ISDA Response to Clearing Member Default Liability Consultation

On April 24, ISDA responded to the Singapore Exchange’s (SGX) consultation paper on revised limit on clearing members’ liability for multiple defaults. In its consultation paper, SGX proposed to limit a non-defaulting clearing member’s liability to meet multiple default losses arising within a 30-day period to three times the aggregate of its funded and unfunded clearing fund contributions (Prescribed Contribution) as determined at the start of the 30-day period and is independent of a clearing member’s resignation.

In the response, ISDA highlighted that while members appreciate SGX’s effort to cap clearing members’ liability without resignation, members feel that the limit of three times a clearing members’ prescribed contribution is high and recommend a lower cap in line with other established central counterparties and industry best practice, which is one or two times of the clearing member’s funded default fund. Members also feel that the calculation methodology of the clearing member’s clearing fund contribution available to meet losses arising from multiple defaults is complex and would welcome a simpler framework.

Documents (1) for ISDA Response to Clearing Member Default Liability Consultation

ISDA AGM Studio: David Bailey

David Bailey, executive director, prudential policy, at the Bank of England, speaks with ISDA CEO Scott O’Malia about the UK’s approach to Basel 3.1, the impact of the revised US Basel III endgame on cross‑border consistency and the role of the...

ISDA AGM Studio: Scott O'Malia and Chris Edmonds

Christopher Edmonds, president, fixed income & data services, at Intercontinental Exchange, speaks with Scott O’Malia, ISDA CEO, about how market volatility, regulatory change and technological transformation are reshaping global markets. The discussion explores what recent volatility has meant for participation,...

ISDA AGM Studio: Bill Borden, Microsoft

Bill Borden, corporate vice president, worldwide financial services, at Microsoft, speaks with Mark New, ISDA’s co-head of digital transformation and senior counsel, about how artificial intelligence (AI) is shaping the future of financial markets and the key factors firms should...