The central counterparty shall take measures to limit the credit and liquidity risks in the event of a participant's default.
To cover any losses in the event of a participant's default, it shall use collateral and capital in the following order:
margins of the defaulting participant;
default fund contributions of the defaulting participant;
dedicated capital of the central counterparty;
default fund contributions of non-defaulting participants.
It shall issue rules governing how more extensive losses are to be covered. It may not:
use the initial margins of non-defaulting participants to cover losses caused by the default of another participant;
use the collateral of indirect participants to cover losses caused by the default of a participant or other indirect participant; or
use an indirect participant's funds in excess of the margin requirement deposited with it in accordance with Article 59 paragraph 3 to cover losses caused by the default of a participant or other indirect participant.
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