sept. 3. SGX emphasized that its contribution is “risk-based” and scales higher with greater use of the clearinghouse.
SGX also pointed out that its “skin in the game” is proportionately higher than other clearinghouses in Europe and the U.S.
Clearing member contributions will be raised to 4.5% of average daily risk margin over three months, up from 3%. This will only affect positions in exchange-traded and commodity contracts; there will be no change in the contributions in respect to OTC ﬁnancial contracts, which are based on 6% of average daily risk margin.
SGX said it will implement the increase in two or more stages in response to feedback from clearing members. The ﬁrst phase will come in October and will increase the rate to 3.3%.