SGX amends default management process for clearing members of CDP

27 October 2021

From 6 September 2021, Singapore Exchange (“SGX”) has amended the default management process for clearing members of The Central Depository Pte Ltd (“CDP”). This follows a November 2020 public consultation on the proposed changes.

The amendments align CDP’s default management practices with global default management practices employed by other clearing facilities and have made the default management process more efficient, enabling a speedier resolution of any default. This will better preserve the integrity and robustness of the financial system from contagion risks should a clearing member default.

Under the previous CDP default management process, CDP would first attempt to settle the defaulting member’s outstanding customer trades, failing which CDP would proceed to liquidate those trades and complete its default management. With a view to managing a member’s default more efficiently, SGX proposed in the November 2020 public consultation to proceed directly to liquidate all trades, both customer and non-customer, that are outstanding between CDP and the defaulting member. SGX issued its response to feedback received on 3 September 2021.

To implement these changes, amendments have been made to the CDP Clearing Rules, CDP Settlement Rules and CDP Depository Rules. The rule amendments took effect from 6 September 2021.

Reference materials

The following materials are available on the SGX website www.sgx.com:

• Press release: SGX amends default management process
• Response to Consultation on CDP’s Proposed Default Management Process
• Amendments to the CDP Clearing Rules
• Amendments to the CDP Settlement Rules
• Amendments to the CDP Depository Rules