Schedule, Part IV Recognition requirements applying to clearing houses: default rules in respect of market contracts (paras. 24 - 28)
Regulations 4 and 5.
Default rules in respect of market contracts
(1) The clearing house must have default rules which, in the event of a member of the clearing house being or appearing to be unable to meet his obligations in respect of one or more market contracts, enable action to be taken to close out his position in relation to all unsettled market contracts to which he is a party.
(2) The rules may authorise the taking of the same or similar action where a member appears to be likely to become unable to meet his obligations in respect of one or more market contracts.
(3) Sub-paragraph (4) applies where the clearing house has arrangements for transacting business with, or in relation to common members of, a recognised investment exchange, a recognised CSD or another recognised clearing house.
(4) A recognised clearing house must have default rules which in the event of the investment exchange, the central securities depository or the clearing house being or appearing to be unable to meet its obligations in respect of one or more market contracts, enable action to be taken in respect of unsettled market contracts to which that person is a party.
Content of rules