ICE Clear Netherlands
Regulation Segregation and portability
July 28, 2015
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Description
Regulation Segregation and Portability
Regulation
Operations
2.0
MT
20150728
N/a
N/a
www.theice.com
REGULATION
pursuant to article 9.2 of the Rulebook
SEGREGATION AND PORTABILITY
Capitalised terms used in this Regulation, and not otherwise defined, shall have the meaning as set out in
the Rulebook.
This Regulation enters into force on 28 July 2015.
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2
Purpose
1.1
This Regulation only applies to Individual Client Account(s) and Omnibus Client
Account(s).
1.2
Upon a Declaration of Default, ICE Clear Netherlands (ICNL) may trigger the procedures
for the transfer of Derivative Contracts and related Collateral deposited by the defaulting
Clearing Participant in these Accounts to another Clearing Participant in accordance with
this Regulation.
Portability
2.1
ICNL will only trigger the procedure for the transfer of Derivative Contracts and related Collateral
deposited by the defaulting Clearing Participant to another Clearing Participant at the request of the
Client(s) of the defaulting Clearing Participant.
2.2
The portability procedure is limited to Derivative Contracts registered in the Individual Client
Account(s) and Omnibus Client Account(s) and the related Collateral.
2.3
ICNL cannot transfer Collateral held with third parties and this should be done by the Clearing
Participant and/or the relevant Clients separately.
2.4
The conditions for transferring Derivative Contracts registered in the Individual Client Account(s)
and Omnibus Client Account(s) and the related Collateral are:
1.
In case of an Individual Client account ICNL has received a request of a Client of the
defaulting Clearing Participant, or in case of an Omnibus Client Account ICNL has
received a request of (i) all Clients that have assets and positions registered in the
relevant Omnibus Client Account or (ii) the trustee on behalf of all Clients that have assets
and positions registered in the relevant Omnibus Client Account;
2.
A back up Clearing Participant has agreed to accept all relevant Derivative Contracts
registered in an Individual Client Account and related Collateral or all relevant Derivative
Contracts in an Omnibus Client Account and related Collateral and doing so will not cause
that back up Clearing Participant not be able to meet the Margin Requirements applicable
to such Clearing Participant;
A legal opinion in relation to the authority to port by the defaulting Clearing Participant or
other applicable rules (if so required), or the written consent of the trustee or administrator
appointed for the defaulting Clearing Participant;
3.
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4.
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Satisfactory certainty that all pending settlements with the defaulting Clearing Participant
will be cancelled, and that new equivalent instructions will be sent by the back up
Clearing Participant.
2.5
ICNL will use all reasonable endeavors to perform the transfer to the back up Clearing Participant
within 4 hours after sending the Declaration of Default.
2.6
If ICNL is of the opinion, in its sole discretion, that the conditions as set out in 2.4 are not met and
will not be met within 4 hours after sending the Declaration of Default or if it is in the interest of the
proper functioning of the Clearing System, ICNL can undertake the other measures as foreseen in
the Rulebook without further delay.
Return of unused residual client collateral
Collateral for Individual Client Accounts
3.1
If collateral for Individual Client Accounts is held by ICNL, any balance owed by ICNL to
the defaulting Clearing Participant after completion of the procedure shall be readily
returned to the Client if known by ICNL.
3.2
ICNL will require a pledge agreement to be in place between the Clearing Participant as
pledgor and the Client as pledgee to protect the interest of the Client(s) involved and
ICNL. Any payments by ICNL will be made in accordance with the pledge agreement. It is
the obligation of the Clearing Participant to ensure that it has entered into the pledge
agreement with its Clients. In the absence of such pledge agreement, payment of
residual Collateral to the Client will only be made with the express consent of the
insolvency practitioner of the defaulting Clearing Participant. In the absence of such
consent, payment will be made by ICNL to the defaulting Clearing Participant for account
of the Client.
Omnibus Collateral
3.4
In the case of Collateral held for Omnibus Client Accounts, ICNL cannot distinguish
individual claims on Collateral pooled in such Accounts and therefore cannot return
Collateral to the Clients.
3.5
ICNL therefore requires pre-arranged procedures with a trustee acting on behalf of all
Clients, a pledge agreement with the Clearing Participant as pledgor and the trustee
acting on behalf of all Clients as pledgee as well as a clean legal opinion on the pledge
agreement in order to protect the Clients and ICNL. In the absence of such arrangement,
payment of residual Collateral cannot be made to the Clients directly and will be made to
the defaulting Clearing Participant for account of the Clients.
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