16.3	An FMI should evaluate and understand its exposures to its custodian banks, taking into account the full scope of its relationships with each.
APEX Clear do not have any custodian banks as we do not intend to accept collaterals other than cash. Should APEX Clear decide to accept non-cash collaterals, APEX Clear will have appropriate policies in place to evaluate and monitor its exposures to its custodian banks.
16.4	An FMI’s investment strategy should be consistent with its overall risk-management strategy and fully disclosed to its participants, and investments should be secured by, or be claims on, high-quality obligors. These investments should allow for quick liquidation with little, if any, adverse price effect.
APEX Clear places great emphasis on the protection of shareholders’ interest and all margin collaterals received from members and their customers. APEX Clear adopts a prudent investment strategy which requires the Investment Committee to approve all investment proposals. Cash collateral received by APEX Clear are placed in current accounts with banks, and we have no immediate plans to invest them. Should we decide to do so, APEX Clear will only invest in the permissible assets stipulated under Regulation 25 of the SF (Clearing Facilities) Regulations 2013. APEX Clear only deposits its cash and monies received from members and their customers in banks regulated by MAS or in banks regulated by other competent central banks/monetary authorities in jurisdictions with low country risk. These monies will only be deposited in current accounts or fixed deposits. Both are available for prompt withdrawals if need be. APEX Clear has also implemented a Bank Counterparty Policy to ensure risk exposure to each bank counterparty remains within the established concentration limit.
Principle 17: Operational risk An FMI should identify the plausible sources of operational risk, both internal and external, and mitigate their impact through the use of appropriate systems, policies, procedures, and controls. Systems should be designed to ensure a high degree of security and operational reliability and should have adequate, scalable capacity. Business continuity management should aim for timely recovery of operations and fulfilment of the FMI’s obligations, including in the event of a wide-scale or major disruption.
17.1	An FMI should establish a robust operational risk-management framework with appropriate systems, policies, procedures, and controls to identify, monitor, and manage operational risks.
APEX Group, which includes APEX Clear, has in place an Enterprise Risk Management framework to identify, monitor and manage APEX Group’s key enterprise risks which includes operational risk, technology risk as well as business resilience. Operational risk includes risks arising from inadequate or failed internal processes and procedures, human errors as well as disruptions arising from external events. The framework also includes an Operational Risk Management Policy that facilitates the control and mitigation of operational risks. APEX Group manages operational risks through establishing policies and procedures and controls to ensure safe operations. All departments are also expected to provide a monthly return on the operational errors that were committed during the month and the action plans put in place to prevent recurrence.