KUALA LUMPUR: Bursa Malaysia Securities Clearing Sdn Bhd has set up a Clearing Guarantee Fund (CGF) to guarantee settlement of trades when there is a payment or delivery default by its trading clearing participants (TCPs).
The fund, which will be in operation July 1, will consist of a pool of assets such as cash, bank guarantees and other financial resources, Bursa Malaysia Bhd chief executive officer Yusli Mohamed Yusoff said in a statement yesterday.
“The fund would also enable the clearing house to deal with potentially large credit and/or liquidity risks that may arise when a TCP defaults on its payment or delivery obligation on any settlement day.
“As a frontline regulator, we are determined to ensure that the capital market infrastructure keeps pace with the growing demands for greater efficiency and risk management,” he said.
Yusli said based on a risk-based model that had been benchmarked against its peers, the quantum of the fund was set at RM100mil.
“TCPs would contribute 15% (with a fixed contribution of RM10,000 in cash), the clearing house 25% and Bursa Malaysia Bhd 60% to the fund in the form of a standby credit facility.
“Contributions by TCPs would be reviewed on a quarterly basis,” he said. The CGF is a common feature of most developed markets and a prescribed requirements by the International Organisation of Securities Commission. – Bernama
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