[English Translation]

REGULATIONS FORMARGIN AND UNSETTLED CONTRACTS FOR
FX CLEARING FUTURES TRANSACTIONSTOKYO FINANCIAL EXCHANGE INC.

(This is an English translation of the Regulations for Margin and Unsettled Contracts for
FX Daily Futures Transactions, the original of which has been prepared in the Japanese
language only. The Japanese language text hereof shall govern for all purposes and in all
respects. Accordingly, all questions that may arise within or without courts of law inregard to the meaning of the words, provisions and stipulations of these Regulations shallbe decided in accordance with the Japanese language text. Tokyo Financial ExchangeInc. (“TFX”) assumes no responsibility for accuracy, correctness, or content of this English
text.)

Regulations for Margin and Unsettled Contracts
for FX Clearing Futures Transactions

Table of Contents
Page
CHAPTER I. GENERAL PROVISIONS ....................................................................................... 1
Article 1. Purpose .................................................................................................................... 1
Article 2. Definitions ............................................................................................................... 1
Article 3. Purpose of FX Clearing Margin .............................................................................. 4
Article 4. Margin Reference Rate ............................................................................................ 4
CHAPTER II. RIGHTS AND DUTIES OF FX CLEARING FUTURES TRADING MEMBERIN REGARD TO FX CLEARING MARGINS .................................................. 6
Section 1. Depositing of FX Clearing Exchange Margin ............................................................ 6
Article 5. Up-front Deposit of Margin..................................................................................... 6
Article 6. Deposit of FX Clearing Exchange Margin .............................................................. 7
Section 2. Claim for Refund of FX Clearing Margin .................................................................. 8
Article 7. Claim for Refund of FX Clearing Margin ............................................................... 8
Article 8. Drawing of FX Clearing Exchange Margin and Restriction ................................... 9
Article 9. Transfer of FX Clearing Variation for Settlement to FX Clearing Exchange Margin............................................................................................................................. 10
Section 3. Treatment upon Suspension from Transaction or Other Measures Taken as for FX
Clearing Futures Contracts ...................................................................................... 10
Article 10. Suspension of Refund of FX Clearing Margin due to Suspension fromTransactions or Other Measures Taken ................................................................. 10
Article 11. Other Treatment involved in Transfer of Unsettled Positions ................................11
CHAPTER III. EFFECTIVE MARGIN RATIO ............................................................................11
Article 12. Maintenance of Effective Margin Ratio .................................................................11
Article 13. Effective Margin Ratio ...........................................................................................11
Article 14. Measures to be Taken When Effective Margin Ratio Declines ............................. 12
Article 15. Actions to be Taken in Measures including Suspension from Transaction ........... 13
Article 16. Method of Forced Allocation Measures ................................................................ 13
CHAPTER IV. TREATMEMT OF LG AS EXCHANGE MARGIN ........................................... 13
Article 17. Deposit by LG ....................................................................................................... 14
Article 18. Designation of Qualified LG Issuing Bank ........................................................... 14
Article 19. Measures to be Taken When Acceptance of Letter of Guarantee Agreement Is
Deemed Inappropriate ........................................................................................... 15
Article 20. Requirement for Letter of Guarantee Agreement .................................................. 15
Article 21 Treatment at Expiration of Letter of Guarantee Agreement .................................. 16

FX Clearing Margin Regulations
Table of Contents

CHAPTER V. miscellaneous PROVISIONS ................................................................................ 16
Article 22 Change in Settlement Method, etc......................................................................... 17
SUPPLEMENTARY PROVISIONS ................................................................................................ 17

FX Clearing Margin Regulations
Table of Contents

CHAPTER I.
GENERAL PROVISIONS

Article 1.

Purpose

1.1
These Regulations set forth the matters necessary to stipulate in connection with
margins and unsettled contracts in connection with FX Clearing Futures transactions andother related matters in accordance with the Exchange’s regulations as follows: Article 1-2of the Trading Regulations and Article 30 of the Clearing Regulations.
1.2
Amendments to Section 3 of Chapter II shall be effected by obtaining the consent
of the Self-regulatory Committee.
Article 2.

Definitions

The terms used herein shall have the meanings ascribed to them as below.
(1)“FX Clearing Exchange Margin” means the money deposited by an FX
Clearing Futures Trading Member with the Exchange with respect to FX
Clearing Futures transactions and bids and offers submitted related
thereto for the purpose of ensuring the performance of the FX Clearing
Futures Trading Member’s obligations relevant to its FX Clearing Futurescontracts.

(2)

A “deposited FX Clearing Exchange Margin Amount” means the amountof FX Clearing Exchange Margin (including the amount of FX Clearing
variation transferred pursuant to Article 9 hereof and, with respect to an
FX Broker Trading Member, including a deposited LG Margin amount)already deposited with the Exchange.

(3)

A “deposited cash margin amount” means the amount of FX Clearing
Exchange Margin already deposited with the Exchange in the currency ofJapanese Yen (including the amount of FX Clearing variation transferredpursuant to Article 9 hereof).

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(4)

“FX Clearing Margin” means a sum of: (i) the amount of FX Clearing
Exchange Margin already deposited by an FX Clearing Futures Trading
Member with the Exchange and (ii) the amount of FX Clearing variationof the said FX Clearing Futures Trading Member if it is greater than zero.

(5)

An “FX Clearing Margin amount” means the amount of FX Clearing
Margin.

(6)“LG” means the Exchange’s right to receive payment of monies under theguarantee obligations owed by a qualified LG issuing bank to the
Exchange with respect to the obligations to be performed by an FXBroker Trading Member under FX Clearing Futures contracts.

(7)“Letter of Guarantee Agreement” means an agreement on the LG between
the Exchange and a qualified LG issuing bank that satisfies therequirements prescribed in Article 20 hereof.

(8)

A “deposited LG Margin amount” means the amount of FX Clearing
Exchange Margin already deposited under the LG at the Exchange.

(9)

A “qualified LG issuing bank” means a financial institution designated by
the Exchange as a counterparty of a Letter of Guarantee Agreement
pursuant to Article 18.2 hereto.

(10)

A “margin reference rate” means a percentage figure determined by the
Exchange as a basis for calculation of the amount of FX Clearing
Exchange Margin to be deposited with the Exchange by an FX Clearing
Futures Trading Member with respect to FX Clearing Futures contracts
executed by the FX Clearing Futures Trading Member for its houseaccount.

(11)“FX Clearing variation” means FX Clearing variation as defined in
Article 90-29.1 of the Clearing Regulations.

(12)“FX Clearing variation margin subject to transfer” means an FX Clearing
variation relating to positions to be settled before being transferred to FX

FX Clearing Margin Regulations2

Clearing Exchange Margin pursuant to Article 9 hereof.
(13)“Initial Margin equivalent” means the amount of absolute value of thedifference between the principal amount of short positions and that oflong positions held multiplied by a margin reference rate calculated foreach type of FX Clearing Futures contracts, converted into the currencyof Japanese Yen at the FX Clearing Settlement Price (meaning the “FX
Clearing Settlement Price” defined in Article 90-25 of the Clearing
Regulations) of Yen Currency Pairs transaction (meaning the “YenCurrency Pairs transaction” defined in Article 2(10) of the Special
Provisions for Trading Regulations for FX Clearing Futures Transactions(hereinafter called the “FX Clearing Special Provisions”)) for thecurrency of the principal amount on each trading day.

(14)

“FX Clearing Margin requirement” means the Initial Margin equivalentadjusted by the amount of FX Clearing variation (if the FX Clearing
variation is positive, by deducting such positive amount and, if it isnegative, by adding the absolute value of such negative amount).

(15)“FX Clearing Cash Settlement Requirement for the day” means, based oneach trading day, if the FX Clearing variation whose final settlement date(meaning the final settlement date specified in Article 4.2 and Article 4.3of the FX Clearing Special Provisions; the same interpretation shall apply
hereinbelow) is a calendar day on which there occurs the opening of theMarket Trading Period of the trading day immediately following a trading
day which serves as the basis (hereinafter called the “Base Trading Day”)
falls (such calendar day shall be hereinafter called as the “Day”), is anegative amount, the absolute value of such negative amount.

(16)“FX Clearing Cash Settlement Requirement for the following day”
means, the absolute value of a negative FX Clearing variation whose final
settlement date is a calendar day on which there occurs the opening of theMarket Trading Period of the second trading day after the Base Trading
Day (such calendar day shall be hereinafter called as the “FollowingDay”) adjusted by the amount of FX Clearing variation whose final
settlement date is the Following Day (if the FX Clearing variation ispositive, by deducting such positive amount and, if it is negative, by

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adding the absolute value of such negative amount) (if such adjusted
amount becomes a negative amount, it shall be zero).
(17)

A “shortfall of FX Clearing Exchange Margin” means a shortfall provided
in Article 6.1 and Article 6.2 hereof.

(18)“FX Clearing Futures Trading Member” means an FX Clearing Futures
Trading Member as defined in Article 2 of the Trading Member
Regulations.

(19)“FX Clearing Futures Clearing Member” means an FX Clearing Futures
Clearing Member as defined in Article 3.3 of the Clearing Regulations.

(20)

A “trading day” means the trading day as defined in Article 8 of FX
Clearing Special Provisions for any type of FX Clearing Futures contract.

Article 3.

Purpose of FX Clearing Margin

3.1
FX Clearing Margin shall be deposited with the Exchange by an FX Clearing
Futures Trading Member to ensure the performance of its obligations relevant to FX
Clearing Futures contracts.
3.2
In the event of default in any of the obligations set forth in Article 3.1 above, theExchange shall be entitled to exercise the right with respect to the FX Clearing Margin
concerned and appropriate the same for the satisfaction of such obligations.
Article 4.

Margin Reference Rate

4.1
The margin reference rate which is applied to FX Clearing Futures contracts shallbe calculated for each type of FX Clearing Futures contracts in accordance with the method
set forth below:(1)

On the last trading day of each week (hereinafter called the “Calculation
Date”, with respect to each trading day during eight (8) weeks and one
hundred and four (104) weeks preceding the week in which a certain
Calculation Date falls (in either case, including such week), numericalvalue shall be calculated by dividing an FX Clearing Settlement Price on

FX Clearing Margin Regulations4

a certain trading day by that on the immediately preceding trading day.
(2)

The natural logarithm shall be taken with respect to each of the numericalvalues for such eight (8) weeks and one hundred and four (104) weeks
obtained pursuant to Article 4.1 (1) above respectively.

(3)

The standard deviation shall be obtained for the numerical values for sucheight (8) weeks and one hundred and four (104) weeks obtained pursuant
to Article 4.1 (2) above respectively.

(4)

Each of the numerical values for such eight (8) weeks and one hundredand four (104) weeks obtained pursuant to Article 4.1 (3) above shall be
multiplied by 2.33.

(5)Each of the numerical values for such eight (8) weeks and one hundredand four (104) weeks obtained pursuant to Article 4.1 (4) above shall be
multiplied by 100, with any fraction of less than two decimal places being
rounded up.

(6)

The larger of the amounts for such eight (8) weeks and one hundred andfour (104) weeks obtained pursuant to Article 4.1 (5) above shall be thepercentage value which shall be applied as the margin reference rate.

4.2
Notwithstanding Article 4.1 above, with respect to the following types of FX
Clearing Futures contracts, the larger of the percentage value calculated in accordance with
Article 4.1 above and four-hundredths shall be the margin reference rate:(1)

ZAR-JPY FX Clearing Futures contract(2)

TRY-JPY FX Clearing Futures contract(3)

MXN-JPY FX Clearing Futures contract(4)

CNH-JPY FX Clearing Futures contract

4.3
The margin reference rate shall apply to the period designated by the Exchange
from the first trading day in the second week following the week in which the relevant

FX Clearing Margin Regulations

5

Calculation Date falls through the first trading day of the next week.
4.4
When the Exchange determines that it is inappropriate to determine the FX
Clearing Margin reference rate pursuant to Articles 4.1 and 4.3 above due to reasons suchas fluctuation of foreign exchange market rates or otherwise, it may determine the FX
Clearing Margin reference rate deemed appropriated by it from time to time.
4.5

When the Exchange determines the FX Clearing Margin reference rate, it shallnotify the FX Clearing Futures Trading Members of such FX Clearing Margin reference
rate.

CHAPTER II.
RIGHTS AND DUTIES OF
FX CLEARING FUTURES TRADING MEMBERIN REGARD TO FX CLEARING MARGINS

Section 1.
Article 5.

Depositing of FX Clearing Exchange MarginUp-front Deposit of Margin

5.1
An FX Broker Trading Member shall, before it submits a bid or offer for an FX
Clearing Futures contract, deposit the FX Clearing Exchange Margin in order to submit
such bid or offer (hereinafter called the “Up-front Exchange Margin”) with the Exchange;
except where the difference between the short position and the long position to be held will
be reduced upon execution of the FX Clearing Futures contract at such bid or offer.
5.2
The amount of the Up-front Exchange Margin shall be not less than the amountobtained by multiplying the margin reference rate calculated for each type of FX Clearing
Futures contracts by the amount of the FX Clearing Futures contract to be executed by such
FX Broker Trading Member at its bit or offer, converted into the currency of Japanese Yenby the price deemed appropriate by the Exchange as the price for Yen Currency Pairs

FX Clearing Margin Regulations

6

transactions for the currency of principal amount of such FX Clearing Futures contract at
the time of submission of such bid or offer.
5.3
In the calculation of the amount specified in Article 5.2 above, if the total sum of
the amount of profit or loss that arises if the positions then held by the FX Broker Trading
Member are settled and the amount of FX Clearing variation margin subject to transfer ispositive, such amount shall be added to the Up-front Exchange Margin.
Article 6.

Deposit of FX Clearing Exchange Margin

6.1
If any shortfall set forth in each Item below arises as a result of calculation of FX
Clearing variation on each trading day, an FX Broker Trading Member shall deposit theamount equivalent to such shortfall in the currency of Japanese Yen with the Exchange as
the FX Clearing Exchange Margin by the date and time set forth in each such Item in themanner separately prescribed by the Exchange:(1)

Shortfall in the case that the deposited FX Clearing Exchange Margin
Amount falls below the FX Clearing Margin requirement: by 11:00 a.m.
on a calendar day on which there occurs the opening of the Market
Trading Period of the second trading day after the trading day on which
the obligation to deposit arises (or, if the calendar day on which there
occurs the opening of the Market Trading Period of the trading day
immediately following, or the second trading day after, the trading day on
which the obligation to deposit arises is a Japanese bank holiday, theimmediately following trading day which is a Japanese banking day).

(2)

Shortfall in the case that the deposited cash margin among falls below the
FX Clearing Cash Settlement Requirement for the day: by 11:00 a.m. on
a calendar day on which there occurs the opening of the Market Trading
Period of the trading day immediately following the trading day on which
the obligation to deposit arises (if the calendar day is a Japanese bankholiday, the immediately following trading day which is a Japanesebanking day)

6.2
If any shortfall set forth in each Item below arises in the FX Clearing Exchange
Margin upon execution of an FX Clearing Futures contract or as a result of calculation of
FX Clearing variation on each trading day, an LP Trading Member shall deposit the amount

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7

equivalent to such shortfall (if both shortfalls set forth in (1) and (2) arise, whichever islarger) in the currency of Japanese Yen with the Exchange as the FX Clearing Exchange
Margin by 4:00 p.m. on a calendar day on which there occurs the opening of the Market
Trading Period of the trading day immediately following the trading day on which the
obligation to deposit arises (if the calendar day is a Japanese bank holiday, the immediately
following trading day which is a Japanese banking day) in the manner separately
prescribed by the Exchange:(1)

Shortfall in the case that the deposited FX Clearing Exchange Margin
Amount falls below the FX Clearing Margin requirement(2)

Shortfall in the case that the deposited cash margin among falls below the
FX Clearing Cash Settlement Requirement for the following day

6.3
An FX Clearing Futures Trading Member shall submit the materials pertaining to
the FX Clearing Exchange Margin in accordance with the requirements separately
prescribed by the Exchange.
6.4
In addition to the provisions of these Regulations, matters necessary for the FX
Clearing Exchange Margin for FX Clearing Futures transactions shall be separately
prescribed by the Exchange.

Section 2.

Claim for Refund of FX Clearing Margin

Article 7.

Claim for Refund of FX Clearing Margin

7.1
Each FX Clearing Futures Trading Member shall be entitled to claim to the
Exchange a refund of the money in the amount equal to the FX Clearing Margin amount.
7.2
Notwithstanding Article 7.1 above, in the following cases, the FX Clearing Futures
Trading Member shall be entitled to claim to the Exchange a refund of the money in theamount equal to the FX Clearing Margin amount less the amount set forth in each Item
below:(1)

In the case where the FX Clearing Futures Trading Member owes any
obligations payable to the Exchange relating to FX Clearing Futures

FX Clearing Margin Regulations

8contracts: the amount of such obligations(2)

In the case where the FX Broker Trading Member has made a deposit by
an LG specified in Article 17 hereof: Deposited LG Margin Amountrelating to the LG

7.3
If a FX Clearing Futures Trading Member exercises its claim for refund relevant to
any FX Clearing Margin, such claim shall be exercised by means of drawing of its FX
Clearing Exchange Margin pursuant to Article 8 hereof.
Article 8.
8.1

Drawing of FX Clearing Exchange Margin and Restriction

An FX Clearing Futures Trading Member may not draw its own FX Clearing

Margin; provided, however, an FX Broker Trading Member may draw the FX Clearing
Exchange Margin pursuant to Article 8.2 and an LP Trading Member may draw the FX
Clearing Exchange Margin pursuant to Article 8.3 below.
8.2
If both amounts set forth in the following Items exist, an FX Broker Trading
Member may draw the FX Clearing Exchange Margin from the deposited cash margin
amount in the amount up to the lesser of the amounts set forth below in accordance withthe requirements separately prescribed by the Exchange:(1)

If the deposited FX Clearing Exchange Margin Amount exceeds the FX
Clearing Margin requirement, the amount of such excess(2)

If the deposited cash margin amount on the Base Trading Day adjusted by
the amount of FX Clearing variation whose final settlement date is thesaid Base Trading Day (if the FX Clearing variation is positive, by adding
such positive amount and, if it is negative, by deducting the absolutevalue of such negative amount) exceeds the Initial Margin equivalent, theamount of such excess

8.3
If both amounts set forth in the following Items exist, an LP Trading Member may
draw the FX Clearing Exchange Margin from the deposited cash margin amount in theamount up to the lesser of the amounts set forth below in accordance with the requirements
separately prescribed by the Exchange:

FX Clearing Margin Regulations

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(1)

If the deposited FX Clearing Exchange Margin Amount on the Base
Trading Day exceeds the FX Clearing Margin requirement, the amount ofsuch excess(2)

If the deposited cash margin amount on the Base Trading Day adjusted by
the amount of FX Clearing variation whose final settlement date is theFollowing Day (if the FX Clearing variation is positive, by adding such
positive amount and, if it is negative, by deducting the absolute value ofsuch negative amount) and, if the FX Clearing variation whose final
settlement date is the Day is negative, after deducting the absolute valueof such negative amount) exceeds the Initial Margin amount, the amountof such excess

Article 9.

9.1

Transfer of FX Clearing Variation for Settlement to FX Clearing
Exchange Margin

If an FX Clearing Futures Trading Member’s Collective Offsetting (as defined in

Article 90-30.2 of the Clearing Regulations) or rollover (as defined in Article 90-27.2 of
the Clearing Regulations) for any of its house account positions relating to FX Clearing
Futures contracts at the close of the Market Trading Period on each trading day generates
FX variation in relation to such position, the amount of the FX variation shall betransferred to FX Exchange Margin by 2:00 p.m. on the final settlement date for the
trading day.
9.2

The Exchange may temporarily change the time and date for the transfer set forthin Article 9.1 above when the Exchange deems necessary to do so. In this case, theExchange shall give an advance notice to that effect to the FX Clearing Futures Trading
Members.

Section 3.

Article 10.

Treatment upon Suspension from Transaction or Other Measures Taken
as for FX Clearing Futures Contracts
Suspension of Refund of FX Clearing Margin due to Suspension fromTransactions or Other Measures Taken

If an FX Clearing Futures Trading Member becomes or is deemed likely to

FX Clearing Margin Regulations

10

become insolvent and the Exchange imposes suspension from or restriction on transactions
or other measure on such FX Clearing Futures Trading Member pursuant to Articles 61
through 63 of the Trading Member Regulations, the Exchange shall temporarily refrainfrom refunding the FX Clearing Margin to the Suspended Member.

Article 11.

Other Treatment involved in Transfer of Unsettled Positions

In addition to the provisions of Articles 10 hereof, any matters necessary fortransfer of Unsettled Positions shall from time to time be prescribed by the Exchange.

CHAPTER III.
EFFECTIVE MARGIN RATIOArticle 12.

Maintenance of Effective Margin Ratio

An FX Broker Trading Member shall maintain an appropriate level of its own
Effective Margin Ratio so that it shall not fall below the levels set forth in each Item of
Article 14.1 during the Market Trading Period and shall endeavor to have it constantly
exceed two hundred (200) %.
Article 13.

Effective Margin Ratio

13.1
The Effective Margin Ratio prescribed in Article 12 above shall be the Effective
Margin divided by the intraday requirement of margin and multiplied by one hundred(100), which shall be calculated for each FX Broker Trading Member.
13.2
The Effective Margin prescribed in Article 13.1 above means the amount obtainedby adding or subtracting the FX Clearing variation margin subject to transfer to or from thedeposited FX Clearing Exchange Margin Amount (if the variation is positive, by adding
such positive amount and, if it is negative, by deducting the absolute value of such negative
amount) and then adding the amount of profit or subtracting the amount of loss that arises
if the FX Clearing Futures contracts are settled at that time. In this case, the amount of
profit or loss shall be the amount converted into the currency of Japanese Yen by the price

FX Clearing Margin Regulations

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deemed appropriate by the Exchange as the price for Yen Currency Pairs transactions forthe currency of principal amount of each type of FX Clearing Futures contracts at the time.
13.3
The intraday requirement of margin prescribed in Article 13.1 above means theamount obtained by multiplying the margin reference rate calculated for each type of FX
Clearing Futures contracts by the absolute value of the difference between the principal
amounts of short positions and long positions then held, converted into the currency ofJapanese Yen by the price deemed appropriate by the Exchange as the price for Yen
Currency Pairs transactions for the currency of principal amount at that time.
13.4
The Exchange shall confirm the sufficiency of the deposit of FX Clearing
Exchange Margin by FX Broker Trading Members by the Effective Margin Ratio during
the Market Trading Period.
Article 14.
14.1

Measures to be Taken When Effective Margin Ratio Declines

When the Exchange deems that an FX Broker Trading Member falls under any of

the following Items, the Exchange may take the measures set forth below on the FX Broker
Trading Member:(1)

When the Effective Margin Ratio falls below one hundred and sixty(160) %, a reminder notice concerning decline of Effective Margin Ratio(2)

When the Effective Margin Ratio falls below one hundred and forty(140) % and it is deemed that an execution of a new FX Clearing Futurescontract and the assumption of obligations therefrom are extremely
difficult, suspension from or restriction on FX Clearing Futures contracts
and suspension from or restriction on the assumption of obligations
therefrom (hereinafter called the “Measures including Suspension fromTransaction”)(3)

When the Effective Margin Ratio falls below one hundred (100) % andprompt recovery of the Effective Margin Ratio is deemed difficult, theforced offsetting transaction of unsettled positions of FX Clearing Futurescontracts for the account of the FX Clearing Futures Trading Member
pursuant to Article 16 hereof (hereinafter called the “forced allocation
measures”)

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14.2
If an FX Broker Trading Member frequently causes its Effective Margin Ratio tofall below the levels of the Effective Margin Ratio set forth in each Item of Article 14.1
above and the Exchange deems that the sound operation of the Exchange Market may behindered, the Exchange may raise the level of the margin reference rate or the levels as
thresholds for the measures to be taken in the case of decline of Effective Margin Ratio
pursuant to Article 14.1 above applicable to the FX Broker Trading Member.
Article 15.

Actions to be Taken in Measures including Suspension fromTransaction

15.1
If the Exchange determines to take the Measures including Suspension fromTransaction, the Exchange shall promptly notify the FX Broker Trading Member subject tothe measures and the LP Trading Member as its Designated counterparty Trading Member(meaning the Designated counterparty Trading Member defined in the FX Clearing Special
Provisions Article 11.1(1)) of such determination.
15.2
Upon receipt of the notice prescribed in Article 15.1 above, the FX Broker Trading
Member shall immediately suspend the presentation of bids and offers for FX Clearing
Futures contracts.
15.3
If the FX Broker Trading Member subject to the Measures including Suspension
from Transaction deposits the FX Clearing Exchange Margin and causes its Effective
Margin Ratio to be two hundred (200) % or above and the Exchange deems it appropriate,
the Exchange shall lift the Measures including Suspension from Transaction on the FXBroker Trading Member.
Article 16.

Method of Forced Allocation Measures

If the Exchange determines to take forced allocation measures, the Exchange shalltake the forced allocation measures promptly in accordance with the requirements
separately prescribed by it.

CHAPTER IV.

FX Clearing Margin Regulations

13

TREATMEMT OF LG AS EXCHANGE MARGIN
Article 17.

Deposit by LG

17.1
An FX Broker Trading Member may apply the LG to the deposit of Up-front
Exchange Margin (hereinafter called the “Deposit by LG”) subject to the placement of theLetter of Guarantee Agreement by a qualified LG issuing bank to the Exchange.
17.2
In the case of the Deposit by LG, the Exchange deems the maximum guarantee
amount specified in the Letter of Guarantee Agreement relating to the LG multiplied by thehaircut prescribed by the Exchange (hereinafter called the “valuation haircut”) as thedeposited LG Margin amount.
17.3

The valuation haircut prescribed in Article 17.3 above shall be 99/100.

17.4
The Exchange shall set a ceiling on the LG Margin amount of an FX Broker
Trading Member and notify the FX Broker Trading Member of the ceiling amount.
17.5
If an FX Broker Trading Member makes a deposit by the LG in the amountexceeding the ceiling amount prescribed in Article 17.4 above, the Exchange shall deem theceiling amount as the deposited LG Margin amount of the FX Broker Trading Member.
Article 18.
18.1

Designation of Qualified LG Issuing BankThe Exchange shall designate an applicant from among those satisfy therequirements set forth in each Item below to the Exchange as a qualified LG issuing bank:(1)

a financial institution designated by the Commissioner of Financial
Services Agency in accordance with each Item of Article 68, paragraph(1) of the Cabinet Office Order on Financial Instruments Exchanges(Cabinet Office Order No. 54 of 2007), hereinafter called as the“Exchange COO”).

(2)

a bank which is a subsidiary of a bank holding company designated by
the Commissioner of Financial Services Agency as set forth in each Itemof Article 1 of the Financial Services Agency Notification No.80 of 2015

FX Clearing Margin Regulations

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18.2
If a qualified LG issuing bank is designated or changed, the Exchange shall notify
FX Broker Trading Members of the designation or change thereof.
Article 19.

Measures to be Taken When Acceptance of Letter of Guarantee
Agreement Is Deemed Inappropriate

19.1
If a qualified LG issuing bank no longer satisfies the requirements set forth in each
Item of Article 18.1 above, the Exchange shall promptly take the following measures andrevoke the designation of the qualified LG issuing bank:

19.2

(1)

Suspension of acceptance of a new Letter of Guarantee Agreement fromthe qualified LG issuing bank(2)

Decrease the valuation haircut for the Letter of Guarantee Agreement
already placed by the qualified LG issuing bank to zero

Even if a qualified LG issuing bank does not fall under Article 19.1 above, if thecredit rating granted to the qualified LG issuing bank is lowered, the Exchange may takemeasures deemed appropriate by the Exchange including the decrease of the valuation
haircut.
Article 20.

Requirement for Letter of Guarantee Agreement

A Letter of Guarantee Agreement shall satisfy all the requirements set forth below:(1)

It provides that the qualified LG issuing bank shall bear the guarantee
obligation to the Exchange for the obligations to be performed by the FXBroker Trading Member to the Exchange under FX Clearing Futurescontracts.

(2)

It provides that, if the Exchange demands the qualified LG issuing Bank
perform the obligations, the qualified LG issuing bank shall perform theobligations within twenty-four (24) hours in principle.

(3)

It provides that, during the effective term of the Letter of Guarantee
Agreement, the qualified LG issuing bank may not amend the contents of
the Letter of Guarantee Agreement without agreement with the Exchange.

FX Clearing Margin Regulations

15

(4)

It provides that, if the qualified LG issuing bank intends to terminate theLetter of Guarantee Agreement, it shall notify the Exchange in writing atleast 5 bank business days prior to the scheduled termination date thereof.

(5)

In addition to the above, it satisfies the requirements set forth in Article
68, paragraph (1), item (iii) of the Exchange COO.

Article 21

Treatment at Expiration of Letter of Guarantee Agreement

21.1
If an FX Broker Trading Member who makes a deposit by the LG intends tocontinue to make a deposit by the LG under a new Letter of Guarantee Agreement with thesame maximum guarantee amount under the current Letter of Guarantee Agreement(hereinafter called the “Current LG Agreement”) after the date of expiration (including an
expiration by cancellation; the same interpretation shall apply hereinbelow) of the Current
LG Agreement for the LG, the FX Broker Trading Member shall place the new Letter of
Guarantee Agreement with the Exchange at least five (5) bank business days prior to the
expiration date of the Current LG Agreement.
21-2
If the status of the Letter of Guarantee Agreement placed with the Exchange falls
under any of the following Items, the Exchange may deem the amount set forth in each
Item as the deposited LG Margin amount on a trading day after the due date of placement
thereof:(1)

If a new Letter of Guarantee is not placed by the due date of placement
thereof: zero(2)

If the maximum guarantee amount under the new Letter of Guarantee
Agreement placed by the due date of placement thereof falls below the
maximum guarantee amount under the Current LG Agreement: themaximum guarantee amount under the new Letter of Guarantee
Agreement multiplied by the valuation haircut

CHAPTER V.
MISCELLANEOUS PROVISIONSFX Clearing Margin Regulations

16

Article 22

Change in Settlement Method, etc.

If the Exchange determines the conditions for postponement of the settlement
dates or the clearing terms and conditions for FX Clearing Futures contracts in accordancewith Article 99 or 100 of the Clearing Regulations, the Exchange may change the deadline(time and date) for depositing of FX Clearing Exchange Margin under Article 6 hereof andtake necessary measures incidental to such change.
Article 23.

Management of FX Clearing Exchange Margin

23.1
When the Exchange accepts deposit of FX Clearing Exchange Margin in cash or
Deposit of LG, the Exchange shall manage the same in the manners prescribed byapplicable laws and ordinances.
23.2
With respect to an FX Clearing Exchange Margin deposited by any FX Clearing
Futures Trading Member, no interest or other consideration shall be payable by the
Exchange.

SUPPLEMENTARY PROVISIONS

These Regulations shall take effect as from April 12, 2021.

FX Clearing Margin Regulations

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