Company: TSI
Filing Date: 2025-08-08
Form Type: N-2
Source: 0001193125-25-177098
Chunk: 184

Company: TCW STRATEGIC INCOME FUND INC
Filing Date: 2025-08-08
Form: N-2
Chunk 184
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 result in litigation or other delays, and the outcome could be adverse for the buyer or seller. The Fund’s obligations under a credit default swap agreement will be accrued daily (offset against any amounts owing to the
Fund).

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and related regulatory developments
require the clearing and exchange-trading on a swap execution facility of certain standardized OTC derivative instruments that the CFTC and SEC have defined as “swaps.” The CFTC has implemented mandatory exchange-trading and clearing
requirements under the Dodd-Frank Act and the CFTC continues to approve contracts for central clearing. Uncleared swaps are subject to certain margin requirements that mandate the posting and collection of minimum margin amounts on certain uncleared
swaps transactions, which may result in the Fund and its counterparties posting higher margin amounts for uncleared swaps than would otherwise be the case. Central clearing is designed to reduce counterparty credit risk compared to uncleared swaps
because central clearing interposes the central clearinghouse as the counterparty to each participant’s swap, but it does not eliminate those risks completely. There is also a risk of loss by a Fund of the initial and variation margin deposits
in the event of insolvency of the clearing member with which a Fund has an open position in a swap contract. The assets of a Fund may not be fully protected in the event of the insolvency of the clearing member or central counterparty because
customers of the clearing member (like the Fund) are generally limited to recovering only a pro rata share of all available funds and margin segregated on behalf of a clearing member’s customers. If the clearing member does not provide accurate
reporting, a Fund is also subject to the risk that the clearing member could use the Fund’s assets, which are held in an omnibus account with assets belonging to the clearing member’s other customers, to satisfy its own financial
obligations or the payment obligations of another customer to the central counterparty. When the Fund enters into a cleared derivative transaction, the Fund is subject to the credit and counterparty risk of the clearinghouse and the clearing member
through which it holds its cleared position. Counterparty risk of market participants with respect to centrally cleared derivatives is concentrated in a few clearinghouses and increasingly fewer clearing members. It is not clear how an insolvency
proceeding of a clearinghouse would be conducted and what impact an insolvency of a clearinghouse would have on the financial system.

In addition, with