APEX Clear performs daily credit and liquidity stress testing to estimate the amount of liquidity required to cover a Clearing Member and / or a non-participant default. Stress test scenarios are relevant, extreme and plausible, and consider the historical and forward looking hypothetical possibilities. Stress test results are reported to the Risk Management Committee on a quarterly basis. In the event where stress test results show that the Guaranty Fund is insufficient, the shortfall will be covered through calling for additional contributions from the Clearing Members. Other than a Clearing Member default, the other significant default liquidity risk is from Settlement / Custodian Bank default and this is managed by APEX Clear’s Bank Counterparty Risk policy.
7.10	An FMI should establish explicit rules and procedures that enable the FMI to effect same-day and, where appropriate, intraday and multiday settlement of payment obligations on time following any individual or combined default among its participants. These rules and procedures should address unforeseen and potentially uncovered liquidity shortfalls and should aim to avoid unwinding, revoking, or delaying the same-day settlement of payment obligations. These rules and procedures should also indicate the FMI’s process to replenish any liquidity resources it may employ during a stress event, so that it can continue to operate in a safe and sound manner.
APEX Clear performs 2 clearing cycles daily, one intraday and one end of day. As part of its default management plan, APEX Clear is able to issue intraday and multiday margin calls to its participants. APEX Clear may also suspend clearing access, restrict further accumulation of positions, advise Clearing Members to wind down positions as well as suspend any excess margin withdrawals. The relatively simple product scope enables positions to be closed out quickly. In the event of a default, the Guaranty Fund will be replenished through a re-injection of contributions from both APEX Clear and the Clearing Members to the appropriate levels.
Principle 8: Settlement finality An FMI should provide clear and certain final settlement, at a minimum by the end of the value date. Where necessary or preferable, an FMI should provide final settlement intraday or in real time.
8.1	An FMI’s rules and procedures should clearly define the point at which settlement is final.
The points of settlement finality for daily clearing and physical delivery are stated in the Clearing Rules and Contract Specifications: For daily clearing, the settlement is final when relevant payment or receipt of funds, which are related to daily mark-to-market and margin call thereof, deposit or withdrawal of cash collateral, have been completed. The settlement finality of the payment or receipt of funds is when the Clearing House receives the confirmation message from the relevant Settlement Bank. The collection and payment processes are covered in the respective contractual agreements with each Settlement Bank to ensure they conform to the Clearing Rules. For physical delivery, settlement is final when the legal title to the commodities has been transferred or the buyer acknowledges the receipt of all the documents stipulated in the relevant Contract Specifications and the value of the contract has been paid.