4.3	A payment system or SSS should cover its current and, where they exist, potential future exposures to each participant fully with a high degree of confidence using collateral and other equivalent financial resources (see Principle 5 on collateral). In the case of a DNS payment system or DNS SSS in which there is no settlement guarantee but where its participants face credit exposures arising from its payment, clearing, and settlement processes, such an FMI should maintain, at a minimum, sufficient resources to cover the exposures of the two participants and their affiliates that would create the largest aggregate credit exposure in the system.
Not Applicable.
4.4	A CCP should cover its current and potential future exposures to each participant fully with a high degree of confidence using margin and other prefunded financial resources (see Principle 5 on collateral and Principle 6 on margin). In addition, a CCP that is involved in activities with a more-complex risk profile or that is systemically important in multiple jurisdictions should maintain additional financial resources to cover a wide range of potential stress scenarios that should include, but not be limited to, the default of the two participants and their affiliates that would potentially cause the largest aggregate credit exposure for the CCP in extreme but plausible market conditions. All other CCPs should maintain additional financial resources sufficient to cover a wide range of potential stress scenarios that should include, but not be limited to, the default of the participant and its affiliates that would potentially cause the largest aggregate credit exposure for the CCP in extreme but plausible market conditions. In all cases, a CCP should document its supporting rationale for, and should have appropriate governance arrangements relating to, the amount of total financial resources it maintains.
APEX Clear covers its current and potential future exposure to each participant fully with margins at a high degree of confidence. (i) Margins (more details can be found in the write-up in Principle 6): The Initial Margin is to protect APEX Clear against the counterparty credit risk from a • Clearing Member based on normal market conditions and it is set at single-tailed confidence level of 99%. The Delivery Margin is to protect APEX Clear against the risk of a Delivery Default for • the physically deliverable contracts and it is set to cover the risks due to: - delivery effect (where there is increasing price volatility before and during the delivery period); - seasoning effect (some contract months have higher price volatility than other months); - length of delivery period; and - other concerns relating to the delivery process. SPAN Margin Methodology for Initial Margin and Delivery Margin: APEX Clear uses • the Standard Portfolio Analysis of Risk (“SPAN”) margin system to determine the Initial Margin and Delivery Margin for each Position Account (also known as a marginable portfolio). Variation Margin is collected to prevent accumulation of unrealized losses / exposures • between Clearing Members and APEX Clear, and to ensure that collateral remains sufficient in view of future price movements of the open positions. Special Margins may be imposed to mitigate other risk concerns such as position • concentration, liquidity, credit deterioration, large exposures. Margins are collected in Cash only and readily accessible when required. •