NYDOCS01/1643340.2

ICE Clear Europesm

Clearing Rules

7 December 2015
NYDOCS01/1643340.2

Table of Contents

Part 1 General Provisions........................................................................................................ 4

Part 2 Clearing Membership.................................................................................................. 79

Part 3 Financial Requirements and Payments....................................................................... 98

Part 4 Clearing Mechanism................................................................................................. 107

Part 5 Margin....................................................................................................................... 136

Part 6 Position Limits.......................................................................................................... 145

Part 7 Settlement and Delivery of Futures .......................................................................... 149

Part 8 Options...................................................................................................................... 153

Part 9 Default Rules ............................................................................................................ 159

Part 10 Disciplinary Proceedings.......................................................................................... 240

Part 11 Guaranty Funds......................................................................................................... 252

Part 12 Settlement Finality Regulations and Companies Act 1989 ...................................... 260

Part 13 [Not used].................................................................................................................. 276

Part 14 Transition Rules for ICE Energy Markets in 2008 [No longer applicable: 

available on request.] ................................................................................................ 276

Part 15 Credit Default Swaps................................................................................................ 277

Part 16 FCM/BD Clearing Member Provisions.................................................................... 303

Part 17 Foreign Exchange ..................................................................................................... 319

Part 18 Transition Rules for LIFFE in 2013.......................................................................... 325

Part 19 Sponsored Principals................................................................................................. 333

Part 20 Transition Rules for ICE Endex in 2013................................................................... 348

Part 21 Transition Rules for LIFFE in 2014.......................................................................... 351

Part 22 Launch Rules for ICE Endex UK and ICE Endex Continental in 2015 ................... 356

Exhibit 1: Customer-CM CDS Transaction Standard Terms

Exhibit 2: Customer-CM F&O Transaction Standard Terms
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Exhibit 3: Customer-CM FX Transaction Standard Terms

Exhibit 4: Settlement and Notices Terms
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Part 1 General Provisions

Rule 101 Definitions

The term "2003 Credit Derivatives Definitions" means the document titled "2003 ISDA Credit

Derivatives Definitions" dated 2003 published by ISDA as supplemented by (a) the 2009 ISDA

Credit Derivatives Determinations Committees, Auction Settlement and Restructuring

Supplement to the 2003 Credit Derivatives Definitions (published by ISDA on 14 July 2009) and

the Credit Derivatives Determinations Committees Rules (published by ISDA and as amended

from time to time) and (b) the 2005 Matrix Supplement to the 2003 ISDA Credit Derivatives

Definitions (published by ISDA on 7 March 2005), all including as supplemented or modified by

incorporation of any additional provisions thereto (howsoever described) under, and as amended

by, the Contract Terms for any relevant CDS Contract from time to time.

The term "2014 Credit Derivatives Definitions" means the document titled "2014 ISDA Credit

Derivatives Definitions" published by ISDA on 21 February 2014 including as supplemented or

modified by incorporation of any additional provisions thereto (howsoever described) under, and

as amended by, the Contract Terms for any relevant CDS Contract from time to time.

The term "2003-type CDS Contract" means a CDS Contract incorporating the 2003 Credit

Derivatives Definitions.

The term "2014-type CDS Contract" means a CDS Contract incorporating the 2014 Credit

Derivatives Definitions.

The term "Acceptance Notice" has the meaning set out in the CDS Procedures.

The term "Account" means a Customer Account of a particular Contract Category, a Proprietary 

Account or an Individually Segregated Sponsored Account.

The term "Accounting Standards" means applicable accounting standards and principles.

The term "Affected Customer" means a Customer in respect of whom Applicable Laws in the 

Customer’s jurisdiction of establishment or applicable in the context of activity on a relevant 

trading platform do not prevent or prohibit a Customer Account providing individual client 

segregation and a Customer Account providing omnibus client segregation (in the manner set out 

in Articles 39 and 48 of EMIR) being provided to the Customer.

The term "Affected FM Party" means a Person prevented, hindered or delayed by a Force 

Majeure Event.

The term "Affiliated Person" or "Affiliate" means, with respect to any specified Person, any 

other Person that Controls, is Controlled by, or is under common Control with, such specified 

Person.

The term "Appeals Panel" means the panel at which an appeal of a decision of a Disciplinary 

Panel is heard pursuant to Rule 1005.
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The term "Applicable Credit Derivatives Definitions" means, in relation to any provisions of

the Rules or the Contract Terms applicable to a CDS Non-2014 Contract or any Component

Transaction in the form of a CDS Non-2014 Contract, the 2003 Credit Derivatives Definitions

and, in relation to any provisions of the Rules or the Contract Terms applicable to a 2014-type

CDS Contract or any Component Transaction in the form of a 2014-type CDS Contract, the 2014

Credit Derivatives Definitions.

The term "Applicable Law" means any applicable national, federal, supranational, state, 

regional, provincial, local or other statute, law, ordinance, regulation, rule, code, guidance, order, 

published practice or concession, regulatory requirement, judgment or decision of a 

Governmental Authority and, for the avoidance of doubt, includes all the provisions of EMIR, 

the FCA Rules, the PRA Rules, rules, regulations, guidance and approach documents of the Bank 

of England, the CEA, the rules and regulations of the CFTC, the Exchange Act, the rules and 

regulations of the SEC, any rules or regulations of any other Regulatory Authority and applicable 

insolvency law (including the U.S. Bankruptcy Code).

The term "Approved Financial Institution" means a credit institution, bank, trust company or 

other institution which is an "institution" as defined in the Settlement Finality Regulations and 

which has been designated as an approved financial institution by the Clearing House for 

purposes of making and receiving cash transfers to and from the Clearing House and Payment 

Transfer Orders.

The term "Assessment Contribution" means an F&O Assessment Contribution, a CDS 

Assessment Contribution or an FX Assessment Contribution.

The term "Banking Consolidation Directive" means Directive 2006/48/EC.

The term "Bankruptcy" means, in relation to a Person, where that Person: (i) is dissolved (other 

than pursuant to a consolidation, amalgamation or merger); (ii) becomes insolvent or is unable to 

pay its debts or fails or admits in writing its inability generally to pay its debts as they become 

due; (iii) makes a general assignment, arrangement or composition with or for the benefit of its 

creditors; (iv) institutes or has instituted against it, by a Governmental Authority with primary 

insolvency, rehabilitative or regulatory jurisdiction over it in the jurisdiction of its incorporation 

or organisation or the jurisdiction of its head or home office, a proceeding seeking a judgment of 

insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other 

similar law affecting creditors' rights, or a petition is presented for its winding-up or liquidation 

by it or such Governmental Authority; (v) has instituted against it a proceeding seeking a 

judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency 

law or other similar law affecting creditors' rights, or a petition is presented for its winding-up or 

liquidation, and such proceeding or petition is instituted or presented by a person or entity not 

described in (iv) above and either (1) results in a judgment of insolvency or bankruptcy or the 

entry of an order for relief or the making of an order for its winding-up or liquidation or (2) is not 

dismissed, discharged, stayed or restrained in each case within 15 days of the institution or 

presentation thereof; (vi) has a resolution passed for its winding-up, official management or 

liquidation (other than pursuant to a consolidation, amalgamation or merger); (vii) seeks or 

becomes subject to the appointment of an administrator, provisional liquidator, conservator, 

receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; 
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(viii) has a secured party take possession of all or substantially all its assets or has a distress, 

execution, attachment, sequestration or other legal process levied, enforced or sued on or against 

all or substantially all its assets and such secured party maintains possession, or any such process 

is not dismissed, discharged, stayed or restrained, in each case within 15 days thereafter; 

(ix) causes or is subject to any event with respect to it which, under the Applicable Laws of any 

jurisdiction, has an analogous effect to any of the events specified in (i) to (viii) above; or 

(x) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence 

in, any of the foregoing acts. For the purposes of this definition and for the avoidance of doubt, 

"Person", in the case of a CDS Clearing Member or Sponsored Principal in respect of CDS 

Clearing, includes any Office (as defined in the CDS Procedures) which the Clearing House and 

the CDS Clearing Member or Sponsored Principal have agreed pursuant to paragraph 8.2(b)(i) of 

the CDS Procedures that the CDS Clearing Member or Sponsored Principal may enter into a 

CDS Contract through or have an open CDS Contract recorded in the name of, or any Office of 

such CDS Clearing Member or Sponsored Principal through which it is acting.

The term "Basis Trades" means 'basis trades' under the LIFFE Rules and/or the ICE Futures 

Europe Rules.

The term "BClear" means the service operated by LIFFE which enables Financials & Softs

Clearing Members to report bilateral trades to LIFFE for the purposes of the LIFFE Rules.

The term "Bilateral CDS Transaction" means: (i) a CDS transaction between two CDS 

Clearing Members (or, to the extent permitted in the CDS Procedures, involving the same CDS 

Clearing Member acting in two different capacities); or (ii) a CDS transaction between a CDS 

Clearing Member and an Affiliate of the same or a different CDS Clearing Member; or (iii) a 

CDS transaction between an Affiliate of a CDS Clearing Member and an Affiliate of the same or 

a different CDS Clearing Member; or (iv) any of cases (i), (ii) or (iii) but where a Sponsored 

Principal is party to the transaction instead of a CDS Clearing Member, (to which in either case 

(i), (ii), (iii) or (iv), for the avoidance of doubt, the Clearing House is not a party).

The term "Board" means the board of Directors or any other body established thereunder 

(whether called a board, a committee or otherwise) of the Clearing House.

The term "Business Day" means a day on which the Clearing House is open for business or, in 

relation to deliveries in respect of a particular F&O Contract, has the meaning given in the 

Delivery Procedures or, in relation to certain Contract Terms, has the meaning given in or 

pursuant to the Contract Terms Procedures, ICE Endex Rules, ICE Endex UK Rules, ICE Endex 

Continental Rules, ICE Futures Europe Rules, ICE Futures US Rules or LIFFE Rules.

The term "Buyer" means, in relation to deliveries under Part 7 or a Contract of Sale, the Clearing 

Member (or Sponsored Principal) or the Clearing House, whichever is obliged to receive 

delivery of a Deliverable (whether itself or through another Person).

The term "Buying Counterparty" means, in respect of a Contract: (a) except in circumstances 

in which sub-paragraph (c) below applies, the Clearing Member that was, before formation of a 

Contract, party to the corresponding Transaction (or specified in the CDS Trade Particulars or 

FX Trade Particulars) as buyer (or, in relation to CDS Contracts, as protection buyer or, in 
NYDOCS01/1643340.2 7

relation to a Financially-Settled FX Contract, Reference Currency Buyer); (b) except in 

circumstances in which sub-paragraph (c) below applies, where a Non-FCM/BD Clearing 

Member's Customer is a party to the corresponding Transaction (or specified in the CDS Trade 

Particulars or FX Trade Particulars) as buyer, protection buyer or Reference Currency Buyer (as 

applicable), the Clearing Member that provides clearing services to that Customer in relation to 

the Transaction in question (or, for F&O Contracts, if more than one such Clearing Member 

exists, the Clearing Member that was selected by the Customer for the initial booking of that 

Transaction); (c) where an FCM/BD Customer is a party to the corresponding Transaction (or 

specified in the CDS Trade Particulars or FX Trade Particulars) as buyer, protection buyer or 

Reference Currency Buyer (as applicable), the FCM/BD Clearing Member clearing on behalf of 

such FCM/BD Customer; (d) in relation to F&O Contracts only and overriding any designation 

that would occur pursuant to (a), (b) or (c) above, where one Clearing Member that would be the 

Buying Counterparty in accordance with (a), (b) or (c) above has allocated an F&O Transaction 

to another Clearing Member for clearing in accordance with Market Rules, the Clearing Member 

to whom such F&O Transaction is allocated; or (e) notwithstanding (a) to (d), in respect of an 

Individually Segregated Sponsored Account, the Sponsored Principal shall act as principal to all 

Contracts as the Buying Counterparty on a joint and several basis with the Sponsor, instead of 

the relevant Clearing Member referred to in (a) to (d) above, subject to and as set out in Part 19.

The term "CAD" means Canadian dollars, or any other lawful currency that is a successor to it.

The term "Call", in respect of an F&O Contract, means an Option pursuant to which a Person 

with a Long position has the actual or notional right to buy a Deliverable from a Person with a 

Short position at the Strike Price and at a specified time.

The term "Capital":

(a) with respect to a Non-FCM/BD Clearing Member or a Sponsored Principal that is not an 

FCM/BD, has the same meaning as the term "own funds", as such term is defined in the 

Banking Consolidation Directive and determined on a stand-alone (non-consolidated) 

basis and subject to the limits and deductions set out therein and, in relation to matters 

reserved for member states, as implemented in the United Kingdom, whether or not the 

relevant Clearing Member is subject to the Banking Consolidation Directive or the 

supervision of the PRA; or

(b) with respect to an FCM/BD Clearing Member, means its "adjusted net capital" as defined 

in CFTC Rule 1.17,

and, in either case, such other classes of capital as are permitted at the Clearing House's 

discretion pursuant to the Finance Procedures.

The term "CDS" means credit default swap.

The term "CDS Assessment Amount" means the total amount of all CDS Assessment 

Contributions payable by CDS Clearing Members pursuant to Rule 910(a) in respect of an Event 

of Default.

The term "CDS Assessment Contribution" has the meaning set out in Rule 910(b).
NYDOCS01/1643340.2 8

The term "CDS Clearing Member" means a Clearing Member that is authorised by the Clearing 

House to become party to CDS Contracts.

The term "CDS Contract" means a Contract that is a CDS, in the form of a 2003-type CDS 

Contract or a 2014-type CDS Contract, to which the Clearing House is party in accordance with 

these Rules and the CDS Procedures, which may be in the form of a CDS relating to an index or 

a single reference entity or in the form of a Component Transaction.

The term "CDS Default Amount" has the meaning set out in Rule 908(e).

The term "CDS Guaranty Fund" means the guaranty fund established and maintained pursuant 

to Part 11 relating to the Clearing of CDS Contracts.

The term "CDS Guaranty Fund Contribution" means a Guaranty Fund Contribution relating to 

the CDS Guaranty Fund.

The term "CDS Standard Terms" means the form of Customer-CM CDS Transaction Standard 

Terms as published by the Clearing House from time to time as an Exhibit to these Rules, but 

which do not form part of these Rules, which are applicable as between each Non-FCM/BD CDS 

Clearing Member and each of its Customers in relation to CDS Clearing, as amended from time 

to time in accordance with the CDS Standard Terms.

The term "CDS Sub-Account" means, in relation to a CDS Clearing Member or Sponsored 

Principal, each account at the Clearing House with a unique identification number used by that 

CDS Clearing Member or Sponsored Principal in accordance with an election under Rule 406(d)

for the recording of details of CDS Contracts with the Clearing House, which account is linked 

to an identification code at Deriv/SERV for the recording of details of trades relating to such 

CDS Contracts and which account is further linked to one of the CDS Clearing Member's 

Proprietary Accounts or one of its Customer Accounts or the relevant Individually Segregated 

Sponsored Account, as a sub-account of the relevant Proprietary Position Account, Customer 

Position Account or Position Account linked to its Individually Segregated Sponsored Account 

(as applicable).

The term "CDS Trade Execution/Processing Platform" means an Exchange that has satisfied 

the Clearing House's requirements to be authorised to submit CDS Trade Particulars and receive 

Acceptance Notices on behalf of one or more CDS Clearing Members or Sponsored Principals 

for Clearing, including having entered into an agreement with the Clearing House to act as an 

"Approved CDS Trade Execution/Processing Platform" in relation to such submissions and 

receipts and, in relation to any CDS Clearing Member or Sponsored Principal on whose behalf

(and, as the case may be, for whose Affiliate) it submits CDS Trade Particulars, has obtained that 

CDS Clearing Member's or Sponsored Principal's authorisation in writing to submit CDS Trade 

Particulars for Clearing and receive Acceptance Notices and accordingly, such a CDS Trade 

Execution/Processing Platform will be a Representative of such CDS Clearing Member or 

Sponsored Principal for such purposes until the expiry of not less than one Business Day's 

written notice to the Clearing House given by such CDS Clearing Member or Sponsored 

Principal that such CDS Trade Execution/Processing Platform is no longer, or is not, authorised 

to act as its Representative. Where an Affiliate of a CDS Clearing Member or Sponsored 
NYDOCS01/1643340.2 9

Principal may submit or confirm CDS Trade Particulars for the account of that CDS Clearing 

Member or Sponsored Principal as referred to in the CDS Procedures, any person which, as a 

CDS Trade Execution/Processing Platform, is a Representative of such CDS Clearing Member 

or Sponsored Principal shall be deemed to be, additionally, a Representative of such Affiliate for 

these purposes. 

The term "CDS Trade Particulars" means trade particulars submitted to the Clearing House by 

one or more Clearing Members, Sponsors or Sponsored Principals (including by any 

Representative, including via a CDS Trade Execution/Processing Platform), which particulars, if 

accepted by the Clearing House, will give rise to a CDS Contract or CDS Contracts (and, in the 

case of particulars of a CDS submitted by or for a Non-FCM/BD Clearing Member for one of its 

Customer Accounts, a Customer-CM CDS Transaction). For the avoidance of doubt, CDS Trade 

Particulars may or may not reflect a binding Bilateral CDS Transaction between two CDS 

Clearing Members or Sponsored Principals or any binding transaction between a CDS Clearing 

Member and its Customer.

The term "CEA" means the U.S. Commodity Exchange Act.

The term "CFTC" means the Commodity Futures Trading Commission of the United States of 

America, or any successor thereto.

The term "Chairman" means the chairman of the Board from time to time.

The term "CHF" means the Swiss frank, or any other lawful currency that is a successor to it.

The term "Circular" means a publication issued by the Clearing House for the attention of all 

Clearing Members and posted on the Clearing House's website in accordance with Rule 109(g).

The term "Clearing" means the central counterparty and, where relevant, related risk, Open 

Contract Position, Margin, settlement, delivery, administrative, acceptance, transaction data, 

settlement price establishment and other functions of the Clearing House pursuant to these Rules.

The term "Clearing House" means ICE Clear Europe Limited, a company registered in England 

& Wales with registered number 06219884.

The term "Clearing House Account" means an account of the Clearing House at an Approved 

Financial Institution.

The term "Clearing House CDS Contributions" means the Clearing House CDS GF 

Contribution and the Clearing House CDS Initial Contribution.

The term "Clearing House CDS GF Contribution" means amounts allocated by the Clearing 

House as being available to be applied following an Event of Default in accordance with 

Rule 908(c)(iii)(B) or Rule 908(g)(iii)(C) and as maintained pursuant to Rule 1103(f) including, 

where the context so requires, any proceeds of realisation of the same.

The term "Clearing House CDS Initial Contribution" means amounts allocated by the 

Clearing House as being available to be applied following an Event of Default in accordance 
NYDOCS01/1643340.2 10

with Rule 908(c)(ii) or Rule 908(g)(ii)(B) and as maintained pursuant to Rule 1103(f) including, 

where the context so requires, any proceeds of realisation of the same.

The term "Clearing House Contributions" means the Clearing House F&O Contributions, the 

Clearing House CDS Contributions and the Clearing House FX Contributions.

The term "Clearing House F&O Contributions" means the Clearing House F&O GF 

Contribution and the Clearing House F&O Initial Contribution.

The term "Clearing House F&O GF Contribution" means amounts allocated by the Clearing 

House as being available to be applied following an Event of Default in accordance with 

Rule 908(b)(iii)(B) or Rule 908(g)(iii)(B) and as maintained pursuant to Rule 1103(f) including, 

where the context so requires, any proceeds of realisation of the same.

The term "Clearing House F&O GF (Energy) Contribution" means that portion of the 

Clearing House F&O GF Contribution as is allocated by the Clearing House as applying

primarily to Energy Contracts and residually to Financials & Softs Contracts. 

The term "Clearing House F&O GF (Financials & Softs) Contribution" means that portion of 

the Clearing House F&O GF Contribution as is allocated by the Clearing House as applying 

primarily to Financials & Softs Contracts and residually to Energy Contracts. 

The term "Clearing House F&O Initial Contribution" means amounts allocated by the 

Clearing House as being available to be applied following an Event of Default in accordance 

with Rule 908(b)(ii) or Rule 908(g)(ii)(A) and as maintained pursuant to Rule 1103(f) including, 

where the context so requires, any proceeds of realisation of the same.

The term "Clearing House F&O Initial (Energy) Contribution" means that portion of the 

Clearing House F&O Initial Contribution as is allocated by the Clearing House as applying 

primarily to Energy Contracts and residually to Financials & Softs Contracts. 

The term "Clearing House F&O Initial (Financials & Softs) Contribution" means that portion 

of the Clearing House F&O Initial Contribution as is allocated by the Clearing House as 

applying primarily to Financials & Softs Contracts and residually to Energy Contracts. 

The term "Clearing House FX Contributions" means the Clearing House FX GF Contribution 

and the Clearing House FX Initial Contribution.

The term "Clearing House FX GF Contribution" means amounts allocated by the Clearing 

House as being available to be applied following an Event of Default in accordance with 

Rule 908(d)(iii)(B) or Rule 908(g)(iii)(D) and as maintained pursuant to Rule 1103(f) including, 

where the context so requires, any proceeds of realisation of the same.

The term "Clearing House FX Initial Contribution" means amounts allocated by the Clearing 

House as being available to be applied following an Event of Default in accordance with Rule 

908(d)(ii) or Rule 908(g)(ii)(C) and as maintained pursuant to Rule 1103(e) including, where the 

context so requires, any proceeds of realisation of the same.
NYDOCS01/1643340.2 11

The term "Clearing Member" means a Person which has entered into a Clearing Membership 

Agreement with the Clearing House and which has been admitted as a clearing member pursuant 

to Part 2 of these Rules.

The term "Clearing Member-Required Additional Margin" has the meaning set out in the 

relevant Standard Terms.

The term "Clearing Membership Agreement" means an agreement between the Clearing 

House and a Clearing Member under which, inter alia, the Clearing House agrees to provide 

Clearing in respect of Contracts to that Clearing Member and that Clearing Member agrees to be 

bound by and subject to these Rules. Without prejudice to the generality of Rule 102(b) or to the 

effectiveness of any other agreement between a Clearing House and a Clearing Member, for the 

avoidance of doubt, for Clearing Members that have executed a Pledged Collateral Addendum, 

the relevant Clearing Membership Agreement will be interpreted as amended by that Pledged 

Collateral Addendum.

The term "Clearing Organisation" means any clearing house duly authorised, regulated, 

recognised or licensed under Applicable Laws in any jurisdiction, including any recognised 

clearing house, recognised overseas clearing house, derivatives clearing organisation or similar 

entity.

The term "Clearing Processing System" means the clearing processing system for Energy 

Contracts, the universal clearing platform for Financials & Softs Contracts and other clearing 

processing systems and platforms used by the Clearing House for F&O Contracts.

The term "CLS Bank" means CLS Bank International.

The term "Component Transaction" has the meaning set out in Part 15.

The term "Collateral Offset Obligations" means obligations of a Clearing Member arising 

pursuant to Rule 919 to pay the Clearing House, which offset obligations of the Clearing House 

to pay the Clearing Member or return assets in respect of Permitted Cover transferred or pledged 

to the Clearing House by the Clearing Member.

The term "Concentration Bank" means an Approved Financial Institution at which the Clearing 

House has an account or accounts for the purpose of making transfers between Clearing House 

Accounts.

The term "Continuing CDS Rule Provisions" means the Rules as in effect prior to the

effectiveness of Circular C14/012 as of 1 February 2014, which Continuing CDS Rule 

Provisions will continue to be in effect with respect to the CDS Contract Category as set forth 

herein. The Continuing CDS Rule Provisions will be available on the Clearing House website at 

http://www.theice.com or a successor website identified by the Clearing House. For purposes of 

the Continuing CDS Rule Provisions, references in Rule 209 thereof to “LIFFE Contracts” shall 

be deemed to be references to “Financials & Softs Contracts” as defined herein.

The term "Contract" means a contract between the Clearing House and a Clearing Member (or 

Sponsored Principal) arising in accordance with these Rules, and as amended, subject to netting 
NYDOCS01/1643340.2 12

or aggregation in accordance with these Rules, the terms and conditions of which are the relevant 

Contract Terms.

The term "Contract Category" means any of the three categories of Contract cleared by the 

Clearing House which are linked to a specific Guaranty Fund, i.e. F&O Contracts, CDS 

Contracts and FX Contracts. 

For the definition of the term "Contract Position", see 'Open Contract Position' below.

The term "Contract Terms" means all the terms and conditions of a Contract, as applicable, in: 

(i) the general conditions set out in the Contract Terms Procedures; (ii) (in relation to ICE Endex 

Contracts only) the ICE Endex Rules; (iii) (in relation to ICE Endex UK Contracts only), the ICE 

Endex UK Rules; (iv) (in relation to ICE Natural Gas Continental Spot Contracts only) the ICE 

Endex Continental Rules; (v) (in relation to ICE Futures Europe Contracts only) the ICE Futures 

Europe Rules; (vi) (in relation to ICE Futures US Contracts only) the ICE Futures US Rules; (vii) 

(in relation to Financials & Softs Contracts only) the LIFFE Rules or the ICE Futures Europe 

Rules, as applicable; (viii) (except in relation to F&O Contracts which are settled only in cash) if 

such F&O Contract becomes deliverable or is a Contract of Sale, the relevant Delivery 

Procedures for the class of F&O Contract, the specified terms set out in the Contract Terms 

Procedures and ICE Endex Rules, ICE Endex UK Rules, ICE Endex Continental Rules, ICE 

Futures Europe Rules, ICE Futures US Rules or LIFFE Rules, as applicable; (ix) for CDS 

Contracts, the terms specified pursuant to Rule 1502; and (x) for FX Contracts, the general 

conditions set out in the Rules and Procedures.

The term "Control" means the rights and powers exercised over a Person by a Controller and its 

cognate terms shall be construed accordingly.

The term "Controller" has the meaning given to that term in section 422 of the FSMA.

The term "Controller Guarantee" means a guarantee given by a Controller of a Clearing 

Member under Rule 201(a)(xi).

The term "Credit Support Document" means any guarantee or letter of credit or other security 

interest issued or granted to or for the benefit of the Clearing House that guarantees, covers or 

secures the Clearing Member's or a Sponsored Principal's obligations under any Contract, but 

excluding any Pledged Collateral Addendum.

The term "Credit Support Provider" means, in respect of a Clearing Member or Sponsored 

Principal, each provider of a Credit Support Document in relation to that Clearing Member.

The term "Custodian" means any bank, custodian, sub-custodian, nominee, agent, depository or 

settlement system.

The term "Customer" means a Person who is a client or customer of a Clearing Member (which 

Customer may, subject to Applicable Law, be acting for one or more other clients or customers 

for purposes of the clearing of Contracts). In respect of a Sponsor, the term includes each of its 

Sponsored Principals.
NYDOCS01/1643340.2 13

The term "Customer Account" means any one customer account at the Clearing House of the 

various different Customer Account Categories and comprises in the case of each Customer 

Account the related Customer Position Account and Customer Margin Account. 

The term "Customer Account Category" means: 

(i) in relation to an FCM/BD Clearing Member, any of the following categories of 

Customer Account of such FCM/BD Clearing Member: 

(A) each different DCM Customer Account; 

(B) each different Non-DCM/Swap Customer Account; 

(C) each different Swap Customer Account; 

(D) each different General Customer Account; and 

(E) each different SBS Customer Account; and 

(ii) in relation to a Non-FCM/BD Clearing Member, any of the following categories 

of Customer Account of such Non-FCM/BD Clearing Member: 

(A) each different Segregated Customer Omnibus Account For F&O;

(B) each different Segregated TTFCA Customer Omnibus Account For F&O;

(C) each different Segregated Customer Omnibus Account For CDS;

(D) each different Segregated TTFCA Customer Omnibus Account For CDS;

(E) each different Segregated Customer Omnibus Account For FX;

(F) each different Segregated TTFCA Customer Omnibus Account For FX; 

(G) each different Individually Segregated Margin-flow Co-mingled Account; 

(H) each different Omnibus Margin-flow Co-mingled Account; or

(I) each different Individually Segregated Sponsored Account each of which 

is a Customer Account of the Sponsor opened at the Clearing House in the 

name of the Sponsored Principal.

The term "Customer Account Contract" means a Contract recorded in a Customer Position 

Account.

The term "Customer Account Position" means an Open Contract Position as recorded in a 

Customer Position Account, or any sub-account thereof.
NYDOCS01/1643340.2 14

The term "Customer-Clearing Member Agreement" has the meaning set out in the relevant 

Standard Terms.

The term "Customer-CM Transaction" means a Customer-CM CDS Transaction, CustomerCM F&O Transaction or Customer-CM FX Transaction.

The term "Customer-CM CDS Transaction" means a CDS transaction between a 

Non-FCM/BD Clearing Member and a Customer (or a Sponsor and Sponsored Principal) on 

economic terms similar to those of a corresponding CDS Contract recorded in one of a Clearing 

Member's Segregated Customer Omnibus Accounts For CDS, Segregated TTFCA Customer 

Omnibus Accounts For CDS or Margin-flow Co-mingled Accounts (except, where applicable, 

the position of the CDS Clearing Member as protection buyer or protection seller and otherwise 

due to being governed by the CDS Standard Terms) or an Individually Segregated Sponsored 

Account (except as modified pursuant to Part 19 and, where applicable, the position of the 

Sponsor as protection buyer or protection seller and otherwise due to being governed by the CDS 

Standard Terms).

The term "Customer-CM F&O Transaction" means an F&O transaction between a 

Non-FCM/BD Clearing Member and a Customer (or a Sponsor and Sponsored Principal) on 

economic terms similar to those of a corresponding F&O Contract recorded in one of a Clearing 

Member's Segregated Customer Omnibus Accounts For F&O, Segregated TTFCA Customer 

Omnibus Accounts For F&O or Margin-flow Co-mingled Accounts (except, where applicable, 

the position of the F&O Clearing Member as Buying Counterparty or Selling Counterparty and 

otherwise due to being governed by the F&O Standard Terms) or an Individually Segregated 

Sponsored Account (except as modified pursuant to Part 19 and, where applicable, the position 

of the Sponsor as Buying Counterparty or Selling Counterparty and otherwise due to being 

governed by the F&O Standard Terms).

The term "Customer-CM FX Transaction" means an FX transaction between a Non-FCM/BD 

Clearing Member and a Customer (or a Sponsor and Sponsored Principal) on economic terms 

similar to those of a corresponding FX Contract recorded in one of a Clearing Member's 

Segregated Customer Omnibus Accounts For FX, Segregated TTFCA Customer Omnibus 

Accounts For FX or Margin-flow Co-mingled Accounts (except, where applicable, the position 

of the CDS Clearing Member as Reference Currency Buyer or Reference Currency Seller and 

otherwise due to being governed by the FX Standard Terms) or an Individually Segregated 

Sponsored Account (except as modified pursuant to Part 19 and, where applicable, the position 

of the Sponsor as Reference Currency Buyer or Reference Currency Seller and otherwise due to 

being governed by the FX Standard Terms).

The term "Customer-CM Collateral" means collateral provided by a Customer to a Clearing 

Member as collateral for the Customer's obligations (or, where applicable, other obligations) to 

the Clearing Member under Customer-CM Transactions.

The "Customer Margin Account" forms part of a Customer Account and the term means an 

account with the Clearing House opened in the name of a Clearing Member for the recording of 

debits and credits of Margin in respect of Customer Account Contracts recorded in the related 

Customer Position Account, which may be divided for administrative convenience only into 
NYDOCS01/1643340.2 15

sub-accounts relating to different Customers or groups of Customers. In respect of an 

Individually Segregated Sponsored Account, the term includes a similar account of a Sponsored 

Principal which is linked to the relevant Individually Segregated Sponsored Account.

The "Customer Position Account" forms part of a Customer Account and the term means an 

account (if any) with the Clearing House opened in the name of a Clearing Member relating to 

Contracts to which the Clearing Member is a party as a result of it acting for one or more 

Segregated Customers and in which the Clearing House records such Contracts, which may be 

divided for administrative convenience only into sub-accounts (including, for the avoidance of 

doubt, CDS Sub-Accounts) relating to different Customers or groups of Customers. In respect of 

an Individually Segregated Sponsored Account, the term includes a similar position account of a 

Sponsored Principal which is linked to the relevant Individually Segregated Sponsored Account.

The term "DCM Customer" means any FCM/BD Customer with respect to any Contract arising 

as a result of a Transaction in U.S. Futures. A Person may be a DCM Customer in relation to 

certain Contracts and another category of FCM/BD Customer in relation to other Contracts.

The term "DCM Customer Account", in respect of an FCM/BD Clearing Member, means a 

kind of Customer Account with the Clearing House (in its capacity as a registered U.S. 

derivatives clearing organization clearing Contracts that are U.S. Futures), the books and records 

of which are located in the United States of America, opened in the name of the FCM/BD 

Clearing Member (acting in its capacity as a clearing member in relation to transactions 

connected with the provision of services to DCM Customers where segregation of related 

collateral is required in accordance with Section 4d(a) of the CEA insofar as applicable, and any 

applicable rules of the CFTC as promulgated thereunder and entering into market contracts in the 

capacity of a clearing member in relation to transactions connected with the provision of services 

to DCM Customers) relating to Contracts to which the FCM/BD Clearing Member is a party as a 

result of it acting for one or more DCM Customers (whose transactions the FCM/BD Clearing 

Member requests be recorded in the DCM Customer Account where the same is required in 

accordance with the segregation provisions of Section 4d(a) of the CEA insofar as applicable, 

and any applicable rules of the CFTC as promulgated thereunder) and in which the Clearing 

House records such Contracts and to which monies in respect of such Contracts are debited and 

credited, which may be divided for administrative convenience only into sub-accounts relating to 

different DCM Customers or groups of DCM Customers.

The term "Default Amount" means any of the F&O Default Amount, the CDS Default Amount 

or the FX Default Amount, as the context requires, and "Default Amounts" means any two of 

the foregoing or all of them, as the context requires. 

The term "Default Notice" means a notice issued by the Clearing House under Rule 902(b).

The term "Default Portability Preference" means the identity of any one or more designated 

"preferred" Transferee Clearing Member(s) specified to the Clearing House by a Customer or 

Sponsored Principal as being the Clearing Member to which it would prefer its Customer-CM 

Transactions (and related Contracts) to be Transferred pursuant to the Default Portability Rules 

in the case of an Event of Default.
NYDOCS01/1643340.2 16

The term "Default Portability Rules" means Rule 904 and any terms setting out the meaning of 

the defined terms used therein.

The term "Defaulter" means a Clearing Member or former Clearing Member or Sponsored 

Principal or former Sponsored Principal or Disclosed Principal Member or former Disclosed 

Principal Member in respect of whom a Default Notice has been issued.

The term "Deliverable" means any property, right, interest, register or book entry, commodity, 

certificate, property entitlement or Investment, which is capable of being delivered pursuant to 

an F&O Contract.

The term "Delivery Default" means a Clearing Member or Sponsored Principal failing to deliver 

or transfer to the Clearing House in full any Deliverable required to be delivered or transferred 

by that Clearing Member or Sponsored Principal under or in connection with any Contract, 

including a failure to deliver or transfer a Deliverable in accordance with the applicable Delivery 

Procedures, unless such failure constitutes a Force Majeure Event affecting the relevant Clearing 

Member or Sponsored Principal.

The term "Delivery Facility" means any Person or facility used for the delivery of Deliverables 

(excluding Transferors and Transferees), including but not limited to, warehouses appearing on 

the list of nominated warehouses as published by ICE Futures Europe, National Grid, GTS, 

GASPOOL, Fluxys Belgium, Huberator, TenneT, Elia, TSO (as such Persons are defined in the 

Delivery Procedures), facilities and systems (including gas or electricity transmission systems)

operated by such Persons, and Registries (as defined in the Delivery Procedures).

The term "Deriv/SERV" means the system for storage and processing of trade information in 

relation to CDS operated by The Depository Trust & Clearing Corporation or its Affiliates, 

currently known as Deriv/SERV, or any successor thereto or any other similar service specified 

by the Clearing House as a trade information warehouse (not being a Repository) for CDS.

The term "Designated Controller" means a Controller that has: (i) been notified to the Clearing 

House by a Clearing Member or Sponsored Principal as a controller which should be taken into 

account by the Clearing House for purposes of calculating the Capital or Margin requirements of 

the Clearing Member or Sponsored Principal; and (ii) executed in favour of, and delivered to, the 

Clearing House an acceptable Controller Guarantee, which Controller Guarantee remains valid 

and in effect.

The term "Director" means a director of the Clearing House.

The term "Disciplinary Panel" means a disciplinary panel established pursuant to Rule 1003.

The term "Disclosed Principal Member" means, where a Clearing Member acts as agent for a 

disclosed principal in respect of its Energy Contract clearing business and such principal has 

been admitted by the Clearing House as a Disclosed Principal Member, that principal.

The term "Dispute" means any dispute, difference, controversy or claim (of any and every kind 

or type, whether based on contract, tort, statute, regulation, or otherwise) arising out of, in 

relation to, or in connection with these Rules or any Contract, including any dispute as to the 
NYDOCS01/1643340.2 17

existence, construction, validity, interpretation, enforceability, termination or breach of these 

Rules or any Contract.

The term "EFPs" means 'exchange for physicals' under the ICE Futures Europe Rules or ICE 

Futures US Rules, as applicable or any similar transaction under LIFFE Rules or ICE Endex 

Rules.

The term "EFSs" means 'exchange for swaps' under the ICE Futures Europe Rules or 'exchange 

for related position' under ICE Futures US Rules, as applicable or any similar transaction under 

LIFFE Rules or ICE Endex Rules.

The term "Eligible Currencies" means USD, EUR, GBP, CAD, CHF, SEK and such other 

currencies as are specified as eligible in the Finance Procedures or otherwise by the Clearing 

House from time to time.

The term "EMIR" (European Market Infrastructure Regulation) means Regulation (EU) No, 

648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, 

central counterparties and trade repositories and includes all delegated or implementing 

regulations, decisions and technical standards thereunder as interpreted in accordance with any 

applicable guidance publicly issued by ESMA or any Regulatory Authority.

The term "Encumbrance" means any claim, charge, mortgage, security, lien, equity, beneficial 

interest, power of sale, option or other right to purchase, usufruct, hypothecation, retention of 

title, right of pre-emption or other third party right or security interest of any kind or an 

agreement to create any of the foregoing.

The term "Energy" is used to refer to the Clearing of the ICE Endex, ICE Endex UK, ICE Endex 

Continental, ICE Futures Europe and ICE Futures US Markets, excluding the Clearing of 

Financials & Softs Contracts on the ICE Futures Europe market.

The term "Energy Clearing Member" means a Clearing Member that is authorised by the 

Clearing House to become party to Energy Contracts.

The term "Energy Contracts" means Contracts resulting from the clearing of Energy 

Transactions.

The term "Energy Transaction" means an ICE Endex Transaction, ICE Endex UK Transaction, 

ICE Futures Europe Transaction (excluding a Financials & Softs Transaction), ICE Futures US

Transaction or ICE Natural Gas Continental Spot Transaction.

The term "ESMA" means the European Securities and Markets Authority or any successor 

entity.

The term "EUR" means the euro, or any other lawful currency that is a successor to it.

The term "Event of Default" has the meaning set out in Rule 901 and the term "Default" shall 

be construed accordingly.
NYDOCS01/1643340.2 18

The term "Exchange" means any exchange or similar body duly authorised, regulated, 

recognised or licensed (to the extent necessary) under Applicable Laws in any jurisdiction, 

including, but not limited to, any recognised investment exchange, recognised overseas 

investment exchange, designated investment exchange, designated contract market, national 

securities exchange, swap execution facility, security-based swap execution facility, exempt 

commercial market, regulated market, alternative trading system, multilateral trading facility, 

swap execution facility, organised trading facility, systematic internaliser, trade affirmation or 

confirmation platform or similar entity.

The term "Exchange Act" means the U.S. Securities Exchange Act of 1934.

The term "Exchange Delivery Settlement Price" or "EDSP" in respect of a Set of F&O 

Contracts or an F&O Contract, means the closing, delivery or cash settlement price determined 

pursuant to Rule 701.

The term "F&O" means futures and options and refers to the Clearing of Energy and Financials 

& Softs products.

The term "F&O Assessment Amount" means the total amount of all F&O Assessment 

Contributions payable by F&O Clearing Members pursuant to Rule 909(a) in respect of an Event 

of Default.

The term "F&O Assessment Contribution" has the meaning set out in Rule 909(b).

The term "F&O Clearing Member" means a Clearing Member that is authorised by the 

Clearing House to become party to Energy Contracts or Financials & Softs Contracts or both.

The term "F&O Contract" means an Energy Contract and/or a Financials & Softs Contract. 

The term "F&O Default Amount" has the meaning set out in Rule 908(e).

The term "F&O Guaranty Fund" means the guaranty fund established and maintained pursuant 

to Part 11 relating only to F&O Contracts.

The term "F&O Guaranty Fund Contribution" means a Guaranty Fund Contribution relating 

to the F&O Guaranty Fund.

The term "F&O Standard Terms" means the form of Customer-CM F&O Transactions 

Standard Terms as published by the Clearing House from time to time as an Exhibit to these 

Rules, but which do not form part of these Rules, which are applicable as between each NonFCM/BD Clearing Member and each of its Customers in relation to F&O Clearing, as amended 

from time to time in accordance with the F&O Standard Terms.

The term "F&O Transaction" means an Energy Transaction and/or Financials & Softs

Transaction.
NYDOCS01/1643340.2 19

The term "Failure To Pay" means, in respect of a particular Contract Category, the failure of the 

Clearing House to make any payment when due (including the return of assets equivalent to any 

Pledged Collateral) pursuant to Part 3 of the Rules if such failure is not remedied on or before:

(i) if no extension has been granted to the Clearing House pursuant to Rule 110(b) or 

Rule 110(c) prior to this date: the date falling 3 Business Days after notice of 

such failure is given to it by the Clearing Member or Sponsored Principal to 

whom such payment or return is due; or

(ii) if an extension has been granted to the Clearing House as referred to in paragraph 

(i) of this definition, 10 a.m. on the next Business Day after service of a notice of 

that failure to the Clearing House by the Clearing Member or Sponsored Principal 

to whom such payment or return is due, provided that such notice is given no 

earlier than the final day of a period for which an extension has been granted to 

the Clearing House pursuant to Rule 110(b) or Rule 110(c),

save to the extent that any such failure to pay or return constitutes a Force Majeure Event 

affecting the Clearing House.

The term "FCA" means the UK's Financial Conduct Authority or any successor entity.

The term "FCA Rules" means all rules, requirements, directions, guidance, examples, waivers 

and other similar materials published or otherwise made by the FCA from time to time.

The term "FCM/BD" means a Person registered as a futures commission merchant with the 

CFTC and/or as a broker-dealer with the SEC, as applicable.

The term "FCM/BD Clearing Member" means a Clearing Member that is an FCM/BD.

The term "FCM/BD Customer" means any Customer that is: (a) a customer (as defined in 

CFTC Rule 39.2) of an FCM/BD Clearing Member with respect to any Contract in one or more 

account classes (as defined in CFTC Rule 190.01) (other than a non-public customer as defined 

in CFTC Rule 190.01); or (b) a customer (as defined in SEC Rule 15c3-3) of an FCM/BD 

Clearing Member with respect to any Contract recorded in an SBS Customer Account; provided 

that for the avoidance of doubt the term "FCM/BD Customer" will include a Customer of an 

FCM/BD Clearing Member (which Customer may, but need not, be an Affiliate of that FCM/BD 

Clearing Member or another Clearing Member) that is itself acting on behalf of one or more 

customers (other than non-public customers, as so defined) with respect to a Contract.

The term "Financial Collateral Regulations" means the Financial Collateral Arrangements 

(No. 2) Regulations 2003 (which implement Directive 2002/47/EC on financial collateral 

arrangements).

The term "Financial Emergency" means, with respect to any Clearing Member, any situation in 

which the financial or operational condition of such Clearing Member or any of its Designated 

Controllers is not or is likely not to be, in either case determined at the discretion of the Clearing 

House, adequate for such Clearing Member to meet its obligations (including, without limitation, 

its obligations to comply with these Rules) or to engage in business, or is such that it would not 
NYDOCS01/1643340.2 20

be in the best interests of the Clearing House or the marketplace for such Clearing Member to 

continue to be a Clearing Member.

The term "Financial Indebtedness" means any indebtedness for or in respect of: (a) monies 

borrowed; (b) any amount raised by acceptance under any acceptance credit facility or 

dematerialised equivalent; (c) any amount raised pursuant to any note purchase facility or the 

issue of bonds, notes, debentures, loan stock or any similar instrument; (d) the amount of any 

liability in respect of any lease or hire purchase contract which would, in accordance with 

applicable accounting standards, be treated as a finance or capital lease; (e) receivables sold or 

discounted (other than any receivables to the extent they are sold on a non-recourse basis); 

(f) any amount raised under any other transaction (including any forward sale or purchase 

agreement) having the commercial effect of a borrowing; (g) any counter-indemnity obligation in 

respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other 

instrument issued by a bank or financial institution; and (h) the amount of any liability in respect 

of any guarantee or indemnity for any of the items referred to in (a) to (g) above.

The term "Financially-Settled FX Contract" means an FX Contract which provides for cash 

settlement in a single predetermined currency on the relevant FX Settlement Date based on the 

difference between the values on the FX Settlement Date of: (i) the purchase of an agreed 

amount in one currency by the Reference Currency Buyer from the Reference Currency Seller; 

and (ii) the purchase by the Reference Currency Seller of an agreed amount in a different 

currency from the Reference Currency Buyer. Each leg of an FX Swap may form the basis of 

FX Trade Particulars which, if eligible for Clearing and Cleared, would give rise to two 

Financially-Settled FX Contracts.

The term "Financials & Softs" is used to refer to the Clearing of Financials & Softs Contracts

on the ICE Futures Europe and LIFFE Markets, as applicable.

The term "Financials & Softs Block Contract" means a Contract resulting from a Financials & 

Softs Block Transaction.

The term "Financials & Softs Block Trade Facility" means the block trade facility operated by 

LIFFE in accordance with the LIFFE Rules and the block trade facility operated by ICE Futures 

Europe in accordance with the ICE Futures Europe Rules, in each case for Financials & Softs 

Transactions.

The term "Financials & Softs Block Transaction" means an EFS, EFP, Soft Commodity 

EFRPs, Basis Trade, Financials & Softs Block Trade Facility transaction or BClear transaction 

reported through either LIFFE in accordance with the LIFFE Rules or ICE Futures Europe in 

accordance with the ICE Futures Europe Rules, as applicable.

The term "Financials & Softs Clearing Member" means a Clearing Member that is authorised 

by the Clearing House to become party to Financials & Softs Contracts and that is a clearing 

member of either LIFFE or ICE Futures Europe, as applicable.

The term "Financials & Softs Contract" means a Financials & Softs Block Contract or a 

Financials & Softs Matched Contract.
NYDOCS01/1643340.2 21

The term "Financials & Softs Matched Contract" means a Contract resulting from a Financials 

& Softs Matched Transaction.

The term "Financials & Softs Matched Transaction" means a Transaction that occurs or 

occurred on LIFFE in accordance with the LIFFE Rules or a Transaction in respect of Financials 

& Softs Contracts that occurs or occurred on ICE Futures Europe in accordance with the ICE 

Futures Europe Rules. 

The term "Financials & Softs Transaction" means a Financials & Softs Matched Transaction or

a Financials & Softs Block Transaction where the related trade particulars or data submitted or 

provided to the Clearing House, LIFFE or ICE Futures Europe by or on behalf of a Clearing 

Member or Clearing Members (including by any Representative) will give rise to a Contract or 

Contracts if the relevant circumstances specified in Rule 401(a) occur (or in such a case but 

where a Sponsored Principal takes the place of one or both of the relevant Clearing Members).

The term "Force Majeure Event" means any occurrence outside the control of the Clearing 

House or the relevant Clearing Member or Sponsored Principal, as applicable, which hinders or 

prevents the performance in whole or in part of any of its obligations hereunder (excluding an 

obligation to make a payment, except for a payment by the Clearing House to a Clearing 

Member or Sponsored Principal that would be funded from a Clearing House Account at a 

Concentration Bank which Concentration Bank has not released or made available funds to the 

Clearing House when expected or required) (and, in relation only to any obligation of the 

Clearing House or a Clearing Member or Sponsored Principal under a Contract, which obligation 

has not yet fallen due, such an occurrence which would hinder or prevent performance in whole 

or in part of any of its obligations thereunder were the occurrence or effects of the occurrence to 

continue until the date of performance of the relevant obligation), including, but not limited to, 

fire, flood, storm, earthquake, explosion, war, hostilities, accidents howsoever caused, strike, 

labour dispute, lockout, work to rule or other industrial dispute, lack of energy supply, disruption 

or blackout of gas or electricity transmission systems, criminal action, terrorist action, civil 

unrest, embargoes, acts of God, acts of a public enemy, unavailability or impairment of computer 

or data processing facilities, the actions or omissions of third Persons (including, without 

limitation, Deriv/SERV, Repositories, CLS Bank, any CDS Trade Execution/Processing 

Platform, FX Trade Exchange/Processing Platform, Delivery Facilities, Approved Financial 

Institutions, Concentration Banks, bank or electronic transfer systems, Exchanges, Markets, 

Clearing Organisations, Governmental Authorities and Regulatory Authorities, but excluding the 

Clearing House in the case of a Force Majeure Event affecting the Clearing House and further 

excluding a Clearing Member, its Customers, Transferors and Transferees in the case of a Force 

Majeure Event affecting a Clearing Member and a Sponsored Principal in the case of a Force 

Majeure Event affecting a Sponsored Principal); and, for CDS Clearing Members, Sponsored 

Principals and the Clearing House in relation to CDS Contracts only, Illegality; or, in relation to 

delivery of a Deliverable pursuant to any F&O Contract, any event that is an event of force 

majeure (or similar event, howsoever defined) for that F&O Contract under the Contract Terms 

or Market Rules.

The term "FSMA" means the UK's Financial Services and Markets Act 2000.
NYDOCS01/1643340.2 22

The term "Future" means an F&O Contract or FX Contract subject to Clearing by the Clearing 

House that is a 'future' or 'contract for differences etc.' under articles 84 or 85 of the FSMA 

(Regulated Activities) Order 2001, any similar investment which may be labelled as a 'spot', 

'forward' or 'swap' contract or treated as such under any Applicable Law or any economically 

similar Contract that is not an investment.

The term "FX" means foreign exchange.

The term "FX Acceptance Notice" has the meaning set out in the FX Procedures. 

The term "FX Assessment Amount" means the total amount of all FX Assessment 

Contributions payable by FX Clearing Members pursuant to Rule 911(a) in respect of an Event 

of Default.

The term "FX Assessment Contribution" has the meaning set out in Rule 911(b).

The term "FX Clearing Member" means a Clearing Member that is authorised by the Clearing 

House to become party to FX Contracts. 

The term "FX Contract" means a Contract that is a foreign exchange contract that is subject to 

Clearing pursuant to these Rules and of a nature as specified in Circulars issued by the Clearing 

House from time to time.

The term "FX Default Amount" has the meaning set out in Rule 908(e).

The term "FX Guaranty Fund" means the guaranty fund established and maintained pursuant to 

Part 11 relating to the Clearing of FX Contracts.

The term "FX Guaranty Fund Contribution" means a Guaranty Fund Contribution relating to 

the FX Guaranty Fund.

The term "FX Mark-to-Market Interest" means interest calculated by reference to the FX 

Mark-to-Market Margin Balance, determined and payable as set out in the Procedures.

The term "FX Mark-to-Market Margin" means the Permitted Cover required to be provided to 

the Clearing House by a Clearing Member or Sponsored Principal or by the Clearing House to a 

Clearing Member or Sponsored Principal in respect of FX Contracts pursuant to Rule 503(i) and 

the Procedures. 

The term "FX Mark-to-Market Margin Balance", in respect of an FX Contract on any day, 

means the sum of all FX Mark-to-Market Margin delivered by the relevant FX Clearing Member 

or Sponsored Principal in respect of such FX Contract to the Clearing House less all FX Markto-Market Margin delivered by the Clearing House in respect of such FX Contract to such FX 

Clearing Member or Sponsored Principal, as determined at the close of business on such day. 

The term "FX Original Margin" means the Permitted Cover required to be provided to the 

Clearing House as security for the obligations of a Clearing Member or Sponsored Principal in 
NYDOCS01/1643340.2 23

respect of FX Contracts pursuant to Part 5 and includes, where the context so requires, any 

proceeds of realisation of the same. 

The term "FX Settlement Date" means (a) in relation to a Financially-Settled FX Contract, 

means the date on which the Reference Currency Buyer or Reference Currency Seller is obliged 

to make payment to the other party in order to discharge its obligations under the contract, which 

date may be expressed as a settlement, termination or payout date and (b) in relation to FX Trade 

Particulars submitted for Clearing, the date set out in the relevant FX confirmation.

The term "FX Standard Terms" means the form of Customer-CM FX Transaction Standard 

Terms as published by the Clearing House from time to time as an Exhibit to these Rules, but 

which do not form part of these Rules, which are applicable as between each Non-FCM/BD 

Clearing Member and each of its Customers in relation to FX Clearing, as amended from time to 

time in accordance with the FX Standard Terms.

The term "FX Swap" means an FX transaction that is a 'contract for differences' under article 85 

of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (or any 

economically similar transaction that is not an investment). An FX Swap may be submitted for 

Clearing as two separate sets of FX Trade Particulars or part of an FX Swap may be submitted 

for Clearing as a single set of FX Trade Particulars.

The term "FX Trade Execution/Processing Platform" means an Exchange that has satisfied the 

Clearing House's requirements to be authorised to submit FX Trade Particulars and receive FX 

Acceptance Notices on behalf of one or more FX Clearing Members or Sponsored Principals for 

Clearing, including having entered into an agreement with the Clearing House to act as an 

"Approved FX Trade Execution/Processing Platform" in relation to such submissions, 

confirmations and receipts and, in relation to any FX Clearing Member or Sponsored Principal 

on whose behalf (and, as the case may be, for whose Affiliate) it submits FX Trade Particulars, 

has obtained that FX Clearing Member's or Sponsored Principal's authorisation in writing or 

through the ICE FX clearing systems to submit and confirm FX Trade Particulars for Clearing

and receipt of FX Acceptance Notices relating thereto and accordingly, such an FX Trade 

Execution/Processing Platform will be a Representative of such FX Clearing Member or 

Sponsored Principal for such purposes until the expiry of not less than one Business Day's 

written notice to the Clearing House given by such FX Clearing Member or Sponsored Principal 

that such FX Trade Execution/Processing Platform is no longer, or is not, authorised to act as its 

Representative. Where an Affiliate of an FX Clearing Member or Sponsored Principal may 

submit or confirm FX Trade Particulars for the account of that FX Clearing Member or 

Sponsored Principal as referred to in the FX Procedures, any person which, as an FX Trade 

Execution/Processing Platform, is a Representative of such FX Clearing Member or Sponsored 

Principal shall be deemed to be, additionally, a Representative of such Affiliate for these 

purposes.

The term "FX Trade Particulars" means trade particulars in respect of a foreign exchange 

transaction in the form of a non-deliverable forward of a nature which, pursuant to the FX 

Procedures and Circulars, is eligible to be submitted for Clearing pursuant to these Rules and the 

FX Procedures submitted to the Clearing House by or for one or more FX Clearing Members, 

Sponsors or Sponsored Principals (including by any Representative, including via an FX Trade 
NYDOCS01/1643340.2 24

Execution/Processing Platform), which particulars, if accepted by the Clearing House, will give 

rise to an FX Contract or FX Contracts (and, in the case of particulars of an FX transaction 

submitted by or for a Non-FCM/BD Clearing Member for one of its Customer Accounts, a 

Customer-CM FX Transaction). For the avoidance of doubt, FX Trade Particulars may or may 

not reflect a binding contract between two FX Clearing Members or Sponsored Principals or any 

binding transaction between an FX Clearing Member and its Customer.

The term "GBP" means the lawful currency from time to time of the United Kingdom.

The term "General Customer" means, for an FCM/BD Clearing Member, a Customer that is not 

a DCM Customer, Swap Customer, Non-DCM/Swap Customer, or SBS Customer. A Person 

may be a General Customer of an FCM/BD Clearing Member in relation to certain Transactions 

or Contracts and another category of FCM/BD Customer of an FCM/BD Clearing Member in 

relation to other Transactions or Contracts.

The term "General Customer Account" means a kind of Customer Account with the Clearing 

House opened in the name of an FCM/BD Clearing Member for the recording of F&O Contracts 

(other than U.S. Futures, Swaps or Non-DCM/Swaps) to which that FCM/BD Clearing Member 

is a party as a result of it acting for one or more General Customers, and related Margin.

The term "Governmental Authority" means any Regulatory Authority and any national, 

federal, supranational, state, regional, provincial, local or other government, government 

department, ministry, governmental or administrative authority, regulator, agency, commission, 

secretary of state, minister, court, tribunal, judicial body or arbitral body or any other Person 

exercising judicial, executive, interpretative, enforcement, regulatory, investigative, fiscal, taxing 

or legislative powers or authority anywhere in the world with competent jurisdiction.

The term "Group Company" means, with respect to any entity, an undertaking which is a parent 

undertaking or subsidiary undertaking of that entity or a subsidiary undertaking of any parent 

undertaking of that entity. For the purposes of this definition, the expressions "parent 

undertaking" and "subsidiary undertaking" shall have the meanings given to them in 

section 1162 of the Companies Act 2006, the expression "undertaking" shall have the meaning 

given to it in section 1161 of the Companies Act 2006 and the expression "entity" shall have the 

same meaning as the expression "undertaking".

The term "Guaranty Funds" means the F&O Guaranty Fund, the CDS Guaranty Fund and the 

FX Guaranty Fund. 

The term "Guaranty Fund Contribution" means Permitted Cover transferred by a Clearing 

Member to the Clearing House as a contribution to the Guaranty Fund pursuant to Part 11 that 

has not been applied pursuant to Part 9 and includes, where the context so requires, any proceeds 

of realisation of the same.

The term "Guaranty Fund Period" (i) for the F&O Guaranty Fund, means a three-month period 

for which the total amount of F&O Guaranty Fund Contributions for the F&O Guaranty Fund is 

fixed (subject to any termination or suspension of any F&O Clearing Member's membership or 

status as an F&O Clearing Member, new F&O Clearing Members making F&O Guaranty Fund 

Contributions and the Clearing House's discretions pursuant to Part 11); (ii) for the CDS 
NYDOCS01/1643340.2 25

Guaranty Fund, means a period for which the total amount of CDS Guaranty Fund Contributions 

for the CDS Guaranty Fund is fixed pursuant to the Finance Procedures (subject to any 

termination or suspension of any CDS Clearing Member's membership or status as a CDS 

Clearing Member, new CDS Clearing Members making CDS Guaranty Fund Contributions and 

the Clearing House's discretions pursuant to Part 11; or (iii) for the FX Guaranty Fund, means a 

period for which the total amount of FX Guaranty Fund Contributions for the FX Guaranty Fund 

is fixed pursuant to the Procedures (subject to any termination or suspension of any FX Clearing 

Member's membership or status as an FX Clearing Member, new FX Clearing Members making 

FX Guaranty Fund Contributions and the Clearing House's discretions pursuant to Part 9).

The term "Guidance" means guidance issued by the Clearing House pursuant to Rule 109(f).

The term "HM Treasury" means Her Majesty's Treasury in the UK and any successor thereto.

The term "ICE Endex" means ICE Endex Derivatives B.V., a private limited liability company 

(besloten vennootschap met beperkte aansprakelijkheid) incorporated under Dutch law, 

registered with the trade register of the chamber of commerce in Amsterdam, the Netherlands, 

under number 09100980, and the regulated market it operates pursuant to a licence under 

section 5:26(1) of the Dutch Act on the Financial Supervision (Wet op het financiëel toezicht).

The term "ICE Endex Block Contract" means a Contract resulting from an ICE Endex Block 

Transaction.

The term "ICE Endex Block Trade Facility" means the over-the-counter clearing service 

operated by ICE Endex in accordance with the ICE Endex Rules.

The term "ICE Endex Block Transaction" means an EFS, EFP or ICE Endex Block Trade 

Facility transaction reported through ICE Endex in accordance with the ICE Endex Rules.

The term "ICE Endex Continental" means ICE Endex Gas B.V., a private limited liability 

company (besloten vennootschap met beperkte aansprakelijkheid) incorporated under Dutch law, 

registered with the trade register of the chamber of commerce in Amsterdam, the Netherlands, 

under number 34221038 0000.

The term "ICE Endex Continental Rules" means the rules of ICE Endex Continental to the 

extent that they are general in nature or apply to "Cleared Products" (as such term is defined in 

the rules of ICE Endex Continental), and, except when a particular rule is cross-referenced 

herein, has the same meaning as that given to the term "Gas Market Rules" in the rules of ICE 

Endex Continental, as amended from time to time.

The term "ICE Endex Contract" means an ICE Endex Block Contract or an ICE Endex 

Matched Contract.

The term "ICE Endex Matched Contract" means a Contract resulting from an ICE Endex 

Matched Transaction.

The term "ICE Endex Matched Transaction" means a transaction that occurs or occurred on 

the ICE Endex regulated market in accordance with the ICE Endex Rules.
NYDOCS01/1643340.2 26

The term "ICE Endex Rules" means the rules of ICE Endex, and, except when a particular rule 

is cross-referenced herein, has the same meaning as that given to the term "Rules" in the rules of 

ICE Endex, as amended from time to time.

The term "ICE Endex Transaction" means an ICE Endex Matched Transaction or an ICE 

Endex Block Transaction where the related trade particulars or data submitted or provided to the 

Clearing House or ICE Endex by or on behalf of a Clearing Member or Sponsored Principal 

(including by any Representative) will give rise to a Contract or Contracts if the relevant 

circumstances specified in Rule 401(a) occur.

The term "ICE Endex UK" means ICE Endex Gas Spot Ltd. (a company registered in England 

and Wales with registration number 08254731) and the market operator known as ICE Endex 

Gas Spot Ltd.

The term "ICE Endex UK Contract" means an ICE Endex UK Matched Contract.

The term "ICE Endex UK Matched Contract" means a Contract resulting from an ICE Endex 

UK Matched Transaction.

The term "ICE Endex UK Matched Transaction" has the same meaning as that given to the 

term "OCM Trade" in the rules of ICE Endex UK, as amended from time to time.

The term "ICE Endex UK Rules" means the rules of ICE Endex UK, and, except when a 

particular rule is cross-referenced herein, has the same meaning as that given to the term "Gas 

Market Rules" in the rules of ICE Endex UK, as amended from time to time.

The term "ICE Endex UK Transaction" means an ICE Endex UK Matched Transaction where 

the related trade particulars or data submitted or provided to the Clearing House or ICE Endex 

UK by or on behalf of a Clearing Member will give rise to a Contract or Contracts if the relevant 

circumstances specified in Rule 401(a) occur.

The term "ICE Futures Europe" means ICE Futures Europe (a company registered in England 

and Wales with registration number 01528617) and the recognised investment exchange (as 

defined in the FSMA) known as and operated by ICE Futures Europe.

The term "ICE Futures Europe Block Contract" means a Contract resulting from an ICE 

Futures Europe Block Transaction.

The term "ICE Futures Europe Block Trade Facility" means the block trade facility operated 

by ICE Futures Europe in accordance with the ICE Futures Europe Rules.

The term "ICE Futures Europe Block Transaction" means an EFS, EFP or ICE Futures 

Europe Block Trade Facility Transaction reported through ICE Futures Europe in accordance 

with the ICE Futures Europe Rules.

The term "ICE Futures Europe Contract" means an ICE Futures Europe Block Contract or an 

ICE Futures Europe Matched Contract.
NYDOCS01/1643340.2 27

The term "ICE Futures Europe Matched Contract" means a Contract resulting from an ICE 

Futures Europe Matched Transaction.

The term "ICE Futures Europe Matched Transaction" means a Transaction that occurs or 

occurred on the ICE Futures Europe exchange in accordance with the ICE Futures Europe Rules.

The term "ICE Futures Europe Rules" means the rules of ICE Futures Europe and, except 

when a particular rule is cross-referenced herein, has the same meaning as that given to the term 

"Regulations" in the regulations of ICE Futures Europe.

The term "ICE Futures Europe Transaction" means an ICE Futures Europe Matched 

Transaction or an ICE Futures Europe Block Transaction where the related trade particulars or 

data submitted or provided to the Clearing House or ICE Futures Europe by or on behalf of a 

Clearing Member or Sponsored Principal (including by any Representative) will give rise to a 

Contract or Contracts if the relevant circumstances specified in Rule 401(a) occur.

The term "ICE Futures US" means ICE Futures U.S. Inc. and the designated contract market 

operated thereby.

The term "ICE Futures US Block Contract" means a Contract resulting from an ICE Futures 

US Block Transaction.

The term "ICE Futures US Block Trade Facility" means the block trade facility operated by 

ICE Futures US in accordance with the ICE Futures US Rules.

The term "ICE Futures US Block Transaction" means an EFS, EFP or ICE Futures US Block 

Trade Facility transaction reported through ICE Futures US in accordance with the ICE Futures 

US Rules.

The term "ICE Futures US Contract" means an ICE Futures US Block Contract or an ICE 

Futures US Matched Contract.

The term "ICE Futures US Matched Contract" means a Contract resulting from an ICE 

Futures US Matched Transaction.

The term "ICE Futures US Matched Transaction" means a transaction that occurs or occurred 

on the ICE Futures US exchange in accordance with the ICE Futures US Rules.

The term "ICE Futures US Rules" means the bylaws and rules of ICE Futures US.

The term "ICE Futures US Transaction" means an ICE Futures US Matched Transaction or an 

ICE Futures US Block Transaction where the related trade particulars or data submitted or 

provided to the Clearing House or ICE Futures US by or on behalf of a Clearing Member or 

Sponsored Principal (including by any Representative) will give rise to a Contract or Contracts if 

the relevant circumstances specified in Rule 401(a) occur.

The term "ICE Group" means the Clearing House and all its Group Companies.
NYDOCS01/1643340.2 28

The term "ICE Natural Gas Continental Spot" is used to refer to the Relevant ICE Endex 

Continental Product (as defined in Part 22) traded on ICE Endex Continental.

The term "ICE Natural Gas Continental Spot Contract" means an ICE Natural Gas 

Continental Spot Matched Contract.

The term "ICE Natural Gas Continental Spot Matched Contract" means a Contract resulting 

from an ICE Natural Gas Continental Spot Matched Transaction.

The term "ICE Natural Gas Continental Spot Matched Transaction" means a transaction in 

respect of an ICE Natural Gas Continental Spot that occurs or occurred on ICE Endex 

Continental in accordance with the ICE Endex Continental Rules. 

The term "ICE Natural Gas Continental Spot Transaction" means an ICE Natural Gas 

Continental Spot Matched Transaction where the related trade particulars or data submitted or

provided to the Clearing House or ICE Endex Continental, by or on behalf of a Clearing Member 

or Clearing Members (including by any Representative) will give rise to a Contract or Contracts 

if the relevant circumstances specified in Rule 401(a) occur. 

The term "ISDA" means the International Swaps and Derivatives Association, Inc. and any 

successor thereto.

The term "Illegality" means where, after giving effect to any applicable provision, disruption 

fallback or remedy specified in, or pursuant to, these Rules, the Procedures and the applicable 

Contract Terms, due to an event or circumstance (other than any action taken by a Clearing 

Member or Sponsored Principal) occurring after a Contract arises, it becomes unlawful under 

any Applicable Law on any day, or it would be unlawful if the relevant payment, delivery or 

compliance were required on that day (in each case, other than as a result of a breach by the 

Clearing Member or Sponsored Principal of Rules 202 and 203), to perform any absolute or 

contingent obligation to make a payment or delivery in respect of such Contract, to receive a 

payment or delivery in respect of such Contract or to comply with any other material provision 

of the Rules and Procedures relating to such Contract.

The term "Impossibility" means where, after giving effect to any applicable provision, 

disruption fallback or remedy specified in, or pursuant to, these Rules, the Procedures and the 

applicable Contract Terms, due to an event or circumstance (other than any action taken by a 

Clearing Member or Sponsored Principal) occurring after a Contract arises, it becomes 

impossible on any day, or it would be impossible if the relevant payment, delivery or compliance 

were required on that day (in each case, other than as a result of a breach by the Clearing 

Member or Sponsored Principal of Rules 202 and 203), to perform any absolute or contingent 

obligation to make a payment or delivery in respect of such Contract, to receive a payment or 

delivery in respect of such Contract or to comply with any other material provision of the Rules 

and Procedures relating to such Contract.

The term "Individually Segregated Margin-flow Co-mingled Account" has the meaning set 

out in the definition of Margin-flow Co-mingled Account.
NYDOCS01/1643340.2 29

The term "Individually Segregated Sponsored Account" means an Account of a Sponsored 

Principal, being a kind of Customer Account at the Clearing House for the recording of positions 

and related Margin, in which solely assets and positions relating to the Sponsored Principal are 

recorded, enabling the Sponsor and Clearing House to distinguish the assets and positions

recorded in the relevant Individually Segregated Sponsored Account from assets and positions 

relating to other Customers of the Sponsor in its capacity as a Clearing Member and from the 

assets and positions relating to other Sponsored Principals and Customers.

The term "Initial Margin" means the Permitted Cover required to be provided or actually 

provided (by way of title transfer pursuant to a Clearing Membership Agreement or Sponsored 

Principal Clearing Agreement or by way of pledge pursuant to a Pledged Collateral Addendum) 

to the Clearing House as collateral for the obligations of a Clearing Member or Sponsored 

Principal in respect of CDS Contracts, including Portfolio Risk Margin, Physical Settlement 

Margin and other margin transferred in relation to CDS Contracts pursuant to Part 5 including 

any margin provided in relation to CDS Contracts pursuant to Rule 502(g), in each case as 

calculated or permitted to be called in accordance with the risk policies of the Clearing House, 

but excluding in any case Mark-to-Market Margin and any Customer-CM Collateral that is not 

transferred to the Clearing House and includes, where the context so requires, any proceeds of 

realisation of the same.

The term "Initial Payment" means, in relation to a CDS Contract, the payment, if any, specified 

as the "Initial Payment Amount" under the Contract Terms for such CDS Contract and, in 

relation to a Bilateral CDS Transaction or CDS Trade Particulars, the payment, usually described 

therein as the "Initial Payment Amount" or "Additional Amount", payable by one party thereto to 

the other usually not later than the third business day after the trade date of such Bilateral CDS 

Transaction or CDS Trade Particulars.

The term "Insolvency" means, in relation to any Person: a bankruptcy or winding-up petition 

being presented; a bankruptcy order being made; a voluntary arrangement being approved; an 

Insolvency Practitioner being appointed or petition or order being made for such an appointment; 

a composition or scheme of arrangement being approved by a court or other Governmental 

Authority; an assignment, compromise or composition being made or approved for the benefit of 

any creditors or significant creditor; an order being made or resolution being passed for winding 

up; dissolution; the striking off of that Person's name from a register of companies or other 

corporate bodies; a distress process being levied or enforced or served upon or against property 

of that Person; a Governmental Authority making an order pursuant to which any of that Person's 

securities, property, rights or liabilities are transferred; a Governmental Authority exercising one 

or more of its stabilisation powers under the Banking Act 2009 in respect of that Person; a trust 

deed granted by it becoming a protected trust deed (where the terms 'trust deed' and 'protected 

trust deed' are construed in accordance with section 73(1) of the Bankruptcy (Scotland) Act 

1985) and, for CDS Clearing Members and Sponsored Principals in respect of CDS Contracts 

only, also any event not otherwise falling within this definition but which constitutes a 

Bankruptcy in respect of such CDS Clearing Member or Sponsored Principal; or any event 

analogous to any of the foregoing in any jurisdiction (always excluding any frivolous or 

vexatious petition or solvent reorganisation, change of Control or merger notified to the Clearing 

House in accordance with Rule 204(a)(i)).
NYDOCS01/1643340.2 30

The term "Insolvency Practitioner" means a receiver, administrator, bank administrator, 

manager or administrative receiver, liquidator, conservator, examiner, trustee in bankruptcy, 

relevant office-holder (under the Companies Act 1989) or any other Person appointed or with 

powers in relation to an Insolvency in any jurisdiction.

The term "Intellectual Property" means copyright, trade marks, design rights, patents, domain 

names, database rights and know-how, in each case whether registered or unregistered and 

including applications to register and rights to apply for registration, and all similar or equivalent 

rights which may subsist anywhere in the world.

The term "Investment" means any 'specified investment' as defined in the Financial Services and 

Markets Act 2000 (Regulated Activities) Order 2001 or any loan, bond, obligation or debenture 

referenced in a CDS Contract.

The term "Investment Losses" means losses, liabilities, damages, costs, claims, shortfalls or 

expenses incurred or suffered by the Clearing House, to the extent that the same are not 

subjected to any power of assessment under Rules 909 to 911 or any mechanism under Rules 914 

to 916, arising in connection with the default of the issuer of any instrument and/or the 

counterparty to any repurchase or reverse repurchase contract or similar transaction in respect of 

any investment(s) or re-investment(s) by the Clearing House of assets representing 

Original/Initial Margin, Guaranty Fund Contributions or Permitted Cover in respect thereof 

(including any such assets transferred by a Defaulter) or the proceeds of any of the foregoing, 

other than any such losses, liabilities, damages, costs, claims, shortfalls or expenses resulting 

directly from a failure by the Clearing House to comply with its own investment policies. For 

the avoidance of doubt, “Investment Losses” shall not include losses, liabilities, damages, costs, 

claims, shortfalls or expenses incurred or suffered by the Clearing House as a result of a 

Custodian default.

The term "Invoice Back" means the process by which an offsetting Contract of the same Set as 

an existing Contract is created by the Clearing House pursuant to Rule 104(a)(i) or Rule 104(b)

and Rule 401(a)(vi), with the role of Buying Counterparty or Selling Counterparty reversed and, 

at the Clearing House's discretion, a different price or premium and other terms as are 

determined by the Clearing House pursuant to Rule 104 or an existing Contract is terminated by 

the Clearing House pursuant to Rule 104(a)(i) or Rule 104(b) at a termination price and other 

terms as are determined by the Clearing House pursuant to Rule 104; and the terms "Invoiced 

Back", "Invoicing Back" and other similar expressions shall be construed accordingly.

The term "LCIA" means the London Court of International Arbitration or any successor thereto.

The term "LCIA Rules" means the arbitration rules of the LCIA.

The term "LIFFE" means LIFFE Administration and Management (a company registered in 

England and Wales with registration number 01591809) and the recognised investment exchange 

(as defined in the FSMA) known as and operated by LIFFE Administration and Management.

The term "LIFFE Block Contract" means a Contract resulting from a LIFFE Block 

Transaction.
NYDOCS01/1643340.2 31

The term "LIFFE Block Trade Facility" means the block trade facility operated by LIFFE in 

accordance with the LIFFE Rules.

The term "LIFFE Block Transaction" means an EFS, EFP, LIFFE Block Trade Facility 

Transaction or BClear transaction reported through LIFFE in accordance with the LIFFE Rules.

The term "LIFFE Clearing Member" means a Clearing Member that is authorised by the 

Clearing House to become party to LIFFE Contracts and that is a clearing member of LIFFE.

The term "LIFFE Contract" means a LIFFE Block Contract or a LIFFE Matched Contract.

The term "LIFFE Matched Contract" means a Contract resulting from a LIFFE Matched 

Transaction.

The term "LIFFE Matched Transaction" means a Transaction that occurs or occurred on the 

LIFFE exchange in accordance with the LIFFE Rules.

The term "LIFFE Rules" means the rules of LIFFE, together with any procedures, as interpreted 

in accordance with guidance, notices and circulars, of LIFFE and, except when a particular rule 

is cross-referenced herein, has the same meaning as that given to the term "Rules" in the rules of 

LIFFE, as amended from time to time.

The term "Long", in respect of an Option, refers to the positions of Persons entitled to exercise

Options.

The term "Loss Assets" means assets of the Clearing House of a value specified pursuant to Rule 

919(p) which are intended to be applied towards Non-Default Losses or Investment Losses

pursuant to Rule 919.

The term "Margin" means Permitted Cover required to be provided or actually provided (by way 

of title transfer pursuant to a Clearing Membership Agreement or Sponsored Principal Clearing 

Agreement or by way of pledge pursuant to a Pledged Collateral Addendum) to the Clearing 

House (or, in the case of Variation Margin, Mark-to-Market Margin and FX Mark-to-Market 

Margin, provided to or by the Clearing House, as the context may require or, in the case of 

Variation Margin provided pursuant to a transfer of cash) pursuant to a requirement for Original

Margin, Variation Margin, FX Original Margin, Initial Margin, Mark-to-Market Margin, FX 

Mark-to-Market Margin or any other requirement under the Rules or the Finance Procedures and 

includes, where the context so requires, any proceeds of realisation of the same.

The term "Margin Account" means a Proprietary Margin Account or Customer Margin 

Account.

The term "Margin-flow Co-mingled Account" means a kind of Customer Account of a NonFCM/BD Clearing Member at the Clearing House for the recording of positions and related 

Margin, in which solely assets and positions and related Margin relating to a particular Customer 

(or a particular group of Customers) are recorded, enabling the Clearing House to distinguish the 

assets and positions recorded in such account from assets, positions and Margin relating to other 

Customers of the Clearing Member and from assets, positions and Margin relating to Sponsored 
NYDOCS01/1643340.2 32

Principals, but in respect of which transfers of Permitted Cover to and from the Clearing House 

are co-mingled or netted with transfers of Permitted Cover relating to other Margin-flow 

Co-mingled Accounts of the same Clearing Member in accordance with Rules 302(a)(v)-(vi) and 

503(k). A Margin-flow Co-mingled Account may be an Account: (i) in which solely assets and 

positions and related Margin relating to a particular Customer are recorded, in which case it will 

be an "Individually Segregated Margin-flow Co-mingled Account" and result in 'individual 

client segregation' for purposes of EMIR; or (ii) in which assets and positions and related Margin 

relating to a group of Customers (such as, without limitation, Customers that are Affiliates of one 

another or Customers which are all funds managed by the same fund manager or fund managers 

that are Affiliates of one another) are recorded, in which case it will be an "Omnibus Marginflow Co-mingled Account" and result in 'omnibus client segregation' for purposes of EMIR.

The term "Mark-to-Market Margin" means cash required to be provided or actually provided 

by a Clearing Member or Sponsored Principal (by way of title transfer pursuant to a Clearing 

Membership Agreement or Sponsored Principal Clearing Agreement or, or for FCM/BD 

Clearing Members, by way of pledge pursuant to a Pledged Collateral Addendum) to the 

Clearing House or by the Clearing House to a Clearing Member related to the market value of a 

Clearing Member's or Sponsored Principal's Open Contract Positions relating to CDS Contracts, 

as determined pursuant to Rule 503(f)(ii) and the Finance Procedures and includes, where the 

context so requires, any proceeds of realisation of the same.

The term "Mark-to-Market Price" has the meaning given in Rule 503(g).

The term "Market" means ICE Endex, ICE Endex UK, ICE Endex Continental, ICE Futures 

Europe, ICE Futures US, LIFFE and any other market for which the Clearing House provides or 

may provide Clearing services (and for the purposes of Clearing Membership Agreements for 

CDS Clearing Members and FX Clearing Members only, also includes the over-the-counter 

markets for CDS and FX).

The term "Market Rules" means the rules, regulations, procedures of, and agreements governing, 

a Market, including the ICE Endex Rules, ICE Endex UK Rules, ICE Endex Continental Rules, 

ICE Futures Europe Rules, ICE Futures US Rules, LIFFE Rules and the procedures of each of 

ICE Endex, ICE Endex UK, ICE Endex Continental, ICE Futures Europe, ICE Futures US and 

LIFFE.

The term "Membership Category" means any of the three membership categories, as applicable 

to the clearing permissions of a Clearing Member or Sponsored Principal, that are linked to a 

specific Guaranty Fund, i.e. F&O, CDS and FX.

The term "MiFID" means Directive 2004/39/EC of the European Parliament and of the Council 

of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC 

and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and 

repealing Council Directive 93/22/EEC, and includes all delegated or implementing regulations, 

decisions and technical standards thereunder as interpreted in accordance with any applicable 

guidance publicly issued by ESMA or any Regulatory Authority.
NYDOCS01/1643340.2 33

The term "MiFID II" means Directive 2014/65/EU of the European Parliament and of the 

Council of 15 May 2014 on markets in financial instruments and amending Directive 

2002/92/EC and Directive 2011/61/EU and Regulation (EU) No 600/2014 of the European 

Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending 

Regulation (EU) No 648/2012, and includes all delegated or implementing regulations, decisions 

and technical standards thereunder as interpreted in accordance with any applicable guidance 

publicly issued by ESMA or any Regulatory Authority.

The term "Monetary Default" means a Clearing Member or Sponsored Principal failing to 

transfer to, deposit with, or pay to, the Clearing House in full any Margin, Guaranty Fund 

Contribution, amount due under or in connection with any Contract or other amount due to the 

Clearing House or required by or pursuant to Market Rules, unless such failure constitutes a 

Force Majeure Event affecting the relevant Clearing Member or Sponsored Principal.

The term "Money Laundering Directive" means Directive 2005/60/EC and relevant 

implementing measures in each member state of the European Economic Area which has 

implemented Directive 2005/60/EC, including the Money Laundering Regulations 2007.

The term "National Grid" has the meaning given in the Delivery Procedures.

The term "Network Code" has the meaning given in the Delivery Procedures.

The term "Nominated Bank Account" means a Nominated Customer Bank Account or a 

Nominated Proprietary Bank Account.

The term "Nominated Customer Bank Account" means an account (if any) of a Clearing 

Member at an Approved Financial Institution, nominated by the Clearing Member in accordance 

with the Finance Procedures, used by the Clearing Member for transfers to or from the Clearing 

House of amounts due in respect of a particular Customer Account (or all its Margin-flow Comingled Accounts) which may be designated by a Clearing Member for payments in respect of a

single Customer Account or Customer Accounts of a particular Customer Account Category (or 

all its Margin-flow Co-mingled Accounts). For the avoidance of doubt, a Nominated Customer 

Bank Account is not and does not form part of a Customer Account. The term includes a similar 

account nominated by a Sponsored Principal in accordance with Rule 1901(b) and 1902, which 

must be linked to the relevant Individually Segregated Sponsored Account. 

The term "Nominated Proprietary Bank Account" means an account of a Clearing Member at 

an Approved Financial Institution, nominated by the Clearing Member in accordance with the 

Finance Procedures, used by the Clearing Member for transfers to or from the Clearing House of 

amounts due in respect of a Proprietary Account, which may be designated for payments in 

respect of F&O Contracts, FX Contracts, CDS Contracts or any or all of them. For the 

avoidance of doubt, a Nominated Proprietary Bank Account is not and does not form part of a 

Proprietary Account. 

The term "Non-DCM/Swap" means, in relation to an FCM/BD Clearing Member, a transaction 

or Contract that is not a U.S. Future, SBS or a Swap (as described in paragraphs (i) or (ii) of the 

definition thereof) and that is a "foreign future" or "foreign option" made on or subject to the 

rules of a “foreign board of trade”, each as defined in the CEA or regulations thereunder, which 
NYDOCS01/1643340.2 34

will include without limitation any such transaction or Contract that is an ICE Endex 

Transaction, an ICE Endex Contract, an ICE Futures Europe Transaction, an ICE Futures Europe 

Contract, a Financials & Softs Transaction and a Financials & Softs Contract.

The term "Non-DCM/Swap Customer", in respect of an FCM/BD Clearing Member, means a 

Customer with respect to a transaction or Contract that is a Non-DCM/Swap and which 

Customer is required by Applicable Laws to be treated as a Non-DCM/Swap Customer. A 

Person may be a Non-DCM/Swap Customer in relation to certain transactions or Contracts and 

another category of FCM/BD Customer in relation to other transactions or Contracts. 

The term "Non-DCM/Swap Customer Account", in respect of an FCM/BD Clearing Member, 

means a kind of Customer Account with the Clearing House that is not a DCM Customer 

Account, Swap Customer Account or SBS Customer Account in relation to which the FCM/BD 

Clearing Member: (i) acts in its capacity as a clearing member in relation to Non-DCM/Swaps 

(other than Permitted Co-mingled Contracts) connected with the provision of services to 

Non-DCM/Swap Customers; and (ii) enters into market contracts in the capacity of a clearing 

member in relation only to transactions connected with the provision of services to 

Non-DCM/Swap Customers.

The term "Non-Default Losses" means losses, liabilities, damages, costs, claims, shortfalls or 

expenses incurred or suffered by the Clearing House that are not Investment Losses, arising in 

connection with any event other than an Event of Default and which threaten the Clearing 

House’s solvency.

The term "Non-FCM/BD CDS Clearing Member" means any CDS Clearing Member that is 

not an FCM/BD Clearing Member.

The term "Non-FCM/BD Clearing Member" means any Clearing Member that is not an 

FCM/BD Clearing Member.

The term "Non-Transfer Positions" in respect of a Customer Account of a Clearing Member, 

means the Customer Account Positions in respect of which either: (i) the relevant Customer has 

not made a Default Portability Preference; or (ii) a Default Portability Preference has been made 

by the relevant Customer but has not been communicated to the Clearing House by such 

Clearing Member or, where permitted, by such Customer, in each case in accordance with the 

Rules and the Procedures.

The term "Omnibus Margin-flow Co-mingled Account" has the meaning set out in the 

definition of Margin-flow Co-mingled Account.

The term "Open Contract Position", in respect of each Set of Contracts for a Clearing Member 

or Sponsored Principal from time to time, comprises the Contract Position and, for F&O 

Contracts only, the Net Amount Position, where:

(a) Contract Position means:

(i) in relation to a Proprietary Position Account for F&O Contracts that are Futures: 

where a Clearing Member or Sponsored Principal is party to one or more Futures 
NYDOCS01/1643340.2 35

Contracts of a particular Set, the number that equals the netted sum of buy and 

sell obligations pursuant to those Contracts recorded in that account;

(ii) in relation to a Proprietary Position Account for F&O Contracts that are Options: 

where a Clearing Member or Sponsored Principal is party to one or more Options 

Contracts of a particular Set, the number that equals the netted sum of Long and 

Short obligations pursuant to those Contracts recorded in that account;

(iii) in relation to a Customer Position Account for F&O Contracts that are Futures: 

where a Clearing Member or Sponsored Principal is party to one or more Futures 

Contracts of a particular Set, the gross number of buy positions and the gross 

number of sell positions pursuant to those Contracts recorded in that account 

(subject to any netting pursuant to Rule 406);

(iv) in relation to a Customer Position Account for F&O Contracts that are Options: 

where a Clearing Member or Sponsored Principal is party to one or more Options 

Contracts of a particular Set, the gross number of Long positions and the gross 

number of Short positions pursuant to those Contracts recorded in that account 

(subject to any netting pursuant to Rule 406);

(v) in relation to a Proprietary Position Account for CDS Contracts: where a Clearing 

Member or Sponsored Principal is party to one or more CDS Contracts of a 

particular Set, the number that equals the aggregate of all Floating Rate Payer 

Calculation Amounts for (and as defined pursuant to) each CDS Contract of that 

Set recorded in that account where it acts as Selling Counterparty minus the 

aggregate of all Floating Rate Payer Calculation Amounts for each CDS Contract 

of that Set recorded in that account where it acts as Buying Counterparty, 

provided that Matched CDS Contracts will be held and calculated on a gross 

basis;

(vi) in relation to a Customer Position Account for CDS Contracts: where a Clearing 

Member or Sponsored Principal is party to one or more CDS Contracts of a 

particular Set, the gross number of all Floating Rate Payer Calculation Amounts 

for (and as defined pursuant to) each CDS Contract of that Set recorded in that 

account where it acts as Selling Counterparty; and the gross number of all 

Floating Rate Payer Calculation Amounts for each CDS Contract of that Set 

recorded in that account where it acts as Buying Counterparty, subject in either 

case to any netting pursuant to Rule 406, provided that Matched CDS Contracts 

will be held and calculated on a gross basis;

(vii) in relation to a Proprietary Account for FX Contracts: where a Clearing Member 

or Sponsored Principal is party to one or more FX Contracts of a particular Set, 

both the gross Financially-Settled FX Contracts to which the Clearing Member or 

Sponsored Principal is party as Reference Currency Buyer and the gross 

Financially-Settled FX Contracts to which the Clearing Member or Sponsored 

Principal is party as Reference Currency Seller for a particular Set, without 

prejudice to any requirement for Margin to be called based on the position derived 
NYDOCS01/1643340.2 36

from the Financially-Settled FX Contracts to which the Clearing Member or 

Sponsored Principal is party as Reference Currency Buyer being netted against 

the Financially-Settled FX Contracts to which the Clearing Member or Sponsored 

Principal is party as Reference Currency Seller (or vice versa) for a particular Set; 

and

(viii) in relation to a Customer Account for FX Contracts: where a Clearing Member or 

Sponsored Principal is party to one or more FX Contracts of a particular Set, both 

the gross Financially-Settled FX Contracts where the Clearing Member or 

Sponsored Principal is identified as Reference Currency Buyer and the gross 

Financially-Settled FX Contracts where the Clearing Member or Sponsored 

Principal is identified as Reference Currency Seller for a particular Set, without 

prejudice to any requirement for Margin to be called based on the position derived 

from the Financially-Settled FX Contracts where the Clearing Member or 

Sponsored Principal is identified as Reference Currency Buyer being netted 

against the Financially-Settled FX Contracts where the Clearing Member or 

Sponsored Principal is identified as Reference Currency Seller (or vice versa) for 

a particular Set to the extent permitted under these Rules and the Procedures for 

the Customer Account in question,

in any case as calculated by the Clearing House from time to time based on data received 

by the Clearing House in respect of Contracts entered into by the Clearing Member or 

Sponsored Principal up to the close of business on the immediately preceding Business 

Day (or such other period determined by the Clearing House at its discretion); and

(b) Net Amount Position for F&O Contracts, means the price at which the Contract Position 

for any Set is recorded on the Clearing House's books based on Exchange Delivery 

Settlement Prices for each Contract.

The term "Opening Days" means the days upon which the Clearing House is operational, which 

may vary for different Contracts or between deliveries and other business, as notified by the 

Clearing House from time to time.

The term "Opening Hours" means the hours during which the Clearing House is operational, 

which may vary for different Contracts or between deliveries and other business, as notified by 

the Clearing House from time to time.

The term "Option" means an F&O Contract subject to Clearing by the Clearing House that is an 

'option' under article 83 of the Financial Services and Markets Act 2000 (Regulated Activities) 

Order 2001 or any economically similar Contract that is not an investment.

The term "Original Margin" means the Permitted Cover required to be provided or actually 

provided (by way of title transfer pursuant to a Clearing Membership Agreement or Sponsored 

Principal Clearing Agreement or by way of pledge pursuant to a Pledged Collateral Addendum) 

to the Clearing House as collateral for the obligations of a Clearing Member or Sponsored 

Principal in respect of F&O Contracts pursuant to Part 5 including any margin provided in 

relation to F&O Contracts pursuant to Rule 502(g), in each case as calculated or permitted to be 
NYDOCS01/1643340.2 37

called in accordance with the risk policies of the Clearing House, but excluding in any case 

Variation Margin, and including where the context so requires, any proceeds of realisation of the 

same.

The term "Permitted Co-mingled Contract" means, with respect to an FCM/BD Clearing 

Member, a Contract that is a Non-DCM/Swap which has been designated by the Clearing House 

by Circular and approved by the appropriate Regulatory Authority or Regulatory Authorities to 

be recorded in a Swap Customer Account or a DCM Customer Account, as applicable, rather 

than a Non-DCM/Swap Customer Account.

The term "Permitted Cover" means cash in Eligible Currencies and other assets determined by 

the Clearing House as permissible for Margin or Guaranty Fund Contributions and includes, 

where the context so requires, any such cash or assets transferred to the Clearing House and any 

proceeds of realisation of the same. A particular kind of currency or asset may be determined by 

the Clearing House to be Permitted Cover only in respect of Proprietary Accounts, particular 

kinds of Customer Accounts, Energy Contracts, Financials & Softs Contracts, F&O Contracts, 

FX Contracts, CDS Contracts or certain Sets of Contracts.

The term "Person" means any individual, partnership, firm, body corporate, association, trust, 

unincorporated organisation or other entity, including:

(a) an investment fund (Sondervermögen) within the meaning of the German Investment Act 

(Investmentgesetz – "InvG") or the German Investment Capital Act 

(Kapitalanlagegesetzbuch – "KAGB"), including a sub-fund (Teilfonds) within the 

meaning of section 34 para. (2) InvG or a sub-fund (Teilsondervermögen) within the 

meaning of section 96 para (2) KAGB; or 

(b) a fund segment of such investment fund; 

(in each case under (a) and (b)) managed by a German investment company 

(Kapitalanlagegesellschaft) ("KAG") within the meaning of the InvG or by a German 

management company (Kapitalverwaltungsgesellschaft) ("KVG") within the meaning of the 

KAGB.

The term "Physical Settlement Margin" means the Permitted Cover required to be provided or 

actually provided (by way of title transfer pursuant to a Clearing Membership Agreement or 

Sponsored Principal Clearing Agreement or by way of pledge pursuant to a Pledged Collateral 

Addendum) to the Clearing House as collateral for the obligations of a Clearing Member or 

Sponsored Principal related to the risk and size of such Clearing Member's or Sponsored 

Principal's obligations relating to physical settlement of a CDS Contract, as determined pursuant 

to Rule 503(f)(i) and the Finance Procedures and as calculated or permitted to be called in 

accordance with the risk policies of the Clearing House from time to time, including the proceeds 

of realisation of the same.

The term "Pledged Collateral" means Margin (or Permitted Cover in respect thereof) provided 

by a Clearing Member or Sponsored Principal in respect of a Pledged Collateral Account by way 

of pledge pursuant to a Pledged Collateral Addendum and any proceeds of realisation of the 

same.
NYDOCS01/1643340.2 38

The term "Pledged Collateral Account" means a Proprietary Account or Customer Account (or 

any sub-account of such an account) in respect of which the Clearing House has designated 

(including by way of Rule 1603(c) or Circular) that some or all Margin (or Permitted Cover in 

respect thereof) is to be provided by a Clearing Member or Sponsored Principal by way of 

security interest in accordance with a Pledged Collateral Addendum rather than by way of title 

transfer pursuant to the Clearing Membership Agreement or Sponsored Principal Clearing 

Agreement. 

The term "Pledged Collateral Addendum" means a pledged collateral addendum to a Clearing 

Membership Agreement or Sponsored Principal Clearing Agreement entered into between a 

Clearing Member or Sponsored Principal and the Clearing House and shall, for an FCM/BD 

Clearing Member, Non FCM/BD Clearing Member, Sponsored Principal and/or particular 

Account, refer to the relevant form of pledged collateral addendum for such Clearing Member, 

Sponsored Principal or Account as specified by the Clearing House from time to time.

The term "Portfolio Risk Margin" means the Permitted Cover required to be provided or 

actually provided (by way of title transfer pursuant to a Clearing Membership Agreement or 

Sponsored Principal Clearing Agreement or by way of pledge pursuant to a Pledged Collateral 

Addendum) to the Clearing House as collateral for the obligations of a Clearing Member or 

Sponsored Principal related to the size and risk of a Clearing Member's or Sponsored Principal's 

Open Contract Positions in relation to CDS Contracts, as determined pursuant to Rule 503(f)(i)

and as calculated or permitted to be called in accordance with the risk policies of the Clearing 

House from time to time, including the proceeds of realisation of the same.

The term "Position Account" means a Proprietary Position Account or Customer Position 

Account.

The term "Position Holder" has the meaning set out in Rule 407.

The term "Position Limit", of any Clearing Member or Sponsored Principal or in respect of any 

Account, means the limit(s) on Open Contract Positions established by the Clearing House 

pursuant to Rule 601.

The term "Potential Event of Default" means any event which, with the giving of notice or the 

lapse of time or both, would constitute an Event of Default.

The term "PRA" means the UK's Prudential Regulatory Authority or any successor entity.

The term "PRA Rules" means all rules, requirements, directions, guidance, examples, waivers 

and other similar materials published or otherwise made by the PRA from time to time.

The term "President" means the president of the Clearing House from time to time.

The term "Procedures" means the procedures of the Clearing House from time to time, as 

amended pursuant to Rule 109(e) and any reference to the "Finance Procedures", "Delivery 

Procedures", "Clearing Procedures", "Complaint Resolution Procedures", "CDS 

Procedures", "General Contract Terms Procedures", "Membership Procedures", "Business 
NYDOCS01/1643340.2 39

Continuity Procedures", "FX Procedures" or any other section of the Procedures shall be 

interpreted accordingly.

The term "Proprietary Account" refers to a proprietary account at the Clearing House which 

may be designated for CDS Contracts, Energy Contracts or FX Contracts and all related Margin 

and comprises a Proprietary Position Account and Proprietary Margin Account.

The term "Proprietary Account Contract" means a Contract recorded in a Proprietary Position 

Account (or any sub-account thereof).

The term "Proprietary Account Position" means an Open Contract Position as recorded in a 

Proprietary Position Account (or any sub-account thereof).

The "Proprietary Margin Account" forms part of a Proprietary Account and the term means an 

account with the Clearing House which is not a Customer Margin Account, opened in the name 

of a Clearing Member for the recording of debits and credits of Margin in respect of Proprietary 

Account Contracts recorded in the related Proprietary Position Account, which may be divided 

for administrative convenience only into sub-accounts including for F&O Contracts only, for 

CDS Contracts only or for FX Contracts only. 

The "Proprietary Position Account" forms part of a Proprietary Account and the term means an 

account with the Clearing House which is not a Customer Position Account, opened in the name 

of a Clearing Member in which Proprietary Account Contracts entered into by the Clearing 

Member (whether directly or indirectly) and/or related Open Contract Positions are recorded, 

which may be divided for administrative convenience only into sub-accounts including for F&O 

Contracts only, for CDS Contracts only or for FX Contracts only. 

The term "Put", in respect of an F&O Contract, means an Option pursuant to which the Person 

with a Long position has the right to sell a Future or Futures to the Person with a Short position 

at the Strike Price and at a specified time.

The term "Reference Currency Buyer" means, (i) in respect of an FX transaction referred to in 

FX Trade Particulars, the person identified as the Reference Currency Buyer in the Clearing 

House's records of such FX Trade Particulars; and (ii) in respect of an FX Contract, the Clearing 

House if the Clearing Member or Sponsored Principal who is party to that FX Contract (or its 

Customer) was identified as the Reference Currency Buyer in the corresponding FX Trade 

Particulars, or the Clearing Member or Sponsored Principal who (or whose Customer) was 

identified as the Reference Currency Buyer in the corresponding FX Trade Particulars. 

The term "Reference Currency Seller" means, (i) in respect of an FX transaction referred to in 

FX Trade Particulars, the person identified as the Reference Currency Seller in the Clearing 

House's records of such FX Trade Particulars; and (ii) in respect of an FX Contract, the Clearing 

House if the Clearing Member or Sponsored Principal who is party to that FX Contract (or its 

Customer) was identified as the Reference Currency Seller in the corresponding FX Trade 

Particulars, or the Clearing Member or Sponsored Principal who (or whose Customer) was 

identified as the Reference Currency Seller in the corresponding FX Trade Particulars.
NYDOCS01/1643340.2 40

The term "Reference Price" in respect of F&O Contracts and a Set of Options or an Option, 

means the reference price determined by the Clearing House on the basis of data provided by the 

relevant Market or otherwise pursuant to Rule 802.

The term "Regulatory Authority" means any Governmental Authority which exercises a 

regulatory or supervisory function under the laws of any jurisdiction in relation to financial 

services, the financial markets, Exchanges or Clearing Organisations (including, without 

limitation, the FCA, the PRA, any other Person given powers under the FSMA, the Bank of 

England, HM Treasury, the college (as defined in EMIR) or any member of such college, the 

European System of Central Banks, the CFTC and the SEC).

The term "Repository" means a trade repository (as defined in EMIR) used for the reporting of 

Contracts (which may also be used for the recording of Transactions submitted for Clearing).

The term "Representative" means any Person that carries out or is responsible for (or purports 

to carry out or be responsible for) any of the functions of another Person, including without 

limitation any director, partner, officer, executive, employee, Affiliate, Customer, contractor or 

agent of that other Person (provided, in the case of a Clearing Member, that a Customer will only 

be treated as a Representative of a Clearing Member in respect of any act, omission, conduct or 

behaviour in its capacity as a Customer to the extent that the Clearing Member is bound by the 

conduct of such Customer pursuant to Rule 102(j) or Rule 1516(b)). In relation to an 

Individually Segregated Sponsored Account, the Sponsor is a Representative of the Sponsored 

Principal. 

The term "Rule Change" means any amendment, alteration, restatement, addition, deletion or 

other change to the Rules (excluding, for purposes of this definition, the Procedures, any 

Guidance or any Circular) made in accordance with Rule 109.

The term "Rules" means these rules, together with the Procedures, as interpreted in accordance 

with Guidance and Circulars.

The term "SBS" means a security-based swap (as defined in the Exchange Act), but does not 

include U.S. Futures, Non-DCM/Swaps and Swaps.

The term "SBS Customer", in respect of an FCM/BD Clearing Member, means any FCM/BD 

Customer with respect to any Contract arising as a result of CDS Trade Particulars relating to an 

SBS and registered in an SBS Customer Account of that FCM/BD Clearing Member. A Person 

may be a SBS Customer in relation to certain Contracts and another category of FCM/BD 

Customer in relation to other Contracts.

The term "SBS Customer Account", in respect of an FCM/BD Clearing Member, means a kind 

of Customer Account with the Clearing House (in its capacity as a registered clearing agency 

registered with the SEC under the Exchange Act), opened in the name of the FCM/BD Clearing 

Member relating to Contracts to which the FCM/BD Clearing Member is a party as a result of it 

acting for one or more SBS Customers (whose transactions the Clearing Member requests be 

recorded in an SBS Customer Account where that is required in accordance with Section 3E(b) 

of the Exchange Act and SEC Rule 15c3-3, insofar as applicable and any other applicable rules 

of the SEC) and in which the Clearing House records such Contracts and to which monies in 
NYDOCS01/1643340.2 41

respect of such Contracts are debited and credited, which may be divided for administrative 

convenience only into sub-accounts relating to different SBS Customers or groups of SBS 

Customers.

The term "SEC" means the Securities and Exchange Commission of the United States of 

America, or any successor thereto.

The term "Segregated Customer" means a Customer of a Non-FCM/BD Clearing Member in 

circumstances where, whether as a result of any requirement of Applicable Law, agreement or 

arrangement, a customer asset segregation, client money, client asset, trust or other client asset 

protection regime (being more than the mere requirement arising under EMIR to distinguish 

from the Proprietary Account assets and positions of the Clearing Member, such as a 

requirement on the Clearing Member to segregate client money arising under CASS 7 of the 

FCA rules) applies as between the Customer and the Clearing Member to assets at the time 

immediately prior to transfer to the Clearing House as Margin for a relevant Customer Margin 

Account.

The term "Segregated Customer Omnibus Account For F&O" means a kind of Customer 

Account with the Clearing House opened in the name of a Non-FCM/BD Clearing Member for 

the recording of F&O Contracts to which that Non-FCM/BD Clearing Member is a party as a 

result of it acting for one or more Segregated Customers, and related Margin (and in which no 

assets or positions relating to the Non-FCM/BD Clearing Member's own account are recorded, 

enabling the Non-FCM/BD Clearing Member to distinguish the assets and positions in F&O 

Contracts held for the account of its Segregated Customers).

The term "Segregated Customer Omnibus Account For CDS" means a kind of Customer 

Account with the Clearing House opened in the name of a Non-FCM/BD CDS Clearing Member 

for the recording of CDS Contracts to which that Non-FCM/BD CDS Clearing Member is a 

party as a result of it acting for one or more Segregated Customers, and related Margin (and in 

which no assets or positions relating to the Non-FCM/BD CDS Clearing Member's own account 

are recorded, enabling the Non-FCM/BD CDS Clearing Member to distinguish the assets and 

positions in CDS Contracts held for the account of its Segregated Customers).

The term "Segregated Customer Omnibus Account For FX" means a kind of Customer 

Account with the Clearing House opened in the name of a Non-FCM/BD Clearing Member for 

the recording of FX Contracts to which that Non-FCM/BD Clearing Member is a party as a 

result of it acting for one or more Segregated Customers, and related Margin (and in which no 

assets or positions relating to the Non-FCM/BD Clearing Member's own account are recorded, 

enabling the Non-FCM/BD Clearing Member to distinguish the assets and positions in FX 

Contracts held for the account of its Segregated Customers).

The term "Segregated TTFCA Customer" means a Customer of a Non-FCM/BD Clearing 

Member which provides collateral to the Non-FCM/BD Clearing Member on a title transfer 

financial collateral arrangement basis or otherwise in circumstances in which no customer asset 

segregation, client money, client asset, trust or other client asset protection regime applies (other 

than the requirement arising under EMIR to distinguish from the Proprietary Account assets and 

positions of the Clearing Member) as between the Customer and the Non-FCM/BD Clearing 
NYDOCS01/1643340.2 42

Member to assets at the time immediately prior to transfer to the Clearing House as Margin for a 

relevant Customer Margin Account.

The term "Segregated TTFCA Customer Omnibus Account For CDS" means a kind of 

Customer Account with the Clearing House opened in the name of a Non-FCM/BD CDS 

Clearing Member for the recording of CDS Contracts to which that Non-FCM/BD CDS Clearing 

Member is a party as a result of it acting for one or more Segregated TTFCA Customers, and 

related Margin (and in which no assets or positions relating to the Non-FCM/BD CDS Clearing 

Member's own account are recorded, enabling the Non-FCM/BD CDS Clearing Member to 

distinguish the assets and positions in CDS Contracts held for the account of its Segregated 

TTFCA Customers).

The term "Segregated TTFCA Customer Omnibus Account For F&O" means a kind of 

Customer Account with the Clearing House opened in the name of a Non-FCM/BD Clearing 

Member for the recording of F&O Contracts to which that Non-FCM/BD Clearing Member is a 

party as a result of it acting for one or more Segregated TTFCA Customers, and related Margin 

(and in which no assets or positions relating to the Non-FCM/BD Clearing Member's own 

account are recorded, enabling the Non-FCM/BD Clearing Member to distinguish the assets and 

positions in F&O Contracts held for the account of its Segregated TTFCA Customers). 

The term "Segregated TTFCA Customer Omnibus Account For FX" means a kind of 

Customer Account with the Clearing House opened in the name of a Non-FCM/BD Clearing 

Member for the recording of FX Contracts to which that Non-FCM/BD Clearing Member is a 

party as a result of it acting for one or more Segregated TTFCA Customers, and related Margin 

(and in which no assets or positions relating to the Non-FCM/BD Clearing Member's own 

account are recorded, enabling the Non-FCM/BD Clearing Member to distinguish the assets and 

positions in FX Contracts held for the account of its Segregated TTFCA Customers).

The term "SEK" means Swedish krona, or any other lawful currency that is a successor to it.

The term "Seller" means, in relation to deliveries under Part 7 or a Contract of Sale, the Clearing 

Member (or Sponsored Principal) or the Clearing House, whichever is obliged to make delivery 

of a Deliverable (whether itself or through another Person).

The term "Selling Counterparty" means, in respect of a Contract: (a) except in circumstances 

in which sub-paragraph (c) below applies, the Clearing Member that was, before formation of a 

Contract for Clearing, party to the corresponding Transaction (or specified in the CDS Trade 

Particulars or FX Trade Particulars) as seller (or, in relation to CDS Contracts, as protection 

seller or, in relation to Financially-Settled FX Contracts, Reference Currency Seller); or (b) 

except in circumstances in which sub-paragraph (c) below applies, where a Non-FCM/BD 

Clearing Member's Customer is party to the corresponding Transaction (or specified in the CDS 

Trade Particulars or FX Trade Particulars) as seller, protection seller or Reference Currency 

Seller (as applicable), the Clearing Member that provides clearing services to that Customer in 

relation to the Transaction in question (or, for F&O Contracts, if more than one such Clearing 

Member exists, the Clearing Member that was selected by the Customer for the initial booking of 

that Transaction); (c) where an FCM/BD Customer is a party to the corresponding Transaction 

(or specified in the CDS Trade Particulars or FX Trade Particulars) as seller, protection seller or 
NYDOCS01/1643340.2 43

Reference Currency Seller (as applicable), the FCM/BD Clearing Member clearing on behalf of 

such FCM/BD Customer; (d) in relation to F&O Contracts only and overriding any designation 

that would occur pursuant to (a), (b) or (c) above, where one Clearing Member that would be a 

Selling Counterparty in accordance with (a), (b) or (c) above has allocated an F&O Transaction 

to another Clearing Member for clearing in accordance with Market Rules, the Clearing Member 

to whom such F&O Transaction is allocated; or (e) notwithstanding (a) to (d), in respect of an 

Individually Segregated Sponsored Account, the Sponsored Principal shall act as principal to all 

Contracts as the Selling Counterparty on a joint and several basis with the Sponsor, instead of the 

relevant Clearing Member referred to in (a) to (d) above, subject to and as set out in Part 19.

The term "Set" means:

(a) for Futures Contracts: a set or class of Contracts that are identical as to their terms 

(including the Deliverable to which such Contract relates and contract date; but excluding 

any amount paid or to be paid for entry into the Contract and any amount paid or to be 

paid in respect of settlement or delivery of a Contract);

(b) for Options Contracts: a set of Contracts that are identical as to their terms (including the 

Deliverable to which such Contracts relate, contract date and strike price; but excluding 

any amount paid or to be paid for entry into or writing of a Contract and any amount paid 

or to be paid in respect of settlement);

(c) for CDS Contracts that are based on an index (including Triggered Restructuring CDS 

Contract Portions and Component Transactions forming part thereof or, pursuant to the 

Rules, resulting therefrom), a set of Contracts that are similar as to their terms (including, 

without limitation, identical as to their terms concerning the Applicable Credit 

Derivatives Definitions, the reference entities and obligations to which any payment or 

delivery obligation is linked, series number, fixed rate and scheduled termination date; 

but which may differ, without limitation, as to any Initial Payment, the 'Trade Date' and 

any provisions relating to tax or the provision of forms relating to tax);

(d) for CDS Contracts that are based on a single reference entity, a set of Contracts that are 

similar as to their terms (including, without limitation, identical as to their terms 

concerning the Applicable Credit Derivatives Definitions, the reference entity and 

obligations to which any payment or delivery obligation is linked, fixed rate, scheduled

termination date and, where terms are determined by reference to a "Physical Settlement 

Matrix", referring to the same version of such "Physical Settlement Matrix"; but which 

may differ, without limitation, as to any Initial Payment, the 'Trade Date' and any 

provisions relating to tax or the provision of forms relating to tax); and

(e) for Financially-Settled FX Contracts: a set of Contracts that are identical as to their terms 

and economic characteristics (including the currency pair to which such 

Financially-Settled FX Contracts relate and their FX Settlement Date; but excluding any 

amount paid or to be paid for entry into or writing of the Financially-Settled FX Contract, 

any amount paid or to be paid in respect of settlement under the Financially-Settled FX 

Contract and the position of the FX Clearing Member or Clearing House as Reference 

Currency Buyer or Reference Currency Seller).
NYDOCS01/1643340.2 44

The term "Settlement and Notices Terms" means the Settlement and Notices Terms as 

published by the Clearing House from time to time as an Exhibit to these Rules, but which do not 

form part of these Rules, which are applicable in respect of CDS Contracts, Customer-CM CDS 

Transactions and clearing agreements or arrangements between FCM/BD CDS Clearing 

Members and their Customers, as amended from time to time in accordance with the terms 

thereof.

The term "Settlement Finality Regulations" means the Financial Markets and Insolvency 

(Settlement Finality) Regulations 1999.

The term "Short", in respect of an Option, refers to the positions of Persons against whom Put 

Options and Call Options may be exercised.

The term "Soft Commodity EFRP" means 'Soft Commodity EFRP' as defined in the ICE 

Futures Europe Rules or 'AAs' as defined in the LIFFE Rules.

The term "Sponsor" means a Clearing Member that has permission from the Clearing House to 

act as such, acting in its capacity as sponsor of an Individually Segregated Sponsored Account.

The term "Sponsor Agreement" means an agreement between a Sponsor and the Clearing 

House under which, inter alia, the Sponsor agrees to act as a Sponsor, the Sponsor agrees to be 

bound by and subject to these Rules in its capacity as such and pursuant to which the Sponsor 

nominates Sponsored Principals for whom it will act as Sponsor.

The term "Sponsored Principal" means the principal in respect of an Individually Segregated 

Sponsored Account. A Sponsored Principal must also be a client (as defined in EMIR) that is a 

Customer of the Sponsor and may be either a Segregated Customer or an Segregated TTFCA 

Customer.

The term "Sponsored Principal Clearing Agreement" means an agreement between a 

Sponsored Principal and the Clearing House under which, inter alia, the Sponsored Principal 

agrees to act as a Sponsored Principal and the Clearing House agrees to provide Clearing in 

respect of Contracts of the Sponsored Principal and the Sponsored Principal agrees to be bound 

by and subject to these Rules. Without prejudice to the generality of Rule 102(b) or to the 

effectiveness of any other agreement between the Clearing House and a Sponsored Principal, for 

the avoidance of doubt, for Sponsored Principals that have executed a Pledged Collateral 

Addendum, the relevant Sponsored Principal Clearing Agreement will be interpreted as amended 

by that Pledged Collateral Addendum.

The term "Standard Terms" means CDS Standard Terms, F&O Standard Terms or FX Standard 

Terms.

The term "Strike Price" in respect of an Option, means the price of the relevant Deliverable at 

which the Option may be or is exercised.

The term "Summary Disciplinary Committee" means a summary disciplinary committee 

established pursuant to Rule 1004(c).
NYDOCS01/1643340.2 45

The term "Surplus Collateral" in respect of a Clearing Member, Sponsored Principal or 

particular Account or account for Guaranty Fund Contributions at any time, means any Permitted 

Cover transferred to the Clearing House that is not required to satisfy the current or most recently 

calculated applicable requirements in respect of Margin or Guaranty Fund Contributions at such 

time. For the avoidance of doubt, Swap Customer Excess Margin (as defined in Rule 1602) does 

not constitute Surplus Collateral, except as set out in Rule 1605(k)(viii).

The term "Swap" means (i) a "swap" as defined in the CEA and the Exchange Act, (ii) to the 

extent permitted to be held in an account with swaps (as defined in (i) above) under Applicable 

Law, a "security-based swap" as defined in the CEA and the Exchange Act, and (iii) Permitted 

Co-mingled Contracts recorded in a Swap Customer Account.

The term "Swap Customer", in respect of an FCM/BD Clearing Member, means any FCM/BD 

Customer with respect to any Contract arising as a result of the submission of CDS Trade 

Particulars or FX Trade Particulars that relates to a Swap. A Person may be a Swap Customer in 

relation to certain Contracts and another category of FCM/BD Customer in relation to other 

Contracts.

The term "Swap Customer Account", in respect of an FCM/BD Clearing Member, means a 

kind of Customer Account with the Clearing House (in its capacity as a registered U.S. 

derivatives clearing organisation clearing Swaps), the books and records of which are located in 

the United States of America, opened in the name of the FCM/BD Clearing Member (acting in 

its capacity as a clearing member in relation to transactions connected with the provision of 

services to Swap Customers where segregation of related collateral is required in accordance 

with Section 4d(f) of the CEA insofar as applicable, and any applicable rules of the CFTC as 

promulgated thereunder and any interpretations thereof by the CFTC, and entering into market 

contracts in the capacity of a clearing member in relation to transactions connected with the 

provision of services to Swap Customers) relating to Contracts to which the Clearing Member is 

a party as a result of it acting for one or more Swap Customers (whose transactions the FCM/BD 

Clearing Member requests be recorded in a Swap Customer Account where the same is required 

in accordance with the segregation provisions of Section 4d(f) of the CEA insofar as applicable, 

and any applicable rules of the CFTC as promulgated thereunder and any interpretations thereof 

by the CFTC) and in which the Clearing House records such Contracts and to which monies in 

respect of such Contracts are debited and credited, which may be divided for administrative 

convenience only into sub-accounts relating to different Swap Customers or groups of Swap 

Customers.

The term "Termination Close-Out Deadline Date" means: (i) in respect of termination of 

clearing membership or status as a Sponsored Principal either generally or in respect of a 

particular Membership Category under Rule 209(a)(ii) to (iv) or Rule 209(c) , the date falling 30 

Business Days after the Termination Notice Time; (ii) in respect of a termination of clearing 

membership or status as a Sponsored Principal in respect of a particular Membership Category 

under Rule 917(c) or Rule 918, the date falling 20+x Business Days after the relevant 

Termination Notice Time where x= the total number of unexpired Business Days in the CoolingOff Termination Period; (iii) notwithstanding (i) and (ii), in any case, such later date as the 

Clearing House may at its discretion permit and notify in writing to the affected Clearing 

Member or Sponsored Principal; or (iv) in respect of termination of clearing membership or 
NYDOCS01/1643340.2 46

status as a Sponsored Principal following an Event of Default under Rule 209(a)(i), is 

inapplicable. 

The term "Termination Close-Out Time" means: (i) in respect of termination of clearing 

membership or status as a Sponsored Principal generally (other than following an Event of 

Default under Rule 209(a)(i)), the time at which a Clearing Member or Sponsored Principal 

ceases to be party to any open Contracts with the Clearing House; (ii) in respect of termination of 

clearing membership or status as a Sponsored Principal in respect of a particular Membership 

Category, the time at which a Clearing Member or Sponsored Principal ceases to be party to any 

open Contracts of the relevant Membership Category with the Clearing House; or (iii) in respect 

of termination of clearing membership or status as a Sponsored Principal generally following an 

Event of Default under Rule 209(a)(i), is inapplicable.

The term "Termination Date" means: (A) in respect of termination of clearing membership or 

status as a Sponsored Principal either generally or in respect of a particular Membership 

Category (other than following an Event of Default under Rule 209(a)(i)), the later of: (i) where 

applicable, the Termination Close-Out Deadline Date; and (ii) the date of the Termination 

Close-Out Time; or (B) in respect of termination of clearing membership or status as a 

Sponsored Principal generally following an Event of Default under Rule 209(a)(i)), the date on 

which default proceedings are completed or such other date as is specified by the Clearing House 

in writing.

The term "Termination Notice" means a notice served by a Clearing Member of termination of 

its membership or of its membership of a particular Membership Category or by a Sponsored 

Principal of termination of its status as such in respect of a particular Membership Category 

under Rule 209(c)(i)(A) or Rule 917(c).

The term "Termination Notice Time" means the time of service by a Clearing Member or 

Sponsored Principal of a Termination Notice.

The term "Trade Nomination" has the meaning given in the Delivery Procedures.

The term "Transaction" means: (i) in respect of the Clearing of CDS Contracts, CDS Trade 

Particulars; (ii) in respect of the Clearing of F&O Contracts, any F&O Transaction; or (iii) in 

respect of the Clearing of FX Contracts, FX Trade Particulars. For the avoidance of doubt: 

(A) CDS Trade Particulars, FX Trade Particulars or an F&O Transaction will be valid and 

constitute a Transaction for purposes of this definition regardless of whether they reflect a 

binding contract or transaction between two Clearing Members (or any Sponsored Principal) or 

between a Clearing Member and its Customer and CDS Trade Particulars, FX Trade Particulars 

or an F&O Transaction shall include any trade particulars or any data resulting from the 

matching of any trade or block orders; and (B) in the case of an F&O Transaction made on or 

reported to a Market, the Transaction need not yet have been reported to the Clearing House in 

order to give rise to an F&O Contract.

The term "Transaction Rights or Obligations" means the rights, liabilities or obligations (if 

any) of a Clearing Member, Sponsor or Sponsored Principal relating to, or arising out of or in 

connection with any Transaction, whether pursuant to contract, tort, equity, restitution or 
NYDOCS01/1643340.2 47

otherwise, whether joint or several, pursuant to the laws of any jurisdiction, which fall or fell due 

for performance to any Person other than as between a Customer (excluding a Sponsored 

Principal) of a Clearing Member in relation to the Transaction in question and such Clearing 

Member (to which the relevant Standard Terms shall apply), but excluding any rights or 

liabilities arising pursuant to the relationship of agency between an FCM/BD Clearing Member 

and its Customer arising in accordance with Part 16.

The term "Transfer" has the meaning given to that term in Rule 904(a).

The term "Transferee" means a Person nominated by a Buyer to whom a transfer or delivery is 

to be made under an F&O Contract and includes reference to the Buyer where transfer or 

delivery is to be made to the Buyer.

The term "Transferee Clearing Member" means a Clearing Member which becomes party to a 

Contract as a result of a transfer, novation, sale or termination and replacement pursuant to Part 9

of the Rules.

The term "Transferor" means a Person nominated by a Seller by whom a transfer or delivery is 

to be made under an F&O Contract and includes reference to the Seller where transfer or 

delivery is to be made by the Seller.

The term "Tribunal" means an arbitral tribunal established under Rule 117.

The term "USD" means the lawful currency from time to time of the United States of America.

The term "U.S. Future" means (i) a Future or an Option that is an option on a Future, in either 

case that is traded on or subject to the rules of a designated contract market under Section 5 of 

the CEA and (ii) Permitted Co-mingled Contracts recorded in a DCM Customer Account. For 

the avoidance of doubt, U.S. Futures will not include Swaps or SBS.

The term "U.S. Person" means a Person that is organised under the laws of or has its principal 

place of business in the United States of America or a state or territory thereof.

The term "Variation Margin" means the cash required to be provided or actually provided by a 

Clearing Member or Sponsored Principal to the Clearing House or by the Clearing House to a 

Clearing Member or Sponsored Principal related to the market value of a Clearing Member's or 

Sponsored Principal's Open Contract Positions relating to F&O Contracts, as determined 

pursuant to Rule 503(e) and the Finance Procedures and includes, where the context so requires, 

any proceeds of realisation of the same.

The term "Withdrawal Date" means, if at any time the Clearing House decides to terminate its 

services, either generally or in relation to a significant part of its business or certain categories of 

Contract, the date on which that termination will take effect.

Rule 102 Interpretation

(a) Any reference to a statute, statutory provision or rule shall include any notice, order, 

guidance, example, regulation or subordinate legislation made from time to time under 
NYDOCS01/1643340.2 48

that statute, statutory provision or rule which is in force from time to time. Any reference 

to a statute or statutory provision shall include such statute or provision as from time to 

time amended, modified, re-enacted or consolidated from time to time and (so far as 

liability thereunder may exist or can arise) shall include also any past statute or statutory 

provision (as from time to time modified, re-enacted or consolidated) which was 

applicable at the time of any relevant action or omission.

(b) References to any rules or any agreement are references to such rules or agreement as 

amended or restated from time to time, provided that such amendments or restatements 

are made in accordance with these Rules.

(c) The Interpretation Act 1978 shall apply to these Rules in the same way as it applies to an 

enactment.

(d) When a reference is made in these Rules to a rule, part, paragraph or procedure, such 

reference is to a Rule, Part, paragraph, Procedure of, or made under these Rules, unless 

otherwise indicated.

(e) The headings in these Rules are for reference purposes only and do not affect in any way 

the meaning or interpretation of these Rules.

(f) To the extent there is any conflict between any of the provisions of these Rules, a 

Clearing Membership Agreement, a Sponsored Principal Clearing Agreement, a Sponsor 

Agreement, the Procedures (including all exhibits, attachments and appendices thereto), 

any Guidance or Circular or Market Rules or between any of the foregoing, the provision 

of the first document specified in the paragraphs below shall prevail, control, govern and 

be binding upon the parties:

(i) these Rules (excluding the Procedures, Contract Terms (save to the extent that the 

Contract Terms are in the Rules but excluding Contract Terms that are in the 

Procedures) and any other document incorporated by reference) (except 

Rules 301(h), (i), (j) or (k) only in the event of any conflict between any such 

provision on the one hand and any provision of the Contract Terms of a CDS 

Contract relating to tax on the other hand, in which case the relevant provision of 

the Contract Terms of the CDS Contract shall prevail; and except as provided in 

Rule 1518);

(ii) the Clearing Membership Agreement;

(iii) in relation to an Individually Segregated Sponsored Account, the Sponsored 

Principal Clearing Agreement;

(iv) in relation to an Individually Segregated Sponsored Account, the Sponsor 

Agreement;

(v) in the case of CDS Contracts only, the CDS Procedures;
NYDOCS01/1643340.2 49

(vi) in the case of Energy Contracts traded on ICE Endex only, in relation to those 

aspects of the ICE Endex Rules that include Contract Terms only, the ICE Endex 

Rules;

(vii) in the case of Energy Contracts traded on ICE Endex UK only, in relation to those 

aspects of the ICE Endex UK Rules that include Contract Terms only, the ICE

Endex UK Rules;

(viii) in the case of Energy Contracts traded on ICE Endex Continental only, in relation 

to those aspects of the ICE Endex Continental Rules that include Contract Terms 

only, the ICE Endex Continental Rules;

(ix) in the case of Energy Contracts traded on ICE Futures Europe only, in relation to 

those aspects of the ICE Futures Europe Rules that include Contract Terms only, 

the ICE Futures Europe Rules;

(x) in the case of Energy Contracts traded on ICE Futures US only, in relation to 

those aspects of the ICE Futures US Rules that include Contract Terms only, the 

ICE Futures US Rules;

(xi) in the case of Financials & Softs Contracts traded on LIFFE, in relation to those 

aspects of the LIFFE Rules that include Contract Terms only, the LIFFE Rules;

(xii) in the case of Financials & Softs Contracts traded on ICE Futures Europe, in 

relation to those aspects of the ICE Futures Europe Rules that include Contract 

Terms only, the ICE Futures Europe Rules;

(xiii) in the case of F&O Contracts only, the Contract Terms other than those set out in 

these Rules or Market Rules (except as set out in Rule 102(f)(i)) (excluding the 

Rules and any other document incorporated by reference);

(xiv) the Procedures (excluding any Contract Terms set out in the Procedures) save to 

the extent included in (v);

(xv) Market Rules other than those referred to in (vi) to (xiii) above (excluding any 

document described in Rule 102(f)(i) to (xiii) incorporated by reference);

(xvi) any Guidance;

(xvii) any Circular (except for a Circular communicating an amendment to any of the 

above documents in accordance with these Rules, in which case the amendments 

communicated in such Circular shall be binding on the effective date specified in 

the Circular as if such amendments were one of those documents);

(xviii) in the case of CDS Contracts recorded in a Segregated Customer Omnibus 

Account For CDS or Segregated TTFCA Customer Omnibus Account For CDS, 

the CDS Standard Terms (solely to the extent that the CDS Standard Terms may 

be of interpretative relevance to the Rules or a CDS Contract);
NYDOCS01/1643340.2 50

(xix) in the case of F&O Contracts recorded in a Segregated Customer Omnibus 

Account For F&O or Segregated TTFCA Customer Omnibus Account For F&O, 

the F&O Standard Terms (solely to the extent that the F&O Standard Terms may 

be of interpretative relevance to the Rules or an F&O Contract); 

(xx) in the case of FX Contracts recorded in a Segregated Customer Omnibus Account 

For FX or Segregated TTFCA Customer Omnibus Account For FX, the FX 

Standard Terms (solely to the extent that the FX Standard Terms may be of 

interpretative relevance to the Rules or an FX Contract); and

(xxi) in the case of CDS Contracts and Customer-CM CDS Transactions, the 

Settlement and Notices Terms.

(g) All Clearing Members must comply with the relevant provisions of EMIR and other 

Applicable Law when providing services to Customers. In particular, all Clearing 

Members must offer, at least, a choice of one Customer Account providing individual 

client segregation and one Customer Account providing omnibus client segregation (in 

the manner set out in Articles 39 and 48 of EMIR) to all Affected Customers. For a 

Clearing Member that is prevented or prohibited under Applicable Laws itself from 

providing such Customer Accounts to an Affected Customer, this offer must include, to 

the extent possible and practicable under Applicable Laws, an offer to procure the 

provision to the Affected Customer of such a Customer Account by another Clearing 

Member (which may be an Affiliate). Clearing Members must provide details of the 

costs and level of protection under individual versus omnibus segregation. A Clearing 

Member must record the choice of omnibus or individual client segregation made by each 

of its Customers in writing. 

(h) All references to timings or times of day are to London (UK) times, unless indicated 

otherwise. Business hours shall occur only on Business Days and shall be construed 

accordingly.

(i) All references to "tax" shall include, without limitation, any tax, levy, impost, duty, or 

other charge or withholding of a similar nature (including any penalty or interest payable 

in connection with any failure to pay or any delay in paying the same).

(j) Each Clearing Member shall be bound by any act, omission, conduct or behaviour 

("conduct") of its Customers and clients of such Customers but only in any instance in 

which any such Customer or client of such Customer:

(i) is permitted by the Clearing Member to have access to any system or interface of 

any Market, CDS Trade Execution/Processing Platform, FX Trade 

Execution/Processing Platform or the Clearing House which access enables or 

results in the entry into of Contracts and relates to Clearing by that Clearing 

Member for such Customer or client (which access, without limitation shall be 

deemed to have been granted by the Clearing Member if the Customer or client in 

question has been nominated to the Clearing House as an Eligible Person pursuant 
NYDOCS01/1643340.2 51

to the Clearing Membership Agreement to which such Clearing Member is a 

party);

(ii) is permitted by the Clearing Member to have access to any system or interface of 

any Market, CDS Trade Execution/Processing Platform, FX Trade 

Execution/Processing Platform or the Clearing House which relates to Clearing by 

that Clearing Member for such Customer or client and which is used for the 

enriching of data held by the Clearing House relating to Contracts, the post-trade 

management of Contracts, allocations from one Clearing Member to another 

Clearing Member under Rule 401(a)(viii) or Rule 401(e) or to or from a 

Participating Exchange under Rule 401(a)(xiv) and Rule 410, the transfer of 

Contracts between any Proprietary Account or Customer Account or between 

different Proprietary Accounts or Customer Accounts (or any sub-account of any 

of the foregoing) of a Clearing Member, position transfers, novations or 

assignments under Rule 408(a), the service of any notice, the exercise or 

abandonment of any Option, the closing-out, expiry or termination of any Future 

or the netting, combining or offsetting of any Contract recorded in a particular 

account;

(iii) is nominated by an F&O Clearing Member as a Transferee or Transferor for 

purposes of delivery under an F&O Contract; or

(iv) is otherwise duly appointed to carry out such conduct as an agent of the Clearing 

Member.

If a Customer or client of a Customer or any of their Representatives would have 

breached the Rules in respect of any instance listed in (i), (ii), (iii) or (iv) above if it were 

a Clearing Member, then such Customer, client or Representative or their Clearing 

Member may be subject to disciplinary proceedings, in which Rule 1003(u) applies. The 

application of this Rule 102(j) to Customers of CDS Clearing Members (acting in such 

capacity) is excluded in Rule 1516(b). This Rule 102(j), in as much as it is relevant to 

conduct relating to FX Data, is subject to the provisions of Rule 1708(a).

In addition, a Clearing Member, Sponsor or Sponsored Principal shall be bound by and 

responsible for any conduct of or by any of the following Persons (including for purposes 

of disciplinary proceedings under Part 10):

(A) the Clearing Member, Sponsor or Sponsored Principal itself (including its 

employees, officers, directors or partners); and

(B) the Clearing Member's, Sponsor's or Sponsored Principal's 

Representatives (excluding Customers and their Customers' clients), as if 

such conduct were the conduct of the Clearing Member, Sponsor or 

Sponsored Principal itself (but this provision shall not, for the avoidance 

of doubt, apply to determine any liability of a Clearing Member, Sponsor, 

Sponsored Principal or Defaulter for losses of the Clearing House or any 

of its Affiliates or any Market or any of their officers, directors or 
NYDOCS01/1643340.2 52

employees, which liabilities are governed solely by Rule 111 and 

Rule 905(f)).

(k) Pursuant to Rule 102(f), a Clearing Member's liability under clause 3.5 of the Clearing 

Membership Agreement shall be limited by Rules 102(j) and 1516(b), as applicable.

(l) Any capitalised term used in these Rules that is not defined in Rule 101 or elsewhere 

herein shall have the meaning given to it (in order of priority) in the Procedures, the 

Clearing House's standard form Clearing Membership Agreement, the Clearing House's 

standard form Sponsored Principal Clearing Agreement, the Clearing House's standard 

form Sponsor Agreement and any relevant Market Rules.

(m) Each of the Rules shall, unless the context otherwise requires, be construed as an 

independent provision and shall be in addition and without prejudice to any other 

provision of the Rules.

(n) If any provision of these Rules (or part of any provision) is found by any court or other 

Governmental Authority to be invalid, illegal or unenforceable, that provision or 

part-provision shall, to the extent required, be deemed not to form part of the Rules, and 

the validity, legality or enforceability of the other provisions of these Rules shall not be 

affected.

(o) The Rules, together with the applicable Clearing Membership Agreement, and other 

documents given contractual force pursuant to these Rules, form a contract between the 

Clearing House and each Clearing Member. In the case of a Clearing Member that is 

also a Sponsor, certain provisions of the Rules, together with the applicable Sponsor 

Agreement, and other documents given contractual force pursuant to these Rules, form a 

contract between the Clearing House, each Sponsor acting in its capacity as such and 

each Sponsored Principal for which such Sponsor acts. The Rules, together with the 

applicable Sponsored Principal Clearing Agreement (if any) and other documents given 

contractual force pursuant to these Rules, also form a contract between the Clearing 

House, each Sponsored Principal and the Sponsor for that Sponsored Principal. All 

obligations of the Clearing House hereunder are solely to Clearing Members, Sponsors 

and Sponsored Principals. No Person other than the Clearing House has any obligation to 

Clearing Members, Sponsors or Sponsored Principals pursuant to these Rules except as 

expressly provided in any provisions of these Rules, the Procedures, any of the Standard 

Terms or the Settlement and Notices Terms purporting to create or define rights and 

obligations as between Clearing Members or Sponsored Principals or between Clearing 

Members and their Customers (each a "Bilateral Obligation"). Subject to any Bilateral 

Obligation in respect of which the relevant Clearing Members, Sponsored Principals or 

Customers (as applicable) shall have the right to enforce the relevant provisions of these 

Rules, Procedures, Standard Terms or Settlement and Notices Terms against one another, 

and except as provided in Rule 102(v) and Rule 1903(j), no Person shall have any right 

pursuant to the Contracts (Rights of Third Parties) Act 1999 to enforce any provision of 

these Rules or the Procedures.
NYDOCS01/1643340.2 53

(p) Any matter or right stated to be in, of or at the Clearing House's discretion shall be 

subject to the Clearing House's sole, unfettered and absolute discretion and such 

discretion may be exercised at any time. Where there is a provision that the Clearing 

House (or its Directors, officers or committees) may make further directions upon or in 

relation to the operation of a Rule or may make or authorise any arrangement, direction 

or procedure thereunder, the Clearing House may make such direction or make or 

authorise such arrangement or procedure in relation to or under the whole or any part of 

the Rule and may make or authorise different directions, arrangements or procedures in 

relation to different Persons and may make or authorise such directions, arrangements or 

procedures generally or in relation to a particular Person or particular occasion and in all 

cases subject to such conditions as it may think fit. Any action taken at the discretion of 

the Clearing House may not be challenged by any Person (subject to the requirements of 

Rule 111(c) and the right of such Person to make a complaint pursuant to the Complaint 

Resolution Procedures or Part 10).

(q) Without prejudice to the requirements of any Applicable Laws including, but not limited 

to, those relating to clients' money made under sections 138 and 139 of the FSMA and 

notwithstanding any other provision of these Rules, nothing in these Rules shall have the 

effect of enabling, requiring or implying that any Margin or other amounts deposited in 

relation to a Clearing Member's or Defaulter's:

(i) Customer Account of any class be used to meet a loss or shortfall on any of that 

Clearing Member's or Defaulter's Proprietary Accounts;

(ii) particular Customer Account be used to meet a loss or shortfall on another of the 

same Clearing Member's or Defaulter's Customer Account;

(iii) particular Proprietary Account be used to meet a loss or shortfall on another of the 

same Clearing Members' or Defaulter's Proprietary Accounts;

(which restrictions, for the avoidance of doubt, shall not apply to any Guaranty Fund 

Contribution or Assessment Contribution).

Without prejudice to the requirements of any Applicable Laws including, but not limited 

to, those relating to clients' money made under sections 138 and 139 of the FSMA, 

nothing in these Rules shall have the effect of enabling, requiring or implying that any 

Contracts recorded in a Clearing Member's or Defaulter's:

(iv) Customer Account of any class be netted, combined or offset with any Contract 

recorded in any of that Clearing Member's or Defaulter's Proprietary Accounts; 

(v) particular Customer Account be netted, combined or offset with any Contract 

recorded in another Customer Account of the same Clearing Member or 

Defaulter; or 

(vi) particular Proprietary Account be netted, combined or offset with any Contract 

recorded in another Proprietary Account of the same Clearing Member or 

Defaulter;
NYDOCS01/1643340.2 54

(except as expressly provided under the Rules and to the extent permissible under 

Applicable Laws).

For the avoidance of doubt and ease of reference, the following provisions or documents 

relevant to asset and account segregation also apply in respect of each Segregated 

Customer Omnibus Account for CDS, Segregated Customer Omnibus Account for F&O

and Segregated Customer Omnibus Account for FX of each Clearing Member that is 

subject to CASS 7.18 of the FCA rules, as well as each Individually Segregated 

Sponsored Account and Margin-flow Co-mingled Account of such a Clearing Member in 

respect of which the Clearing House gives an acknowledgement in accordance with 

paragraph (viii) below:

(vii) the third and fourth sentences of clause 5.3 of the Clearing Membership 

Agreement (and equivalent provisions of the Sponsored Principal Clearing 

Agreement and Sponsor Agreement, if applicable); and

(viii) any letter delivered to the Clearing House pursuant to CASS 7.18, where the 

Clearing House has countersigned the same and returned it to the Clearing 

Member.

Any reference in these Rules or the Procedures to Rule 102(q) shall be deemed to include 

a reference to such provisions as are mentioned in paragraph (vii) and such letters as are 

mentioned in paragraph (viii), as are applicable to the Clearing Member concerned.

(r) The Rules shall at all times be observed, interpreted and given effect to in the manner 

most conducive to the promotion and maintenance of recognition of:

(i) the Clearing House as a recognised clearing house under the FSMA, as having 

any status or licence granted by a Market or Delivery Facility, as a registered 

derivatives clearing organization under the CEA and as a registered clearing 

agency under the Exchange Act and any other legal or regulatory status it has 

from time to time under any other Applicable Law;

(ii) the good reputation of the Clearing House (and Clearing Members and Sponsored 

Principals);

(iii) high standards of integrity and fair dealing in accordance with FCA Rules and 

other Applicable Law;

(iv) the Clearing House's obligation under EMIR and other Applicable Law to act

fairly and professionally in accordance with the best interests of Clearing 

Members, Sponsored Principals and Customers and sound risk management; and

(v) proper protection for all Persons interested in the performance of Contracts.

To the extent that the Clearing House or any Clearing Member or Sponsored Principal 

has any right under these Rules which may on its face be performed in a manner that goes 
NYDOCS01/1643340.2 55

beyond that which is permitted by Applicable Law, that right may only be exercised to 

the extent permitted under Applicable Law. 

(s) Subject to Rule 1608, these Rules, each Contract and all non-contractual obligations 

arising out of or in connection with these Rules or any Contract, shall be governed by and 

construed in accordance with the laws of England and Wales.

(t) These Rules may be supplemented by processes established pursuant to documents 

governing the internal governance of the Clearing House and its committees.

(u) References in these Rules to UK or English legislation or European Directives shall be 

interpreted as references to such legislation as implemented in England and Wales, 

including by the relevant Governmental Authorities. References in these Rules to U.S. 

federal or state legislation or regulation shall be interpreted as references to such 

legislation or regulation as implemented in the U.S. including by the relevant U.S. 

Governmental Authorities.

(v) Notwithstanding Rule 102(o), nothing in these Rules shall preclude a Customer or any 

other Person from agreeing to the application of these Rules or any provision of these 

Rules in their agreements with any Clearing Member or third party, in which case the 

Clearing House shall be entitled to enforce any provision of these Rules (including, 

without limitation, Rule 111) as a third party with rights pursuant to the Contracts (Rights 

of Third Parties) Act 1999.

(w) To the extent permitted by Applicable Laws and without prejudice to Rule 408, a 

Clearing Member may outsource performance of any of its obligations under the Rules to 

an Affiliate or other Person, but will remain fully liable to the Clearing House for such 

performance notwithstanding the outsourcing, provided that a Clearing Member may 

nominate another Person to perform its responsibilities with respect to the submission of 

end-of-day prices, becoming party to Contract allocations under Part 9 of the Rules 

following an Event of Default (to the extent that the Clearing House has rights to require 

entry into of such Contracts) and participation in default auctions and such other 

obligations as permitted by the Clearing House, if such Person is acceptable to the 

Clearing House and enters into an agreement with the Clearing Member and Clearing 

House on such terms and conditions as are specified by the Clearing House. In any 

circumstances in which a Person performs pursuant to an outsourcing arrangement or 

such a nomination, such Person will act as the Clearing Member's Representative.

(x) If a Person with obligations under these Rules or a Contract is a partnership, the liability 

of each partner in the partnership under or in connection with these Rules or the Contract 

shall be joint and several. In the event of any circumstances which would be operation of 

Applicable Law give rise to the dissolution of the partnership, or entitle a partner to seek 

an order to dissolve the partnership, the obligations of the partners shall remain in full 

force and effect.

(y) Where a Contract is not a derivative for the purposes of MiFID or MiFID II, or any 

national implementing measure of a member state of the European Economic Area, any 
NYDOCS01/1643340.2 56

provisions in these Rules with respect to Repositories shall not apply, unless the Clearing 

House or other relevant persons determine to submit details to Repositories on a 

voluntary basis.

Rule 103 Delay in performance by the Clearing House

Subject to the provisions of the Contract Terms and further subject as set out in the Procedures, 

where an obligation of the Clearing House must be performed immediately, promptly or by or 

prior to a specified time or date but is not so performed, the Clearing House shall not be in 

breach of these Rules if, having used all reasonable endeavours to perform such obligation by 

such specified time or date, it performs the relevant obligation promptly after such specified time 

or date.

Rule 104 Invoicing Back and Specification of Terms

(a) Other than in circumstances in which Rule 912 applies and subject to Rules 104(c) to (f), 

if a Force Majeure Event, Illegality or Impossibility affects Contracts of a particular Set, 

the Clearing House shall have the right, in consultation with the relevant Market (if any) 

to: 

(i) Invoice Back Contracts of such Set; or

(ii) specify or over-ride the price or other terms of Contracts of such Set.

(b) The Clearing House shall in addition have the right, in consultation with the relevant 

Market, to Invoice Back an Energy Contract that is subject to delivery or tender in the 

circumstances and in the manner set out in the Delivery Procedures. 

(c) Any instance of Invoicing Back or specification or over-riding of price or other terms 

under Rule 104(a) must, subject to Rule 109(c), be approved in advance by an affirmative 

vote of the Board at a quorate meeting, at which meeting the facts giving rise to the Force 

Majeure Event, Illegality or Impossibility, as the case may be, will be considered and at 

which the Board decides that it would be appropriate to exercise the right in question. 

Any exercise of such a right will further be undertaken subject to any additional 

processes established pursuant to documents governing the internal governance of the 

Clearing House and its committees. 

(d) Neither Invoicing Back rights nor specification or over-riding of price or other terms 

rights under Rule 104(a) or 104(b) are to be exercised by the Clearing House to deal with 

the general management of an Event of Default (such as for the purpose of changing the 

amount of any liability of the Clearing House to a Defaulter (or deemed defaulter) or to a 

Clearing Member or Sponsored Principal which would be a Defaulter on the making of 

the relevant declaration by the Clearing House under Rule 901(a) or of any liability of 

any Defaulter (or deemed defaulter) or any such Clearing Member or Sponsored Principal 

to the Clearing House) or as an alternative to applying the process in Part 10 et seq. in 

circumstances in which such provisions apply. However, nothing in this Rule 104(d)

shall prevent the Clearing House from exercising its rights under Rule 104(a) or 

Rule 104(b) in respect of a Contract to which a Defaulter is party where, in the case of 
NYDOCS01/1643340.2 57

Rule 104(a), a Force Majeure Event, Illegality or Impossibility affects a Contract of a 

particular Set to which a Defaulter is party in a similar way to that in which it affects 

Contracts of the same Set to which non-defaulting Clearing Members or Sponsored 

Principals are party, where the Clearing House takes similar action in respect of Contracts 

of the same Set of non-defaulting Clearing Members and Sponsored Principals in 

accordance with this Rule 104 or where, in respect of Rule 104(b) and an Energy 

Contract that is subject to delivery or tender, the Delivery Procedures provide for 

Invoicing Back to take place in respect of a Defaulter's Contract.

(e) Where the Clearing House exercises any of its rights under Rule 104(a) or (b), it will do 

so in good faith and in accordance with Rule 102(r).

(f) The Clearing House will not exercise any rights under Rule 104(a) or (b) to Invoice Back 

or specify or over-ride the price or other terms of any Contract to which a Clearing 

Member or Sponsored Principal is party unless there is an objective justification for it 

doing so and such an approach is applied objectively. The price at which any Invoicing 

Back or specification or over-riding of price or other terms under Rule 104(a) or (b) is 

executed shall be determined in a commercially reasonable manner and, in respect of an 

Energy Contract that is subject to delivery or tender, in accordance with the Delivery 

Procedures. The process established in Rule 109(k) shall apply to any class of Contract 

whenever the Clearing House exercises its rights under Rule 104(a), mutatis mutandis.

(g) Provided that any rights exercised under this Rule 104 are exercised in accordance with 

this Rule 104, any resulting Invoicing Back, specification or over-riding of price or other 

terms by the Clearing House shall be final and binding for the purposes of these Rules 

and not be subject to challenge by any Person under these Rules or otherwise, except in 

the case of manifest error, negligence or fraud.

Rule 105 Termination

(a) If at any time the Clearing House decides to or must cease acting as a clearing house, 

either generally, in relation to a particular Exchange or in relation to a class of Contracts 

(including if it determines, following loss of any authorisation, status, approval or 

recognition from a Regulatory Authority, a Delivery Facility or a Market, that it is unable 

to continue its business or a particular business), it shall give advance notice of the 

proposed Withdrawal Date by Circular. In the event of a complete cessation of services 

or of services in relation to a particular Exchange or any class of Contracts, at least four 

months' notice shall be necessary unless any action by the Regulatory Authority, Delivery 

Facility or Market giving rise to the cessation of services takes effect within a shorter 

period. In any other event for which there is a Withdrawal Date, at least one month's 

notice shall be necessary. The Clearing House shall be entitled to postpone any such 

Withdrawal Date, generally or in respect of any individual Clearing Member, Sponsored 

Principal, Exchange or class of Contract.

(b) If, at any Withdrawal Date, any affected Contracts have not been finally settled, the 

Clearing House shall be entitled to terminate any or all such Contracts and require any 
NYDOCS01/1643340.2 58

such Contracts to be cash settled on terms specified by the Clearing House in accordance 

with Rule 104.

(c) Rule 918(a)(i), (ii), (iii), (v), (vi) and (vii) and Rule 918(b) shall apply, mutatis mutandis, 

in relation to a termination of the Clearing House's services, whether generally or in 

respect of a particular Contract Category, as applicable, in the event of any termination 

under this Rule 105. For such purposes, the term Termination Notice Time as used in 

Rule 918 shall be read as referring to the time at which the Clearing House issues a notice 

relating to the withdrawal, the terms Termination Close-out Deadline Date and 

Termination Date as used in Rule 918 shall be read as referring to the Withdrawal Date, 

the term Relevant Contract Category as used in Rule 918 refers to the Sets of Contracts 

being withdrawn and the terms Relevant Membership Category, Relevant Guaranty Fund 

Contributions and Relevant Assessment Contributions as used in Rule 918 shall be 

interpreted accordingly.1

Rule 106 Confidentiality and Information

(a) The Clearing House shall be entitled to keep records in an electronic or durable medium 

of all data or information available to it under these Rules or otherwise concerning 

Clearing Members (including financial statements filed with the Clearing House), 

Customers, Sponsored Principals, Sponsors, Accounts, Margin, Transactions, Contracts, 

past or current Open Contract Positions, deliveries and settlement. All information 

received or held by the Clearing House concerning Transactions, Contracts or past or 

current Open Contract Positions carried by the Clearing House or positions with any 

other Clearing Organisation for a Clearing Member or Sponsored Principal or relating to 

any Customer, or concerning Margin payments between the Clearing House or any other 

Clearing Organisation and a Clearing Member or Sponsored Principal or concerning 

deliveries made by or to a Clearing Member or any of its Transferors or Transferees or 

any financial statements filed with the Clearing House by any Clearing Member or 

Sponsored Principal or any other information relating to a Clearing Member, Sponsored 

Principal, Sponsor or Customer provided by a Clearing Member, Sponsored Principal, 

Sponsor or Customer to the Clearing House at the Clearing House's request, or pursuant 

to the Rules or Applicable Laws shall be held in confidence by the Clearing House and 

shall not be made known to any other Person except that each Clearing Member, 

Sponsored Principal, Sponsor and Customer hereby consents to the Clearing House 

making the following disclosures, subject to such terms and conditions as the Clearing 

House may from time to time deem appropriate:

(i) to a Regulatory Authority or Governmental Authority where a request is formally 

made to the Clearing House by or on behalf of the same or pursuant to Applicable 

Laws or where disclosure is required under Applicable Laws;

 1 Rule 105(c) applies only to the F&O and FX Contract Categories. Rule 105(c) under the Continuing CDS Rule 

Provisions applies to the CDS Contract Category. 
NYDOCS01/1643340.2 59

(ii) in the case of a breach by a Clearing Member or Sponsored Principal of: (i) any 

clearing membership criteria established by the Clearing House, whether as a 

breach of Rule 202(a)(iv) (including as applied to Sponsored Principals pursuant 

to Rule 1901(k)) or otherwise; or (ii) in the case of a Clearing Member, such 

Clearing Member's obligation to publicly disclose prices and fees associated with 

the clearing services it provides and/or its obligation to provide Customers with 

separate access to each specific service it provides; to the public, subject to any 

decision made by any Regulatory Authority pursuant to article 38(5) of EMIR;

(iii) pursuant to an order of a competent court or other Governmental Authority or 

otherwise to such other Persons, at such times and in such manner as may be 

required by Applicable Law;

(iv) to any member of the ICE Group, any Exchange or Clearing Organisation 

(including any Participating Exchange) and any of their or the Clearing House's 

Representatives, committees, experts, Delivery Facilities, auditors, advisers or 

lawyers including (without limitation) for audit, compliance, making or taking 

delivery, market surveillance or disciplinary purposes, in connection with or 

pursuant to a Link Agreement, for the purposes of an arbitration pursuant to 

Rule 117 or any proceedings in support of such an arbitration, or in relation to any 

possible or actual Event of Default or the termination or suspension of any 

clearing membership;

(v) to any Person in the business of providing data processing or similar services for 

the purposes of performing computations or analysis, or of preparing reports or 

records, for the Clearing House;

(vi) to any Person who has provided or is considering entering into a loan, insurance 

policy, guarantee or other financial arrangement with the Clearing House or any 

of its Affiliates, provided that information identifying the positions or name of a 

Clearing Member or any of its accounts or the name of any of a Clearing 

Member's Customers will not be so disclosed, except, in the case of a Clearing 

Member and its accounts only, as is necessary to respond to any enquiries of such 

a Person concerning the Clearing House's or any of its Affiliates' potential losses 

or exposures relating to an Event of Default (whether or not declared);

(vii) to the Secretary of State, any Insolvency Practitioner and any other authority or 

body having responsibility for any matter arising out of or connected with an 

Event of Default;

(viii) in the case of information relating to any Transaction or Contract (including 

details of the parties thereto and related Margin), to Deriv/SERV, a Repository or 

Governmental Authority for purposes of transaction reporting;

(ix) to any Person or to the public as a result of its complaints procedure or 

disciplinary proceedings;
NYDOCS01/1643340.2 60

(x) to any Person if the information comes into the public domain, other than as a 

result of a breach of this Rule by the Clearing House or its Representatives; 

(xi) in the case of information concerning any Individually Segregated Sponsored 

Account, to the Sponsor or Sponsored Principal in respect of such Account; 

(xii) in the case of information concerning any Customer, to any Clearing Member 

with a relationship with such Customer in respect of one of its Customer 

Accounts; 

(xiii) otherwise with the written consent of the Person or Persons to whom the 

confidential information relates; or

(xiv) pursuant to any obligation on the Clearing House or a Market under the Network 

Code, the Fluxys Belgium Rules, the Huberator Terms or the GTS Rules (as such 

terms are defined in the Delivery Procedures).

(b) Clearing Members, Sponsored Principals, Sponsors and Customers are given notice that 

the Clearing House is subject to section 348 (Restrictions on disclosure of confidential 

information by the FCA / PRA etc.) and regulations made under section 349 (Exemptions 

from section 348) of the FSMA. Clearing Members, Sponsored Principals, Sponsors and 

Customers shall be deemed to consent to any use, disclosure or non-disclosure of 

information by the Clearing House that is required or permitted pursuant to such 

provisions.

(c) The Clearing House is a Data Controller in relation to Personal Data provided to it by 

Clearing Members, Sponsored Principals, Customers and their Representatives. Each 

Clearing Member and Sponsored Principal shall ensure that:

(i) any and all of its Representatives in relation to whom Personal Data are provided 

to the Clearing House ("Data Subjects") have consented in advance to such data 

being Controlled and Processed by the Clearing House or, if not a natural person, 

have agreed to procure such consent to the extent necessary;

(ii) the disclosure of Personal Data by the Clearing Member, Sponsored Principal or 

its Representatives is in all respects and in each case lawful; and

(iii) the information set out in Rule 106(d) has been provided to each Data Subject 

prior to disclosure of Personal Data relating to such Data Subject to the Clearing 

House.

(d) The Clearing House shall have the right to disclose Personal Data to such Persons and for 

such purposes as are set out in Rule 106(a). The Clearing House and other Persons 

referred to in Rule 106(a) may transfer Personal Data outside the European Economic 

Area and Process Personal Data outside the European Economic Area.

(e) Data Subjects have the right, on payment of a small fee to the Clearing House, to receive 

a copy of Personal Data held by the Clearing House and to have any errors or 
NYDOCS01/1643340.2 61

inaccuracies in such Personal Data rectified. Any request should be addressed to the 

Clearing House's registered office.

(f) In this Rule 106 only, the terms "Control" (and derivations thereof), "Process" (and 

derivations thereof), "Personal Data" and "Data Controller" each have the meaning 

given to such terms in the Data Protection Act 1998.

(g) Each Clearing Member, Sponsored Principal and the Clearing House:

(i) consents to the recording of telephone conversations between the trading, clearing 

and other relevant personnel of the Clearing Member or Sponsored Principal and 

the Clearing House or their Group Companies in connection with the Rules and 

any Contract, potential Contract or Transaction;

(ii) agrees to obtain any necessary consent of, and give any necessary notice of such 

recording to, its and its Group Companies' relevant personnel;

(iii) agrees, to the extent permitted by Applicable Law, that recordings may be 

submitted in evidence in any Dispute; and

(iv) agrees that the remainder of this Rule 106 shall apply to any such recordings 

made by the Clearing House.

Rule 107 Conversion to other Eligible Currency

The Clearing House shall be entitled to direct Approved Financial Institutions to convert any 

cash standing to the debit or credit of any Clearing Member or Sponsored Principal into such 

other Eligible Currency as the Clearing House, in its discretion, determines is appropriate or 

expedient. Any such conversion shall be effected at a reasonable exchange rate determined by 

the Clearing House at its discretion or such Approved Financial Institution.

Rule 108 Maintenance of Records; Return of Documents and other Materials

(a) Clearing Members and other Persons that provide or present any documentation or other 

materials to the Clearing House are required to make a copy (whether electronic or 

physical) prior to doing so and must maintain each such copy for at least ten years. 

Clearing Members that are authorised and regulated by the FCA or PRA will be deemed 

to satisfy this requirement if they comply with all applicable FCA Rules and PRA Rules 

relating to record-keeping in relation to their activities connected with the Clearing 

House.

(b) The Clearing House shall not be obliged to return or provide a copy of any document or 

other materials presented or provided by any Clearing Member or other Person to the 

Clearing House, except where an express right to such copy or return is set out in these 

Rules.
NYDOCS01/1643340.2 62

Rule 109 Alteration of Rules, Procedures, Guidance and Circulars

(a) The Clearing House shall provide details (which, where appropriate, will include a 

reasoned account) of any Rule Change in a Circular. A Rule Change shall take effect and 

be binding on the Clearing House, Clearing Members, Sponsored Principals and other 

Persons who have agreed to be bound by the Rules on the relevant date specified by the 

Clearing House in a Circular. Where the reason for any Rule Change is not manifest in 

the amended text of the Rules, the Clearing House will seek to provide an appropriate 

reasoned account of the Rule Change.

(b) The Clearing House shall be entitled, at its discretion, to make any Rule Change at any 

time and without consulting Clearing Members or any other Persons where such Rule 

Change:

(i) is of a minor nature and relates to Rules of an administrative or commercial 

nature;

(ii) is of a limited, technical nature, if a consultation is reasonably considered by the 

Clearing House not to be appropriate;

(iii) relates to the Clearing House's fees, if a consultation is reasonably considered by 

the Clearing House not to be appropriate;

(iv) is considered by the Clearing House to be necessary as a result of an Event of 

Default, Force Majeure Event or Financial Emergency which has been recognised 

by an affirmative vote of the Board at a quorate meeting (subject always to 

Rule 109(c)) and subject to any processes established pursuant to documents 

governing the internal governance of the Clearing House and its committees;

(v) is required to ensure compliance by the Clearing House or any Clearing Member, 

Sponsored Principal or Customer with Applicable Laws, Accounting Standards or 

the requirements of any Governmental Authority or Regulatory Authority or is 

necessary or desirable to maintain the Clearing House's status as a recognised 

clearing house under the FSMA, any Clearing House's status or licence granted by 

any Delivery Facility or Market, or any other legal or regulatory status it has 

under any other Applicable Law;

(vi) concerns the parameters for Margin or the Guaranty Fund or classes of or haircuts 

for Permitted Cover, if a consultation is reasonably considered by the Clearing 

House not to be appropriate;

(vii) results from, and is or can be implemented solely by, a change in:

(A) Market Rules made by the relevant Market;

(B) the Credit Derivatives Determinations Committees Rules made by the 

Persons lawfully entitled to amend that document; or
NYDOCS01/1643340.2 63

(C) any other document (excluding, for the avoidance of doubt, the Applicable 

Credit Derivatives Definitions) that is not published by the Clearing House 

but which is incorporated into or forms part of the Contract Terms of any 

Contract in circumstances in which, pursuant to the Rules, upon such 

document being amended there results in a change to the Contract Terms 

without the need for any further step by the Clearing House,

which changes, for the avoidance of doubt shall take effect upon the relevant 

Market Rules, Credit Derivatives Determinations Committees Rules or other 

document itself being amended without the need for any Circular or notice on the 

part of the Clearing House;

(viii) involves a technical or operational specification of any Contract Term previously 

published in a Circular or found in a Clearing House policy or procedure but 

which is not set out in the Rules or otherwise in the Procedures;

(ix) involves the removal of an existing Contract Set or the addition of a new Contract 

Set; or

(x) is considered by the Clearing House to be of an urgent nature (provided that the 

Clearing House may consult Clearing Members in relation to the continued 

applicability of the Rule Change after the urgent event or circumstance has 

concluded or ended), of a nature that would not affect significantly the rights of 

Clearing Members or of a nature where a consultation would otherwise not be 

appropriate or necessary;

provided that, in any such case, the requirements of sections 300A to 300E of the FSMA 

or article 10(4) of the Settlement Finality Regulations would not prevent such Rule 

Change from being made.

(c) In relation to the determination of an Event of Default, a Force Majeure Event or a 

Financial Emergency pursuant to Rule 109(b)(iv) or, in relation to a Force Majeure Event 

only, Rule 112(b), or in relation to an approval of Invoicing Back under Rule 104(a), in 

the event that the Clearing House is unable to convene a meeting of the Board 

sufficiently promptly in the circumstances, any officer of the Clearing House designated 

by the Board from time to time for purposes of the applicable determination or approval 

may make such determination or approval, as the case may be, provided that the Clearing 

House shall convene a meeting of the Board as soon as practicable thereafter to ratify 

such determination or approval, rescind such determination or approval (only where, if 

rescission is desired, this is possible and practicable) or, where rescission is desired but 

not possible and practicable, to amend such determination or approval as appropriate.

(d) In cases other than those described in Rule 109(b), prior to any proposed Rule Change 

taking effect, the Clearing House will either: (i) issue a consultation paper by Circular or 

(ii) consult with a smaller number of Clearing Members selected by the Clearing House 

at its discretion. In cases where this Rule 109(d) applies, the Clearing House will seek to 

provide at least 14 days from the date of the relevant Circular for Persons to respond to 
NYDOCS01/1643340.2 64

the consultation. The contents of responses and the names of Persons who respond to any 

consultation may be made publicly available by the Clearing House, unless the Clearing 

House receives a request to the contrary by a Person making a response. If the Clearing 

House receives any such requests for confidentiality or anonymity, the Clearing House 

may state that an anonymous response was made and may make public a summary of the 

contents of any response but the response will otherwise be subject to Rule 106. Clearing 

Members are encouraged, where appropriate, to inform their Customers and Sponsored 

Principals for whom they act as Sponsor of proposed Rule Changes.

(e) The Clearing House may at any time amend the Procedures, subject to any processes 

established pursuant to documents governing the internal governance of the Clearing 

House and its committees. Any such amendment shall have immediate effect or shall 

take effect at such time as is specified by the Clearing House. The Clearing House will 

issue a Circular in respect of any amendment to the Procedures.

(f) The Clearing House may issue, amend or revoke interpretative Guidance in relation to 

any aspect of the management of the Clearing House, its action under these Rules or the 

conduct of business of the Clearing House, Clearing Members, Sponsored Principals or 

Customers at any time at its discretion and without prior consultation.

(g) The Clearing House may issue Circulars or amend or revoke the contents of Circulars in 

connection with Clearing, the Rules or any action taken by it under the Rules at any time 

at its discretion and without prior consultation.

(h) None of the following (whether proven, evidenced or alleged) shall invalidate any Rule 

Change, Procedures amendment or the contents of any Circular or Guidance in respect of 

any Person:

(i) omission by the Clearing House to give any notice or publish any Circular which 

may be required under these Rules;

(ii) non-receipt of any Circular by a Person or any of its Representatives;

(iii) lack of awareness on the part of the Person or any of its Representatives;

(iv) lack or inadequacy of any reasoned account; or

(v) failure by the Clearing House to comply with its obligations under Rule 109(d).

(i) Without prejudice to the generality of Rule 109(h), in the event of any of the 

circumstances in Rule 109(h)(i), (iv) or (v) occurring, the Clearing House will consider 

what action should appropriately be taken in relation to the Rule Change which may (or 

may not) include the Clearing House:

(i) opening a second or subsequent consultation on the past Rule Change, subject to 

the procedures required by this Rule 109 mutatis mutandis; or
NYDOCS01/1643340.2 65

(ii) allowing Clearing Members or Sponsored Principals to make representations or 

submissions in relation to a past Rule Change and considering whether to propose 

a new Rule Change in accordance with this Rule 109.

(j) In accordance with paragraph 2 of the CDS Standard Terms, a change may be made to 

the CDS Standard Terms in the same way as a Rule Change is made pursuant to this 

Rule 109. In accordance with paragraph 2 of the F&O Standard Terms, a change may be 

made to the F&O Standard Terms in the same way as a Rule Change is made pursuant to 

this Rule 109. In accordance with paragraph 2 of the FX Standard Terms, a change may 

be made to the FX Standard Terms in the same way as a Rule Change is made pursuant to 

this Rule 109.

(k) The Clearing House may specify a one-off irreversible payment under Contracts of a 

particular relevant Set by Buying Counterparties or Selling Counterparties (which in any 

case shall also include an irreversible payment by the Clearing House to the extent that it 

takes a similar position in the affected Set), if it has made or proposes to make any Rule 

Change or other change to Contract Terms which the Clearing House determines, 

pursuant to documents governing the internal governance of the Clearing House and its 

committees, materially affects Exchange Delivery Settlement Prices, Mark-to-Market 

Prices or FX Mark-to-Market Prices of such Set. In such circumstances, the amount 

payable, the party that is obliged to make such payments, and the date of payments 

(which may be by reference to the date of introduction of a particular future Rule Change 

or change to Contract Terms) shall be specified by the Clearing House in a Circular. In 

making such determinations, the Clearing House may have reference to a poll of, or to 

price submissions by, Clearing Members or Market prices, the need and process for 

which is to be determined in any case pursuant to documents governing the internal 

governance of the Clearing House and its committees.

Rule 110 Extension or Waiver of Rules

(a) The performance by any Clearing Member or Sponsored Principal of any of its 

obligations under the Rules or any Contract may be waived by the Clearing House 

whenever in its discretion it considers that such waiver is necessary or in the best 

interests of the Clearing House.

(b) Subject to Rule 110(c), the time fixed by the Rules for filing any report or other 

document, for submitting any information or for making transfers, deposits or payments 

may be extended by the Clearing House whenever in its discretion it considers that such 

extension is necessary or in the best interests of the Clearing House. Any such extension 

may continue in effect after the event or events giving rise thereto.

(c) Any extension of the time for making transfers, deposits, payments or performance for 

any length of time longer than 3 Business Days after such transfer, deposit, payment or 

performance is due must be approved by the Clearing House in advance by an affirmative 

vote of the Board at a quorate meeting, at which meeting the facts giving rise to the 

proposed use of this provision will be considered and the meeting shall decide whether it 

would be appropriate to use this power, and provided further that the use of this power 
NYDOCS01/1643340.2 66

will be undertaken subject to any processes established pursuant to documents governing 

the internal governance of the Clearing House and its committees.

(d) Any waiver of any right or consent given by the Clearing House under these Rules is only 

effective if it is in writing, applies only in the circumstances for which it is given and 

shall not prevent the Clearing House from subsequently relying on the relevant provision. 

No delay or failure to exercise by the Clearing House of any of its rights or pursuing any 

of its remedies hereunder shall constitute a waiver. No single or partial exercise of any 

right or remedy by the Clearing House shall prevent any further exercise of the same or 

any other right or remedy.

(e) If any extension of any length of time is approved in respect of any payment, deposit, 

transfer or performance under this Rule 110, any notice given to the Clearing House prior 

to the end of such extension period shall be deemed not to have been given.

(f) The Clearing House shall be entitled without breach of these Rules to delay the making 

of a payment to any Clearing Member or Sponsored Principal in respect of a Variation 

Margin or Mark-to-Market Margin call in respect of all or any of a Clearing Member's or 

Sponsored Principal's accounts on an intra-day basis without following the procedure set 

out in Rule 110(a) to (e) in circumstances in which:

(i) another Clearing Member or Clearing Members or Sponsored Principal or 

Sponsored Principals has or have been or will be asked to make payment in 

respect of a Variation Margin or Mark-to-Market Margin call occurring at or 

around the same time;

(ii) that other Clearing Member or Sponsored Principal has, or those other Clearing 

Members or Sponsored Principals have failed to pay the Clearing House (which 

term for purposes of this Rule 503(k) and Rule 503(l) includes a request for 

payment or planned request for payment not yet being made, confirmed or due 

including for technical or operational reasons); and

(iii) the total amount of such failure or failures to pay exceeds the Original Margin, 

Initial Margin or FX Original Margin for each Proprietary Account or Customer 

Account to which the unpaid call relates provided by the Clearing Member or 

Clearing Members or Sponsored Principal or Sponsored Principals that has or 

have failed to pay the Clearing House.2

(g) No right of the Clearing House under this Rule 110 shall be exercised so as to extend the 

time at which a payment in any currency to any Clearing Member in respect of Variation 

Margin or Mark-to-Market Margin is otherwise due on any Business Day, in respect of 

all or any of a Clearing Member’s accounts, beyond the time immediately prior to the 

commencement of the daily payment cycle for the relevant currency for the next 

following Business Day.

 2 Rule 110(f) does not apply to the CDS Contract Category.
NYDOCS01/1643340.2 67

Rule 111 Liability

(a) Each Clearing Member shall indemnify and hold harmless the Clearing House against 

any and all losses, liabilities, damages, injuries, costs, claims, shortfalls and expenses 

(excluding any consequential losses, liabilities, damages, injuries, costs, claims, shortfalls

or expenses) incurred or suffered by the Clearing House or any of its officers or 

employees arising out of or in connection with any of the following:

(i) a breach (or an allegation made by the Clearing House or any Governmental 

Authority of a breach) by such Clearing Member of any of its obligations under 

these Rules, the Procedures, its Clearing Membership Agreement, a Sponsor 

Agreement or any Contract;

(ii) such Clearing Member's conduct (excluding conduct attributed to a Clearing 

Member solely as a result of the conduct of a Customer under Rule 102(j)), 

excluding conduct which the Clearing Member is obliged to perform and has 

performed in accordance with the Rules or Procedures or its Clearing Membership 

Agreement or Sponsor Agreement;

(iii) a breach by such Clearing Member of any Customer-CM Transaction, agency 

relationship or other contract with its Customer or a failure to perform by such 

Clearing Member in breach of any other obligation to such Customer (including, 

without limitation, any failure by such Clearing Member in whole or in part to 

pass on or credit to any Customer equivalent performance under a Customer-CM 

Transaction or other contract with its Customer to that which such Clearing 

Member has received under a Customer Account Contract from the Clearing 

House where such failure constitutes a breach or failure to perform as 

aforementioned);

(iv) if it is a CDS Clearing Member, a Customer-CM Relationship Claim (as defined 

at Rule 111(i) below) in respect of a breach or failure to perform alleged by a 

Customer of the CDS Clearing Member acting in such capacity but only to the 

extent that (A) the Indemnifying CM (as defined at Rule 111(i) below) has elected 

to defend against, negotiate or settle the Customer-CM Relationship Claim in 

accordance with Rule 111(i)(ii) below; (B) the Customer-CM Relationship Claim 

has been resolved; and (C) the Clearing House has been unable to recover from 

the Customer any or a portion of any losses, liabilities, damages, injuries, costs 

and expenses (excluding any consequential losses, liabilities, damages, injuries, 

costs or expenses) it has incurred or suffered in respect of that Customer-CM 

Relationship Claim; in which case the Indemnifying CM shall indemnify the 

Clearing House only for the portion of the indemnifiable amounts not recovered 

from the Customer;

(v) except in respect of a CDS Clearing Member acting in that capacity: (A) any 

claim made or alleged against the Clearing House by, or any liability of the 

Clearing House to, an Eligible Person (as defined in the relevant Clearing 

Membership Agreement), Transferor, Transferee or Customer of that Clearing 
NYDOCS01/1643340.2 68

Member; or (B) such Clearing Member's conduct to the extent that the same is not 

covered by Rule 111(a)(ii); or

(vi) a breach (or an allegation made by the Clearing House or any Governmental 

Authority of a breach) by the Clearing Member of any Applicable Law,

provided that a Clearing Member shall not indemnify or hold harmless the Clearing 

House or any of its officers or employees to the extent that any such loss, liability, 

damage, injury, cost or expense arises out of or in connection with:

(A) a breach by the Clearing House of any of its obligations under these Rules, 

the Procedures or any Contract;

(B) fraud, bad faith, gross negligence or wilful misconduct by the Clearing 

House or any of its officers or employees; or

(C) personal injury or death resulting from negligence, recklessness or an 

intentional act or omission of the Clearing House or any of its officers or 

employees.

(b) The provisions of this Rule 111 shall apply:

(i) without prejudice to the liability of any other Person subject to the Rules or the 

rules of any Exchange for the same conduct;

(ii) in the case of inconsistency with any other provision of the Rules, in priority to 

that other provision;

(iii) whether or not the Clearing Member's Representative(s) are subject to the Rules;

(iv) whether or not the Clearing Member's Representative(s) can be conclusively 

identified (provided that it is established that the relevant conduct was in fact 

carried out by a Clearing Member's Representative, albeit an unidentified Clearing 

Member's Representative); and

(v) save as expressly set out in Rule 111(f), to Sponsored Principals (and Sponsored 

Principal Clearing Agreements) and Disclosed Principal Members (and their 

agreements with the Clearing House), in each case in the same way as they apply 

to a Clearing Member that has no Customers (and Clearing Membership 

Agreements).

(c) Neither the Clearing House nor any of its Representatives, its Affiliates or its Affiliates' 

Representatives shall be liable to any Clearing Member or any other Person in respect of 

any loss, liability, damage, injury, cost or expense incurred or suffered by such Clearing 

Member or Person, whether in contract, tort or restitution, as a fiduciary or under any 

other cause of action, arising out of or in connection with any of the following:

(i) any suspension, restriction or closure of the Clearing House or its services;
NYDOCS01/1643340.2 69

(ii) any failure or malfunction of or inability to use any systems, communication lines 

or facilities or technology supplied, operated or used (directly or indirectly) by the

Clearing House, any Exchange or any Delivery Facility or the suspension, 

restriction or closure of any Market, Exchange or Delivery Facility;

(iii) any act or omission of any Exchange, any Market, any Delivery Facility, any 

Clearing Member or any other third party including any error in relation to price 

data;

(iv) any Force Majeure Event affecting the Clearing House (including, in relation to a 

delivery, a Force Majeure Event affecting a Person making or taking delivery on 

behalf of the Clearing House);

(v) any dispute relating to the validity, existence or terms of any Contract;

(vi) the exercise (or failure to exercise) by the Clearing House of any discretion or 

right conferred upon it pursuant to these Rules;

(vii) the exercise (or failure to exercise) by any Exchange of any discretion or right 

conferred upon it pursuant to its rules (including, without limitation, in relation to 

error trades);

(viii) any indirect or consequential loss, liability, damage, injury, cost or expense, any 

loss of profit (whether direct or indirect) or any loss of bargain;

(ix) any action in libel, defamation or slander in connection with the issue of any 

Default Notice, conduct of any proceedings relating to an Event of Default, the 

timing of termination of any Contracts or the manner in which or the price at 

which any Contracts are terminated following an Event of Default;

(x) rejection of any application to become a Clearing Member;

(xi) any Contract being void pursuant to Rule 403 or avoided pursuant to Rule 404, 

including (without limitation) the causes and consequences of such Contract being 

void or voidable;

(xii) any action or inaction on the part of a Transferor or Transferee;

(xiii) in respect of a Contract subject to tender, delivery or physical settlement:

(A) a tender given by the Clearing House;

(B) any documents accompanying a tender as required by Market Rules or the 

Procedures;

(C) the performance by the Clearing House of its obligations to make delivery 

of a Deliverable under a Contract or to pay the price or Exchange Delivery 

Settlement Price; or
NYDOCS01/1643340.2 70

(D) any other loss, liability, damage, injury, cost or expense arising under the 

terms of a Contract in relation to tender, delivery or physical settlement,

unless, the relevant Clearing Member gives notice of its loss, liability, damage, 

injury, cost or expense within seven Business Days of either the day on which 

relevant documents must be taken up and paid for by the Clearing Member 

(whether or not the Clearing Member fulfils that obligation) or the Clearing 

Member must take delivery of the Deliverable, whichever is the earlier;

(xiv) as a result of any action taken by it pursuant to Market Rules on the basis that 

Market Rules are to any extent invalid or ultra vires or that a determination or 

request made by the Market or any agreement made by the Market, is ultra vires

or incompatible with Market Rules;

(xv) any express or implied representations or warranties in relation to the Clearing 

House's systems, including, but not limited to, representations or warranties of 

good title, merchantability and fitness for purpose or for a particular use;

(xvi) any statement, representation, assurance or warranty of the Clearing House or any 

other Person other than as expressly set out in the Rules, Procedures, Contract 

Terms, a Clearing Membership Agreement, a Sponsored Principal Clearing 

Agreement or a Sponsor Agreement; or

(xvii) any action, suit or proceeding brought against the Clearing House over one year 

after the time that a cause of action, suit or proceeding has accrued

provided that neither this Rule 111(c) nor any other provision of these Rules shall affect 

the application of section 291 of the FSMA or shall exclude or restrict the liability of the 

Clearing House or any other Person for:

(xviii) fraud, bad faith, gross negligence or wilful misconduct;

(xix) personal injury or death resulting from negligence, recklessness, or an intentional 

act or omission;

(xx) obligations under Contracts (except that, other than as provided in Part 7, the 

terms of CDS Contracts, Part 15, the terms of FX Contracts, Part 17, and the 

Procedures, the Clearing House shall have no obligation physically to make or 

accept delivery of any Deliverable and shall have no liability arising out of the 

failure or lateness of another Clearing Member (or its Transferor or Transferee) 

physically to make or accept any such delivery or make any such payment); or

(xxi) any liability which in accordance with Applicable Laws cannot be excluded, to 

the extent such liability cannot lawfully be excluded.

(d) Any possible action, suit or proceeding against the Clearing House must be notified to the 

Clearing House as soon as reasonably practicable, including all relevant details then 

known and supporting documentation.
NYDOCS01/1643340.2 71

(e) [Not used.]

(f) Save for any liability which it cannot exclude pursuant to Applicable Laws, the Clearing 

House shall not be liable pursuant to these Rules or any Clearing Membership 

Agreement, Sponsored Principal Clearing Agreement or Sponsor Agreement to any 

Person who is not a Clearing Member or Sponsored Principal. Without prejudice to the 

generality of the foregoing, the Clearing House shall not be liable (save for any liability 

which it cannot by law exclude) to any Transferor or Transferee (that is not the Seller or 

Buyer under a Contract, respectively) or to any Customer of a Clearing Member (except 

in the case of a Customer as expressly set out in Part 16 of the Rules and elsewhere in 

respect of Customers of FCM Clearing Members; and in the case of a Sponsored 

Principal as expressly set out in Part 19 the Rules and elsewhere).

(g) If the Clearing House is found liable to a Clearing Member in respect of a Contract and 

another Clearing Member is also found liable to the Clearing House in respect of a 

Contract which arose pursuant to the same Transaction as the first Contract, then the 

liability of the Clearing House under the first Contract shall be deemed to be a 

foreseeable consequence of the breach by the Clearing Member of the second Contract 

and the Clearing House shall be entitled to be indemnified by such Clearing Member in 

accordance with this Rule 111.

(h) Damage or loss to the property of the Clearing House or any other property on the 

Clearing House's premises will be paid for by the Clearing Member causing such damage 

or loss.

(i) If the Clearing House is subject to any claim by a third party which would, if the claim 

were successful, be likely to give rise to a right on the part of the Clearing House to make 

a claim under Rule 111(a)(iii) (such claim, a "Customer-CM Relationship Claim") or 

Rule 111(a)(iv), in each case, against a CDS Clearing Member acting in that capacity that 

is not a Defaulter ("Indemnifying CM"):

(i) the Clearing House will:

(A) promptly provide the Indemnifying CM with notice of the Customer-CM 

Relationship Claim and all documentation and correspondence in its 

possession that is materially relevant to the Customer-CM Relationship 

Claim (save to the extent that the provision of such documentation or 

correspondence to the Indemnifying CM is restricted by a duty of 

confidentiality or by any Applicable Law); and

(B) provide the Indemnifying CM with a reasonable opportunity to comment 

on correspondence and documents proposed to be sent by the Clearing 

House to the claimant that is material to the Customer-CM Relationship 

Claim (save to the extent that the provision of any draft correspondence is 

restricted by a duty of confidentiality or by any Applicable Law);

(ii) the Indemnifying CM shall have the right to defend against, negotiate, settle, or 

otherwise deal with a Customer-CM Relationship Claim, provided that: 
NYDOCS01/1643340.2 72

(A) if the Indemnifying CM elects to defend against, negotiate, settle, or 

otherwise deal with a Customer-CM Relationship Claim, it shall, within 

thirty (30) calendar days (or sooner if the nature of the Customer-CM 

Relationship Claim so requires) from the date of receipt of notice from the 

Clearing House of the Customer-CM Relationship Claim, notify the 

Clearing House, the relevant officer, or the relevant employee, as 

applicable, of its intent to do so;

(B) the Indemnifying CM will at all times conduct itself with reference to the 

requirements of Rule 102(r); and 

(C) the Indemnifying CM will consult with the Clearing House in connection 

with any document or proposed document concerning the Customer-CM 

Relationship Claim that relates to the Clearing House or makes statements 

about the Clearing House's conduct, and will take into account any 

reasonable suggestions or comments received by it from the Clearing 

House in relation to any such document or proposed document (and the 

reasonableness of any comments of the Clearing House shall be 

interpreted, without limitation, with reference to the principles set out in 

Rule 102(r)); and

(iii) if the Indemnifying CM does not elect to itself defend against, negotiate, settle, or 

otherwise deal with a Customer-CM Relationship Claim within the period 

specified in Rule 111(i)(ii)(A),

(A) the Indemnifying CM will promptly provide the Clearing House with all 

documentation and correspondence in its possession that is materially 

relevant to the Customer-CM Relationship Claim (save to the extent that 

the provision of such documentation or correspondence to the Clearing 

House is restricted by a duty of confidentiality or by any Applicable Law); 

and

(B) the Clearing House will, in addition to its obligations in Rule 111(i)(i):

(1) take into account any reasonable suggestions or comments 

received by it from the Indemnifying CM in relation to proposed 

correspondence or documents referred to in Rule 111(i)(i)(B) (and 

the reasonableness of any comments shall be interpreted, without 

limitation, with reference to the principles set out in Rule 102(r)); 

and

(2) consult with the Indemnifying CM in respect of the resolution of 

the Customer-CM Relationship Claim, including, prior to any 

settlement, in respect of the terms of settlement.
NYDOCS01/1643340.2 73

Rule 112 Force Majeure and similar events

(a) Neither the Clearing House nor a Clearing Member or Sponsored Principal shall be liable 

for any failure, hindrance or delay in performance in whole or in part of its obligations 

under these Rules or of any Contract if and to the extent that such failure, hindrance or 

delay arises as a result of a Force Majeure Event.

(b) On the occurrence of any Force Majeure Event (and, where the Force Majeure Event 

affects the Clearing House, an affirmative vote of the Board at a quorate meeting 

recognising such Force Majeure Event (subject always to Rule 109(c)):

(i) the Affected FM Party shall immediately notify the Clearing House of the same 

(or, if the Affected FM Party is the Clearing House, the Clearing House shall 

issue a Circular in relation to the Force Majeure Event);

(ii) the Clearing House shall be entitled to require any Contracts affected by the event 

or circumstance to be performed in accordance with directions issued by the 

Clearing House or to be Invoiced Back;

(iii) the Clearing House shall be entitled to require any Clearing Member or Sponsored 

Principal to take such action as the Clearing House may direct in respect of 

Contracts affected by the event or circumstance;

(iv) the Clearing House shall be entitled to require Clearing Members or Sponsored 

Principals to comply with any directions issued by the Clearing House regarding 

the performance of, or otherwise in respect of, such affected Contracts as are 

specified by the Clearing House; and, upon receipt of such an invoice, settlement 

of all affected accounts shall be due immediately and shall be made forthwith in 

discharge of such Contracts;

(v) a Clearing Member or Sponsored Principal affected by a Force Majeure Event 

shall use all reasonable endeavours to mitigate the effects of the same upon its 

ability to perform its obligations to the Clearing House and if the Clearing House 

is affected by a Force Majeure Event, it shall use all reasonable endeavours to 

mitigate the effects of same upon its ability to perform such obligations to 

Clearing Members; and

(vi) the Affected FM Party shall notify the Clearing House immediately as soon as its 

ability to perform is no longer affected by the Force Majeure Event (or, if 

Affected FM Party is the Clearing House, the Clearing House shall issue a 

Circular in relation to the cessation of the Force Majeure Event).

(c) If a Market determines in accordance with Market Rules that an excessive position or 

unwarranted speculation or any other undesirable situation or practice is developing or 

has developed which is affecting or capable of affecting the Market, the Clearing House 

may take such action as is requested of it by that Market in respect of one or more 

Contracts.
NYDOCS01/1643340.2 74

Rule 113 Notices

(a) The delivery by hand, electronic transmission, facsimile or telephone of any notice, order 

or other communication to a Clearing Member or Sponsored Principal at the address, 

facsimile number or telephone number last designated by it shall be good and sufficient 

delivery thereof to such Person (unless another method of delivery is specified in the 

Rules or in relation to any Contract). The publication of a Circular shall amount to good 

and sufficient delivery of the contents of the Circular to all Clearing Members and 

Sponsored Principals.

(b) Any notice, document, communication, filing or form to be served on, filed with, made to 

or provided to the Clearing House pursuant to these Rules or in relation to any Contract 

shall be served, filed, made or provided at the address, fax number or e-mail address (or 

through such other communication system) as is specified by the Clearing House from 

time to time in accordance with the Procedures and shall be marked for the attention of 

such person or department as is specified by the Clearing House from time to time in 

accordance with the Procedures. Unless another form or method is specified in the Rules 

or the Procedures for the notice, document, communication, filing or form in question, a 

notice, document, communication, filing or form must be served, filed, made or provided 

in writing.

(c) Any notice, document, communication, filing or form, unless otherwise specified in the 

Rules or the Procedures, will only be effectively served, filed, made or provided and 

delivered to the Clearing House for the purposes of these Rules:

(i) if sent by post, on the third Business Day (or tenth Business Day in the case of 

airmail) after the day on which it was deposited in the post, full postage prepaid, 

in a correctly addressed envelope; or

(ii) if delivered in person or by courier, at the time of delivery or, if not delivered 

during business hours on a Business Day, on the following Business Day.

(d) Unless otherwise specified in the Rules or Procedures, any notice by fax or electronic 

communication shall not be effective until hard copy confirmation is served pursuant to 

Rule 113(c).

(e) Each Clearing Member that is not incorporated or registered in England and Wales shall 

appoint and maintain an agent in England and Wales to act as its agent to accept service 

of process issued out of the courts of England and Wales in relation to any arbitration 

commenced pursuant to Rule 117, the Clearing Membership Agreement or any Sponsor 

Agreement and shall deliver to the Clearing House an agreement substantially in the form 

specified by the Clearing House relating to such appointment countersigned by such 

agent. No Clearing Member shall give any notice of revocation to, or otherwise 

terminate the appointment of, any such agent unless prior to such termination it has 

validly appointed a replacement agent in England and Wales reasonably acceptable to the 

Clearing House to accept service of process issued out of the courts of England and 

Wales in relation to any arbitration commenced pursuant to Rule 117, the Clearing 
NYDOCS01/1643340.2 75

Membership Agreement or any Sponsor Agreement and has delivered to the Clearing 

House a copy of that agent's acceptance of that appointment substantially in the form 

specified by the Clearing House countersigned by such agent. If for any reason any agent 

appointed under this Rule 113(e) ceases to be such an agent, the Clearing Member shall 

forthwith appoint a replacement agent in England and Wales and deliver to the Clearing 

House a copy of the new agent's acceptance of that appointment substantially in the form 

specified by the Clearing House countersigned by such agent within 10 Business Days of 

such appointment. Nothing in these Rules, the Procedures, the Clearing Membership 

Agreement, any Sponsor Agreement or any Contract shall affect the right of the Clearing 

House to serve process in any other manner permitted by law.

Rule 114 Action by the Clearing House

(a) Except as otherwise specifically set out herein, any action permitted or required to be 

taken by the Clearing House may be taken by the Board, the Chairman, the President, any 

other Board member or any other officer or committee to whom or which authority has 

been delegated by the Clearing House, the Board, the Chairman, the President or any 

committee.

(b) Where there is a provision to the effect that an action may be taken or power exercised by 

the Clearing House, any action taken or power exercised by the Clearing House shall be 

without prejudice to the right of the Clearing House to exercise such powers and take 

such other steps (or not as the case may be) as it may think fit upon that or any other 

occasion.

(c) The Clearing House may outsource operational functions, services or activities. If it does 

so, this shall not affect the Clearing House's responsibilities and liabilities under these 

Rules, any Clearing Membership Agreement, any Sponsored Principal Clearing 

Agreement, any Sponsor Agreement or Applicable Laws.

Rule 115 Relations with Governmental Authorities and other Persons

(a) With a view to maintaining recognition as a clearing house under the FSMA, the Clearing 

House may:

(i) make arrangements with any Person for monitoring compliance with and 

investigating alleged breaches of the Rules (and arrangements, Procedures and 

directions made, authorised or given thereunder); and

(ii) co-operate generally with any Governmental Authority.

(b) Without prejudice to the generality of Rule 115(a):

(i) this may include making arrangements for the sharing of information with 

Governmental Authorities; and

(ii) the Clearing House may, where appropriate, at any time refer a complaint or any 

other matter coming to its attention to one or more Exchanges, Clearing 
NYDOCS01/1643340.2 76

Organisations or Regulatory Authorities for its or their comment or investigation 

and may, pending the result of such reference, either suspend or continue with (in 

whole or in part) its own investigation, proceedings or other actions.

Rule 116 Opening Hours

The Clearing House will give notice of any changes to its Opening Days, Opening Hours and 

Business Days from time to time by Circular.

Rule 117 Dispute Resolution

(a) Subject to Rule 1518, any Dispute between the Clearing House and the Clearing 

Member(s) shall be referred to and finally resolved by arbitration under the LCIA Rules, 

which Rules are deemed to be incorporated into this Rule 117. In the event of a conflict 

between any provision of the LCIA Rules and this Rule 117, this Rule 117 shall prevail.

(b) The seat of arbitration will be London and the language of the arbitration proceedings 

shall be English.

(c) The Tribunal will comprise three arbitrators appointed by the LCIA Court. The LCIA 

Court shall nominate one of the arbitrators to act as the chairman of the Tribunal. The 

members of the Tribunal will be persons considered by the LCIA Court in its discretion 

to have experience with respect to the subject matter of the Dispute. Tribunal members 

shall not be current or former employees or directors of any Clearing Member that is a 

party to the arbitration, current or former employees of the Clearing House or any person 

or persons with a material interest or conflict of interest in the outcome of the Dispute.

(d) The Tribunal shall have the power on the application of any party to an existing 

arbitration, to require one or more Clearing Members to be joined to an existing 

arbitration. Each Clearing Member agrees that it may be joined as an additional party to 

an arbitration involving the Clearing House and another Clearing Member.

(e) If more than one arbitration is begun under these Rules and the Clearing House or a 

Clearing Member that is a party to an arbitration so concerned serves notice upon the 

Tribunals concerned that it believes two or more arbitrations are substantially related and 

that the issues should be heard in one set of proceedings, the Tribunal appointed in the 

first-filed of such proceedings shall have the power to determine whether, in the interests 

of justice and efficiency, the proceedings should be consolidated and heard together 

before that Tribunal.

(f) In the case of such joinder or consolidation, the Tribunal shall make a single, final award 

determining all Disputes between the relevant parties in those proceedings. Each 

Clearing Member and the Clearing House irrevocably waives any right to challenge any 

award or order of any Tribunal by reason of the fact that it arises from a joined or 

consolidated arbitration. In addition to the waiver of challenge on the basis of joinder set 

out in clause 8.5 of the Clearing Membership Agreement, each Clearing Member and the 

Clearing House hereby irrevocably waives any right to challenge any award or order of 
NYDOCS01/1643340.2 77

any tribunal appointed under the Clearing Membership Agreement by reason of the fact 

that it arises from a consolidated arbitration.

(g) The award of the arbitral Tribunal will be final and binding on the Clearing House and 

any Clearing Member from the day it is made. Judgment upon the award may be entered 

or the award enforced through any other procedure in any court of competent jurisdiction.

(h) No arbitral proceedings under this Rule 117 may be instigated where arbitral proceedings 

could have been instigated in respect of the same Dispute under Market Rules.

(i) The provisions of this Rule 117 may not be varied by any Clearing Member or Clearing 

Members save where each Clearing Member that is a party to the Dispute or arbitration 

proceedings and the Clearing House agree in express written terms.

(j) The commencement of any arbitral proceedings shall be without prejudice to and shall 

not limit in any way the right of the Clearing House to instigate any procedure under 

Part 9 or Part 10 of these Rules, including without limitation in relation to any Event of 

Default, any investigation, disciplinary proceedings or the imposition of a sanction.

(k) Each Clearing Member that now or hereafter has a right to claim sovereign immunity 

from suit or sovereign immunity from enforcement for itself or any of its assets shall be 

deemed to have waived any such immunity to the fullest extent permitted by Applicable 

Laws. Such waiver shall apply in respect of any immunity from:

(i) any proceedings commenced pursuant to this Rule 117;

(ii) any judicial, administrative or other proceedings to aid an arbitration commenced 

pursuant to this Rule 117; and

(iii) any effort to confirm, enforce, or execute any decision, settlement, award, 

judgment, service of process, execution order or attachment (including 

pre-judgment attachment) that results from any judicial or administrative 

proceedings commenced pursuant to this Rule 117.

(l) The rights and obligations of a Clearing Member under the Rules and in relation to any 

Contract are of a commercial and not a governmental nature.

(m) No Clearing Member shall raise or in any way whatsoever assert a defence of sovereign 

immunity in relation to any claim or enforcement proceedings arising from a Dispute 

under the Rules.

(n) All Permitted Cover standing to the credit of a Clearing Member who is party to one or 

more Contracts subject to a Dispute or difference to which this Rule 117 or Market Rules 

applies, whether or not such Permitted Cover is held with respect to a disputed Contract, 

may be retained by the Clearing House until the Dispute in question is finally disposed of.

(o) This Rule 117 is subject to Rule 1608.
NYDOCS01/1643340.2 78

(p) This Rule 117 applies to Disputes in connection with Sponsored Principals and 

Sponsored Principal Clearing Agreements in the same way that it applies to Disputes in 

connection with Clearing Members and Clearing Membership Agreements;

(q) This Rule 117 applies to Disputes in connection with Sponsors and Sponsor Agreements 

in the same way that it applies to Disputes in connection with Clearing Members and 

Clearing Membership Agreements.
NYDOCS01/1643340.2 79

Part 2 Clearing Membership

This Part 2 does not apply to Sponsored Principals save to the extent expressly set out in Part 19.

Rule 201 Clearing Membership Criteria

(a) In order to attain and maintain membership as a Clearing Member, a Person must, at a 

minimum, as from the date on which it is proposed that it becomes a Clearing Member:

(i) have paid the Clearing House's (non-refundable) application fee (if applicable) 

and provided completed membership application forms;

(ii) (if proposing to become a Clearing Member in relation to ICE Endex 

Transactions) be a member of ICE Endex;

(iii) (if proposing to become a Clearing Member in relation to ICE Futures Europe 

Transactions) be a member of ICE Futures Europe;

(iv) (if proposing to become a Clearing Member in relation to ICE Futures US 

Transactions) be a member of ICE Futures US;

(v) (if proposing to become a Clearing Member in relation to ICE Endex UK 

Transactions) each Clearing Member's Transferor and Transferee must: (A) be a 

member of ICE Endex UK or have other adequate arrangements in place to enable 

the Clearing Member, effectively and promptly, to manage the default of its 

Transferors and Transferees for ICE Endex UK Transactions; (B) be a User (as 

such term is defined in the Network Code); and (C) where a Clearing Member's 

Transferor or Transferee is not a Trader User, hold a Gas Transporter's Licence or 

a Shipper's Licence (as such terms are defined in the Network Code), which in 

either case is in force with no notice of revocation having been given in respect of 

such designations;

(vi) (if proposing to become a Clearing Member in relation to ICE Natural Gas

Continental Spot Transactions) each Clearing Member's Transferor and 

Transferee must: (A) be a member of ICE Endex Continental or have other 

adequate arrangements in place to enable the Clearing Member, effectively and 

promptly, to manage the default of its Transferors and Transferees for ICE 

Natural Gas Continental Spot Transactions; (B) be a Licensed Shipper (as defined 

in the Delivery Procedures), with no notice of revocation having been given in 

respect of such designations;

(vii) be a user of or otherwise have access to at least one Repository (if any) for the 

Contracts it proposes to clear;

(viii) (if proposing to become a Clearing Member in relation to Financials & Softs

Transactions that are made on or reported to LIFFE) be a member of LIFFE;
NYDOCS01/1643340.2 80

(ix) have nominated a Person, satisfactory to the Clearing House, who is (A) a 

director, general partner, trustee or officer of the applicant (or Person occupying a 

similar status or performing similar functions), (B) responsible for the clearing 

operations of the applicant and (C) authorised to act on behalf of the applicant in 

all transactions with or involving the Clearing House, and have nominated a 

second Person who meets the requirements of (A) above and is authorised to act 

on behalf of the applicant in the event of the death, incapacity or other inability of 

the first Person to so act;

(x) maintain and, where applicable, procure that all of its Designated Controllers 

maintain, sufficient Capital in accordance with Rule 206;

(xi) where a Controller Guarantee is or is to be provided by a Designated Controller, 

procure that the Controller Guarantee is executed in such form and delivered in 

such manner as the Clearing House may prescribe from time to time;

(xii) be party to a Clearing Membership Agreement with the Clearing House;

(xiii) have in place all necessary regulatory authorisations, licences, permissions and 

approvals in its country of origin, the UK and any other jurisdiction in which it 

conducts business;

(xiv) be fit and proper, have sufficient qualities of financial responsibility, operational 

capacity, business integrity, reputation and competence as the Clearing House, in 

its discretion, considers necessary or appropriate and satisfy the Clearing House 

that its directors, officers and Controllers also satisfy such tests;

(xv) satisfy the internal stringent credit criteria established by the Clearing House, such 

satisfaction to be confirmed by an examination of its books and records; provided 

further that this requirement may, at the discretion of the Clearing House, be met 

by a Controller of the Clearing Member if such Controller provides a guarantee in 

accordance with the Finance Procedures; 

(xvi) have such facilities, equipment, operational capability, personnel, hardware and 

software systems as are capable of supporting the proper performance of its 

business as a Clearing Member, including such IT links to the Clearing House and 

software as in the judgment of the Clearing House are necessary or desirable;

(xvii) have in place business continuity procedures that satisfy the Clearing House's 

minimum requirements;

(xviii) have a sufficient level of knowledge about the types of Contracts that it intends to 

clear and any risks involved in relation to the same;

(xix) have demonstrated its ability to make available to the Clearing House sufficient 

Margin and make Margin payments as required pursuant to these Rules;

(xx) have made the required Guaranty Fund Contributions;
NYDOCS01/1643340.2 81

(xxi) not be subject to an Insolvency;

(xxii) be either a Person that is not a natural person or a Person that is subject to 

business taxation for the purposes of Council Directive 2003/48/EC on the 

taxation of savings income in the form of interest payments;

(xxiii) demonstrate operational competence in respect of the classes of contracts that it 

proposes to clear;

(xxiv) be an "eligible contract participant", as defined in Section 1a of the U.S. 

Commodity Exchange Act;

(xxv) if it is not incorporated in England and Wales, have appointed an agent for the 

service of process pursuant to Rule 113(e);

(xxvi) if it is to provide a Controller Guarantee from a Controller that is not incorporated 

in England and Wales, have appointed an agent for the service of process in 

respect of the Controller following the same provisions as are applicable to 

Clearing Members pursuant to Rule 113(e);

(xxvii) if it is to clear transactions on behalf of Customers, have the necessary additional 

financial resources and operational capacity to perform this activity;

(xxviii)not be subject to any circumstances pursuant to which an Event of Default could 

be declared were the applicant to be a Clearing Member;

(xxix) have provided details of an office which is staffed during normal business hours 

and sufficient for its proposed activities as a Clearing Member under the direct 

supervision and responsibility of an executive officer of the Clearing Member 

(who need not be physically located at such office) to which all notices, orders 

and other communications from the Clearing House may be transmitted or 

delivered;

(xxx) satisfy the Clearing House that it, its officers, directors and Controllers would 

each meet the requirements for an 'approved person' (for individuals) or 

'controller' (for partnerships, companies and other bodies corporate) under 

applicable FCA Rules and PRA Rules;

(xxxi) hold a Nominated Bank Account or Accounts (as necessary) at an Approved 

Financial Institution or Institutions in relation to each of which a direct debit 

mandate has been established in favour of the Clearing House;

(xxxii) if non-cash assets are to be used as Permitted Cover, have executed all necessary 

documentation relating to the transfer of such assets and not be in dispute with the 

Clearing House in relation to the ownership over or rights relating to such 

non-cash assets;
NYDOCS01/1643340.2 82

(xxxiii)either (A) be a Person in respect of whom 'simplified due diligence' may be

applied pursuant to the Money Laundering Regulations 2007; or (B) have been 

subject to customer due diligence measures under the Money Laundering 

Regulations 2007 to the Clearing House's satisfaction;

(xxxiv)not be prevented from entering into any Contract or using the Clearing House as a 

result of any sanctions administered or imposed by the European Union, H.M. 

Treasury, the Office of Foreign Assets Control of the U.S. Department of the 

Treasury, the United Nations Security Council or any other relevant 

Governmental Authority affecting the Clearing Member or any of its assets;

(xxxv) be incorporated or registered in and access the Clearing House from only 

jurisdictions whose Applicable Laws relating to insolvency, the regulation of 

clearing houses, Markets or central counterparties, the enforceability of Contracts 

and the Rules and such other matters as the Clearing House specifies are 

acceptable to the Clearing House (and an applicant may be required to supply a 

legal opinion of external counsel, addressed to the Clearing House, addressing 

such issues, at its cost); and comply with any additional restrictions or 

requirements imposed by the Clearing House as a result of activities in any such 

jurisdictions;

(xxxvi)not be subject to statutory disqualification under Applicable Law;

(b) The Clearing House may at its discretion attach further objective conditions to any 

application for Clearing Member status prior to such status being granted, provided that 

such additional conditions are proportional to the risk brought by the applicant. The 

Clearing House may grant approval to an applicant conditional upon satisfying certain 

requirements, provided that the applicant has expressed its intention to meet such 

requirements and provided evidence of its ability to do so.

(c) Applicants for membership must provide information or documentation to the Clearing 

House evidencing compliance (or lack thereof) with each of the criteria set out in or 

required pursuant to Rule 201(a), and for CDS Clearing Member applicants only, 

Rule 201(i), and, in addition, for FX Clearing Member applicants only, Rule 201(j). 

Failure by an applicant to supply such information or documentation may result in an 

application being rejected or Clearing Member status or access to particular services 

being revoked.

(d) All information supplied to the Clearing House in respect of an application for 

membership shall be deemed to have been provided by the Clearing Member to the 

Clearing House on the day on which that Clearing Member becomes a Clearing Member, 

save to the extent that such information has been amended or revoked at least two 

Business Days prior to membership being granted.

(e) If the Clearing House determines that an application for membership should be denied, 

the applicant will be given notice of such denial, with the membership criterion or criteria 

that were not met being specified. In such an event, the applicant may request an 
NYDOCS01/1643340.2 83

opportunity to be heard by the Clearing House's Board (or an appropriately constituted 

sub-committee of the Board) in relation to the matter and to present evidence as to why 

its application should not be denied or may raise a complaint which the Clearing House 

will deal with in the same way as if Part 10 applied to such complaint (notwithstanding 

that the Rules do not apply to the complaint).

(f) Membership of the Clearing House does not entitle any Clearing Member to any 

shareholding or other similar interest in the Clearing House or any of the Clearing 

House's Affiliates. Nothing in these Rules is intended to, or shall be deemed to, establish 

any partnership or joint venture between any Clearing Member, Sponsor, Sponsored 

Principal, the Clearing House or any other Person. Except for any provision relating to 

the relationships between a Clearing Member and Disclosed Principal Member, between 

a Clearing Member and its Representative or between a Sponsor and its Sponsored 

Principal, nothing in these Rules constitutes any Clearing Member, Sponsored Principal, 

Sponsor, Disclosed Principal Member, Customer or the Clearing House as the agent or 

principal of any other Person. Nothing in these Rules authorises any Person to make or 

enter into any commitments for or on behalf of any other Person (save in the case of a 

Clearing Member acting on behalf, or for the account, of and being liable for a Customer 

or as otherwise expressly provided herein).

(g) Clearing Members shall be deemed to represent and warrant, upon their first date of 

membership and on each subsequent date that they are a Clearing Member, that they meet 

all of the membership criteria in Rule 201(a) (and, if they are a CDS Clearing Member, 

Rule 201(i) and, in addition, if they are an FX Clearing Member, Rule 201(j)) and are in 

compliance with all of their obligations under these Rules.

(h) In order to attain and maintain membership as a Disclosed Principal Member, a Person 

must, at a minimum, as from the date on which it is proposed that it becomes a Disclosed 

Principal Member, meet all the requirements for membership as a Clearing Member. A 

Disclosed Principal Member shall be subject to and bound by all these Rules in every 

way as if it were a Clearing Member, subject to such modifications as are set out herein 

and acting at all times as disclosed principal for the Clearing Member that it has selected.

(i) In order to attain and maintain membership as a CDS Clearing Member, a Person must, at 

a minimum, as from the date on which it is proposed that it becomes a CDS Clearing 

Member, meet such additional requirements applicable to CDS Clearing Members as are 

specified in the CDS Procedures.

(j) In order to attain and maintain membership as an FX Clearing Member, a Person must, at 

a minimum, as from the date on which it is proposed that it becomes an FX Clearing 

Member, meet such additional requirements applicable to FX Clearing Members as are 

specified in the Procedures.

(k) The references in Rule 201(g), Rule 202(a)(iv) and Rule 209(a)(v) to satisfaction of the 

criteria for membership in or set out in Rule 201(a) include those criteria for membership 

which are required pursuant to (but not actually set out in) Rule 201(a).
NYDOCS01/1643340.2 84

Rule 202 Obligations of Clearing Members

(a) In connection with these Rules, all and any Contracts, its membership of the Clearing 

House and its business and activities as a Clearing Member, each Clearing Member shall 

at all times:

(i) comply with: (A) these Rules and any agreement with the Clearing House; and 

(B) for F&O Contracts, comply with Market Rules and any rules of or agreement 

with a Delivery Facility, as applicable or relevant to the F&O Contract;

(ii) comply with all Applicable Laws relating to its status and performance as a 

Clearing Member;

(iii) act in good faith in its dealings with the Clearing House;

(iv) continually satisfy the criteria for membership set out in or required pursuant to 

Rule 201(a) and, in addition, if it is a CDS Clearing Member, Rule 201(i), and, in 

addition, if it is an FX Clearing Member, Rule 201(j);

(v) respond promptly to any direction by the Clearing House to provide information 

or documentation;

(vi) maintain at least the amount of Capital required pursuant to Rule 206 (and, where 

the Capital requirements would not be met without a Controller Guarantee being 

provided, procure that each of its Designated Controllers is party to a Controller 

Guarantee that remains in force and maintains such amount of Capital as is 

required pursuant to Rule 206);

(vii) pay all fees and other charges when due in accordance with Part 3;

(viii) provide Margin and make Margin payments to the Clearing House in accordance 

with Part 3 and Part 5;

(ix) make all such payments to such Guaranty Funds as are required pursuant to 

Part 11;

(x) respond promptly to all enquiries or requests for information made by the 

Clearing House;

(xi) maintain accounts at an Approved Financial Institution for the deposit of funds in 

Eligible Currencies and the deposit of securities required to be transferred to and 

from the Clearing Member pursuant to these Rules (whether by way of Margin, 

Guaranty Fund Contributions, fees, amounts due under Contracts or otherwise) 

and have arrangements with such Approved Financial Institutions satisfactory to 

the Clearing House for electronic transfer of funds and securities into and out of 

such accounts as is required under the Rules and Procedures, on the order of the 

Clearing House and without the need to seek the consent of such Clearing 

Member or any of its Customers;
NYDOCS01/1643340.2 85

(xii) if it:

(A) has a place of business or establishment in any member state of the 

European Economic Area;

(B) is to have a Customer Account or act as a Sponsor in respect of an 

Individually Segregated Sponsored Account; and

(C) is a credit institution or financial institution (as defined in the Money 

Laundering Directive) or otherwise is a person falling under article 17(2) 

of the Money Laundering Regulations 2007 (or the equivalent provision 

implementing the Money Laundering Directive in a member state other 

than the UK):

consent to any Transferee Clearing Member and the Clearing House relying upon 

its customer due diligence in relation to all of its Customers, Disclosed Principal 

Members, Sponsored Principals and all other "beneficial owners" (within the 

meaning of article 3(6) of the Money Laundering Directive) in respect of any 

Contracts entered into in respect of Customer business, Margin and Contracts 

recorded in one of its Customer Accounts (or an Individually Segregated 

Sponsored Account for which it acts as Sponsor) or any other collateral subject to 

the Default Portability Rules, such consent only to be relied upon in the event of 

the Clearing Member becoming a Defaulter and the Default Portability Rules 

being applied;

(xiii) if the Clearing House at its discretion so directs, allow formal audits or system 

tests of its operations related to its business with the Clearing House during 

reasonable business hours and on reasonable notice no more than twice annually, 

at the expense of the Clearing Member;

(xiv) have adequate systems and controls in place in order to ensure that:

(A) its internal affairs are organised and controlled in a responsible and 

effective manner;

(B) it has adequate risk management systems that are applied appropriately;

(C) its internal record-keeping is adequate;

(D) all of its Representatives are fit and proper, suitable, adequately trained 

and properly supervised;

(E) all clearing business conducted by it, including in relation to individual 

Contracts, complies with the Clearing Member's obligations under the 

Rules and Applicable Laws;

(F) it only enters into Contracts or accesses the Clearing House (through 

actions of its Representatives or otherwise) in or from jurisdictions on a 
NYDOCS01/1643340.2 86

list of acceptable jurisdictions published by the Clearing House from time 

to time and in accordance with all conditions and requirements as are 

specified by the Clearing House from time to time for entry into Contracts 

or access in or from that jurisdiction;

(G) it is able continuously to monitor communication facilities for receipt of 

communications from the Clearing House; and

(H) it is able promptly to review Circulars and other communications 

delivered or made available to the Clearing Member or its Representatives 

by the Clearing House;

(xv) ensure that any power of attorney, appointment of any agent or Representative or 

other authorisation to transact business with the Clearing House given by a 

Clearing Member to any Person remains in effect on its original terms until not 

less than five Business Days after a written notice of change has been received by 

the Clearing House;

(xvi) keep accurate records showing the details of each Transaction submitted for 

Clearing by or on behalf of such Clearing Member and such other information, in 

such form, as shall be required by the Clearing House from time to time and in 

accordance with Applicable Laws and Accounting Standards;

(xvii) gather and make available to the Clearing House basic information to identify, 

monitor and manage relevant concentrations of risk relating to the provision of 

services to Customers; 

(xviii) upon request, inform the Clearing House about the criteria and arrangements 

adopted by it to allow clients access to Clearing with the Clearing House; 

(xix) participate in default management simulations, new technology testing and other 

exercises, as notified by the Clearing House from time to time;

(xx) be responsible for ensuring that Customers comply with their obligations in the 

manner set forth in the Rules and Standard Terms; and

(xxi) if it is subject to CASS 7.18 of the FCA rules, deliver to the Clearing House, in 

the format required under CASS 7.18, a letter in respect of each of its Segregated 

Customer Omnibus Accounts for CDS, Segregated Customer Omnibus Accounts

for F&O and Segregated Customer Omnibus Accounts for FX, as well as each 

Individually Segregated Sponsored Account and Margin-flow Co-mingled 

Account which is treated by it as a client transaction account under CASS 7.18.

(b) Prior to making available services relating to Clearing of CDS, F&O or FX to any 

Customer, a Non-FCM/BD Clearing Member is obliged to procure the agreement of such 

Customer to the CDS Standard Terms, F&O Standard Terms or FX Standard Terms 

respectively, in such a way that: 
NYDOCS01/1643340.2 87

(i) the relevant Standard Terms and/or Rules are duly cross-referenced (as being 

applicable to Customer-CM Transactions between such Customer and such NonFCM/BD Clearing Member) in an agreement between the Non-FCM/BD Clearing 

Member and its Customer that has been duly executed and duly authorised by 

both of them; and 

(ii) subject to Rule 202(c), the obligations of the Customer to the Non-FCM/BD 

Clearing Member and the Clearing House under the relevant Standard Terms 

constitute its legal, valid and binding obligations, enforceable in accordance with 

their respective terms (subject to applicable bankruptcy, reorganisation, 

insolvency, moratorium or similar laws affecting creditors' rights generally and 

subject, as to enforceability, to equitable principles of general application and to 

other matters which are standardly excluded, restricted or qualified in legal 

opinions (regardless of whether enforcement is sought in a proceeding in equity or 

at law)); and 

(iii) automatic early termination does not apply under such agreement in respect of 

either the Non-FCM/BD Clearing Member or its Customer and the relevant 

Customer-CM Transactions (unless the party, or each of the parties, to which 

automatic early termination applies is incorporated in Switzerland, Germany or 

any other jurisdiction approved by the Clearing House for such purposes).

To the extent that it agrees to be bound by the Rules, a Customer of a Non-FCM/BD 

Clearing Member will be deemed to be bound by each set of relevant Standard Terms in 

such a manner.

(c) Where:

(i) the governing law of the agreement between a Non-FCM/BD Clearing Member 

and its Customer incorporating the relevant Standard Terms and/or Rules is the 

law of any jurisdiction of incorporation of any Clearing Member; and

(ii) each of the place of incorporation and relevant place of business of the Customer 

is the same as any jurisdiction of incorporation of any Clearing Member or any 

other jurisdiction specified for this purpose by the Clearing House,

the obligation in Rule 202(b)(ii) to procure that the obligations of the Customer under the 

relevant Standard Terms are of a legal, valid and binding nature and enforceable will be 

deemed to be satisfied and there shall be no obligation on such Clearing Member to carry 

out any further enquiry as regards enforceability of the relevant Standard Terms under 

Applicable Laws.

(d) If the Clearing House so requests in writing and there are reasonable grounds for it 

making such a request, a Non-FCM/BD Clearing Member will execute any 

documentation specified by the Clearing House which confirms its agreement to any 

Standard Terms relating to Contracts it clears for its Customer or any amendment to any 

such Standard Terms made in accordance with such Standard Terms (either generally or 

in respect of any particular Customer). 
NYDOCS01/1643340.2 88

(e) Where a Customer of a Non-FCM/BD Clearing Member has agreed or is deemed to have 

agreed to the application of any Standard Terms as set out in Rule 202(b)-(c), the 

requirements of clause 3.2 of the Clearing Membership Agreement shall be deemed to 

have been satisfied by the Non-FCM/BD Clearing Member in respect of such Customer.

(f) If a Controller Guarantee has been provided in favour of a Clearing Member, the 

Clearing Member to which the Controller Guarantee relates shall procure that the 

Controller:

(i) at all times complies with the requirements of Rule 201(a)(xi), Rule 202(a)(ii), 

Rule 202(a)(iii), Rule 202(a)(v), Rule 202(a)(vi), Rule 202(a)(x) and 

Rule 202(a)(xiii) as if the Controller were a Clearing Member, mutatis mutandis, 

and such provisions applied to the Controller's business;

(ii) would not breach any of the requirements of Rule 203, were the Controller to be a 

Clearing Member subject to the requirements of Rule 203, mutatis mutandis, and 

such provisions applied to the Controller's business; and

(iii) makes all notifications that would be required under Rule 204 if the Controller 

were a Clearing Member, mutatis mutandis, and such provisions applied to the 

Controller's business. 

Rule 203 Prohibitions on Clearing Members

(a) In connection with these Rules, any Contracts, its membership of the Clearing House or 

its business and activities as a Clearing Member, no Clearing Member shall at any time:

(i) provide any information to the Clearing House (including information for the 

purpose of obtaining or reinstating membership) which is false, misleading or 

inaccurate in any material respect;

(ii) breach any Applicable Law relating to its status and performance as a Clearing 

Member;

(iii) commit any act of fraud;

(iv) engage in any behaviour which amounts to market abuse, insider dealing, market 

manipulation, money laundering or which is in breach of any similar Applicable 

Laws;

(v) except with the prior written consent of the Clearing House and otherwise than to 

terminate existing positions, continue to trade, enter into Contracts or provide or 

accept payments or transfers in respect of Margin when not in compliance with 

the Capital requirement then applicable;

(vi) knowingly disseminate false, misleading or inaccurate reports concerning any 

Contract, product or market information or conditions that affect or tend to affect 

prices of Contracts;
NYDOCS01/1643340.2 89

(vii) make or report a false or fictitious Transaction or Contract;

(viii) knowingly, fraudulently, recklessly or negligently furnish any false, inaccurate or 

misleading information to the Clearing House;

(ix) enter into any Contract or fail to close out the same either intending to default in 

performance of the same or having no reasonable grounds for believing that it 

would be able to avoid such default (provided that it shall not be sufficient to have 

intended to comply with any contractual or other provision governing the 

consequences of default);

(x) use or reveal any information confidential to the Clearing House or any of its 

Representatives when under a legal or contractual obligation to the Clearing 

House or any Applicable Law not to do so;

(xi) (A) use any information technology or any online services provided to it or made 

available to it pursuant to its membership of the Clearing House other than for the 

purposes of conducting its business and activities as a Clearing Member in 

accordance with these Rules; or (B) use any FX Data except for (1) internal 

purposes related directly to such Clearing Member's, its Affiliates' and Customers' 

and their clients' trading and clearing activity relating to FX Clearing at the 

Clearing House; or (2) licensing, sublicensing, transferring, transmitting, 

reproducing and/or distributing copies of FX Data to third parties in accordance 

with Rule 1708;

(xii) engage in any other event or practice which has developed or is developing on the 

Clearing House and is reasonably considered by the Clearing House to be capable 

of impairing the orderly conduct of business of the Clearing House or affecting 

the timely delivery or settlement of Contracts;

(xiii) represent or hold out to any Person that membership of the Clearing House brings 

with it any stamp of approval, special status, hallmark, regulatory supervision or 

approval or confers any rights or protections to Customers or any other Person in 

relation to the Clearing Member's business, policies, financial standing or 

otherwise (although Clearing Members may inform their Customers, potential 

Customers and other Persons that they are a member of the Clearing House and 

details of their privileges);

(xiv) participate in, facilitate, procure, counsel, incite, encourage, aid or abet any 

conduct by a third party which would be a violation or attempted violation of 

these Rules regardless of whether that third party is subject to these Rules;

(xv) take any action or make any omission or knowingly or recklessly permit the use 

of its services, facilities or membership or clearing privileges by any Person in a 

manner which in the reasonable opinion of the Clearing House is liable to:

(A) bring the Clearing House or any of its Clearing Members into disrepute;
NYDOCS01/1643340.2 90

(B) impair the dignity or degrade the good name of the Clearing House;

(C) create or maintain or exacerbate actual or attempted breaches, 

infringements, manipulations or violations of the Rules (or arrangements, 

provisions or directions made or given thereunder) or market practice; or

(D) otherwise be substantially detrimental to the interests or welfare of the 

Clearing House;

(xvi) engage in conduct that would render it unable to satisfy the membership criteria in 

Rule 201(a), Rule 201(i) or Rule 201(j) (in the case of Rule 201(i), only if it is a 

CDS Clearing Member, and in the case of Rule 201(j), only if it is an FX Clearing 

Member);

(xvii) knowingly, negligently, recklessly or carelessly allow any Representative to 

engage in any conduct that might itself breach these Rules or render it unable to 

satisfy the membership criteria in Rule 201(a), Rule 201(i) or Rule 201(j) (in the 

case of Rule 201(i), only if it is a CDS Clearing Member and in the case of 

Rule 201(j), only if it is an FX Clearing Member);

(xviii) assign any of its rights or transfer by novation any of its rights and obligations 

under these Rules to a third party (or purport to do so) unless the Clearing House 

provides its prior written consent (which consent shall not unreasonably be 

withheld or delayed);

(xix) breach any Contract Terms; or

(xx) if it is subject to CASS 7.18 of the FCA rules, deliver any letter to the Clearing 

House in the manner referred to in Rule 102(q)(viii) in respect of any Proprietary 

Account, Segregated TTFCA Customer Omnibus Accounts for CDS, Segregated 

TTFCA Customer Omnibus Accounts for F&O or Segregated TTFCA Customer 

Omnibus Accounts for FX.

Rule 204 Notifications by Clearing Members

(a) Each Clearing Member shall notify the Clearing House in writing without delay 

providing full particulars known to it:

(i) in relation to any change of Control, as soon as it becomes aware of that change or 

proposed change of Control and it is not prevented from disclosing the change of 

Control by Applicable Laws;

(ii) if it breaches any applicable Position Limit that has been notified to it;

(iii) if it ceases to have sufficient Capital, as determined pursuant to Rule 206;

(iv) if its Capital for any reason is reduced by more than 10% from that shown on the 

latest financial statement filed by it with the Clearing House;
NYDOCS01/1643340.2 91

(v) prior to any payment, loan, distribution or redemption causing a reduction in 

Capital of the nature described in Rule 204(a)(iv), detailing the payment, loan, 

distribution or redemption involved and a description of the effect that the same 

will have on the Capital of the Clearing Member;

(vi) in the event that it fails to meet any obligation to transfer, deposit or pay any 

Margin when and as required by any Clearing Organisation of which it is a 

member (other than the Clearing House), excluding any matter subject to a 

dispute (where the Clearing Member is not in default) or resulting from manifest 

error;

(vii) in the event that it fails to comply with any applicable financial requirements of 

any Governmental Authority, Regulatory Authority, Exchange, Clearing 

Organisation or Delivery Facility;

(viii) of an Insolvency affecting it or any of its Group Companies (and must provide a 

copy of such notice to the Bank of England pursuant to Part 12);

(ix) of any Event of Default affecting it;

(x) of any financial or commercial difficulty such as would give rise to a risk of an 

Event of Default occurring;

(xi) of any "early warning" or similar matter required to be notified to the CFTC or 

SEC under Applicable Law, within the time and in the manner specified in 

Applicable Law for such notification to such Regulatory Authority;

(xii) of any breach by it of any Applicable Law relating to its status and performance 

as a Clearing Member or of the Rules, including full particulars of the breach; or

(xiii) of anything relating to the Clearing Member of which the Clearing House would 

reasonably expect notice (including of any matter, circumstance, change or 

occurrence which would cause a statement previously furnished pursuant to this 

Rule 204, any information supplied in connection with the Clearing Member's 

application for membership or otherwise to be inaccurate, incomplete or 

superseded).

(b) Where a Clearing Member is regulated by the FCA or PRA:

(i) Notifications under Rule 204(a)(i) shall only be required where a change of 

Control is notifiable to the FCA or PRA; and in such cases the Clearing Member 

should provide the Clearing House contemporaneously with a copy of all 

submissions sent to the FCA or PRA relating to the change of Control; and

(ii) Notifications under Rule 204(a)(xiii) (other than notifications of any matter, 

circumstance, change or occurrence which would cause a statement previously 

furnished pursuant to this Rule 204, any information supplied in connection with 

the Clearing Member's application for membership or otherwise to be inaccurate, 
NYDOCS01/1643340.2 92

incomplete or superseded) shall only be required if a notification is also required 

to the FCA or PRA under the Principles for Business in the FCA Rules or PRA 

Rules.

Rule 205 Financial Reporting

(a) Each Clearing Member must file with the Clearing House in relation to the Clearing 

Member and, if so notified by the Clearing House at its discretion, any Controller:

(i) an audited financial statement including profit and loss accounts and balance 

sheet, with the auditor's report, drawn up in accordance with Applicable Laws and 

Accounting Standards or otherwise following the requirements of the Clearing 

House within 90 days of the end of the Clearing Member's or relevant Controller's 

fiscal year;

(ii) a quarterly financial statement including management profit and loss accounts and 

balance sheet, drawn up in accordance with Applicable Laws and Accounting 

Standards or otherwise following the requirements of the Clearing House, within 

30 days of the end of each quarter; and

(iii) in the case of Clearing Members or their Controllers that are licensed, authorised

or regulated by a Regulatory Authority, a copy of all financial returns, reports, 

statements and notices provided to the relevant Regulatory Authority as soon as 

so provided and, if any such material is other than a routine periodic financial 

return, statement or report required under Applicable Laws, a written statement 

setting out (to the extent known) the reasons why such Clearing Member or 

relevant Controller is filing it.

(b) In the case of Clearing Members authorised and regulated by the FCA or PRA, the 

Clearing House shall be authorised, at its discretion, to obtain copies of financial filings, 

returns and reports directly from the FCA or PRA rather than from the Clearing Member. 

The Clearing Member will not be relieved of any of its obligations to the extent that the 

Clearing House does not obtain, or is unable to verify the accuracy of, any financial 

return or report obtained by it from the FCA or PRA.

(c) Each Clearing Member shall file with the Clearing House such financial or other relevant 

information, in addition to what is explicitly required by this Rule 205, as may be 

requested by the Clearing House at its discretion from time to time.

(d) All qualifications and reports of Clearing Members' auditors in any financial report must 

be satisfactory to the Clearing House.

Rule 206 Minimum Capital

(a) Each Clearing Member shall maintain at all times the requisite types and amounts of 

Capital as required pursuant to the CDS Procedures and Finance Procedures, or otherwise 

as specified in writing by the Clearing House from time to time. Eligible Capital of each 

Designated Controller, if any, of a Clearing Member will be taken into account by the 
NYDOCS01/1643340.2 93

Clearing House in determining whether the Clearing Member satisfies applicable Capital 

requirements.

(b) A Clearing Member must, upon request of the Clearing House, provide financial 

statements and other documentation supporting calculations of Capital and details of the 

terms and conditions of any documentation relating to any Capital (including, without 

limitation, subordinated loan agreements, legal opinions, information provided to 

Governmental Authorities and accounts and including in relation to any Controller) to the 

Clearing House.

Rule 207 Clearing Member Status

(a) Each Clearing Member shall be authorised to enter into Contracts and hold an Open 

Contract Position with the Clearing House. Clearing Members may, at the Clearing 

House's discretion, be subject to restrictions in their business with the Clearing House, for 

example by reference to certain Contracts, Markets or the clearing of Contracts for 

Customers or using Customer Accounts either generally or of a particular Customer 

Account Category or acting as a Sponsor either generally or for different cleared 

products. The Clearing House shall be entitled to publish lists of Clearing Members 

including details of their privileges and restrictions from time to time.

(b) Each Clearing Member shall have the privileges, rights and obligations provided for in 

these Rules. Such privileges, rights and obligations may be terminated or altered in any 

respect at any time as provided in these Rules.

(c) A Clearing Member may apply to clear additional categories of Contract by furnishing 

such information as is relevant to such request in accordance with Rule 201.

(d) Each Clearing Member shall be liable to the Clearing House and responsible for all its 

obligations in respect of each of its Proprietary Accounts. Each Clearing Member shall 

be liable to the Clearing House and responsible for all its obligations in respect of each of 

its Customer Accounts as principal, except that an FCM/BD Clearing Member shall be 

liable to the Clearing House in respect of each of its Customer Accounts as set forth in 

Part 16 and a Sponsor shall be liable in respect of an Individually Segregated Sponsored 

Account as set out in Part 19. Any sub-accounts of a Customer Account are reported on 

by the Clearing House for administrative convenience of the Clearing Member only.

Recognition by the Clearing House, and transfers between, to and from, a Clearing 

Member's Nominated Customer Bank Accounts and Nominated Proprietary Bank 

Accounts are for administrative convenience of the Clearing Member only. Subject only 

to the provisions of Part 16 (and, in the case of FCM/BD Clearing Members, any Pledged 

Collateral Addendum) neither any separate Customer Account or sub-accounts of a 

Customer Account recognised in the Clearing House's or any Clearing Member's books 

and records or those of any Approved Financial Institution nor any other Procedures or 

Rules of the Clearing House shall result in any obligation of the Clearing House towards 

any Customer of the Clearing Member, any other Person that is not a Clearing Member, 

whether under rules made under FSMA relating to client money, any other Applicable 

Laws or otherwise. It is the responsibility of the Clearing Member (and not the Clearing 
NYDOCS01/1643340.2 94

House) to ensure that its Nominated Proprietary Bank Accounts and Nominated 

Customer Bank Accounts are linked appropriately to each Proprietary Account and 

Customer Account and to ensure its own compliance with Applicable Laws relating to 

conduct of business, client money, segregation of client assets and segregation of 

Customer Transactions. Accordingly: (i) each Clearing Member with a Customer 

Account intends that it will be acting in a separate capacity for purposes of section 187 of 

the Companies Act 1989 in relation to any of its Customer Accounts to that in which it 

acts in relation to any of its Proprietary Accounts or any other Customer Account; (ii) 

each Clearing Member with more than one Customer Account intends that it will be 

acting in a separate and different capacity for purposes of section 187 of the Companies 

Act 1989 in relation to each of its different Customer Accounts, which capacity in each 

case is a separate and different capacity from that which it acts in relation to any of its

Proprietary Accounts or any other Customer Account; each Clearing Member with more 

than one Proprietary Account intends that it will be acting in a separate and different 

capacity for purposes of section 187 of the Companies Act 1989 in relation to each of its 

different Proprietary Accounts, which capacity in each case is a separate and different 

capacity from that which it acts in relation to any of its Customer Accounts or any other 

Proprietary Account; and (iii) the Clearing House agrees with the Clearing Members 

acting in such different capacities. An FCM/BD Clearing Member shall be eligible to 

have any number of Proprietary Accounts, DCM Customer Accounts, Non-DCM/Swap 

Customer Accounts, Swap Customer Accounts, General Customer Accounts and SBS 

Customer Accounts. A Non-FCM/BD Clearing Member shall be eligible to have any 

number of Proprietary Accounts, Segregated Customer Omnibus Accounts For F&O, 

Segregated TTFCA Customer Omnibus Accounts For F&O, Segregated Customer 

Omnibus Accounts For CDS, Segregated TTFCA Customer Omnibus Accounts For 

CDS, Segregated Customer Omnibus Accounts For FX and Segregated TTFCA 

Customer Omnibus Accounts for FX, as well as having any number of Margin-flow Comingled Accounts and being able to act as Sponsor in respect of any number of 

Individually Segregated Sponsored Accounts. 

(e) A Disclosed Principal Member shall be liable as principal to the Clearing House and 

responsible for all obligations arising in respect of the Proprietary Account referable to 

the Clearing Member that has appointed it as a Disclosed Principal Member, instead of 

the Clearing Member. Where the Clearing Member appoints a Disclosed Principal 

Member, there shall be no Customer Account for either the Clearing Member or the 

Disclosed Principal Member and the only Proprietary Account shall be that of the 

Disclosed Principal Member.

(f) Subject to Market requirements (if any), a Clearing Member may appoint another 

Clearing Member to perform specific functions, including deliveries, on the first Clearing 

Member's behalf. In order to do so, the relevant Clearing Members, the Market (if any) 

and the Clearing House must be party to an agreement pursuant to which the second 

Clearing Member agrees to perform specific functions detailed in the agreement on 

behalf of the first Clearing Member. A Clearing Member intending to perform functions 

for another Clearing Member will represent and warrant to the Clearing House that it has 

sufficient authorisation under the FSMA and other Applicable Laws to carry on such 

function.
NYDOCS01/1643340.2 95

(g) The following categories of Clearing Members will not be permitted to clear Financials 

& Softs Contracts that are futures or options on underlying U.S. securities (other than 

futures contracts on broad-based security indices or exempted securities): (i) FCM/BD 

Clearing Members; (ii) other Clearing Members that are organised in the United States of 

America; and (iii) other Clearing Members having a U.S. residence, based upon the 

location of their executive office or principal place of business, including, without 

limitation, (a) a U.S. bank (as defined by Section 3(a)(6) of the Exchange Act), and (b) a 

foreign branch of a U.S. bank or U.S. registered broker-dealer. 

Rule 208 Suspension of Clearing Member

(a) A Clearing Member may be suspended:

(i) if one or more of the conditions set out in Rule 209(a)(i) to (v) is satisfied;

(ii) upon any breach by the Clearing Member of these Rules;

(iii) if a Market suspends the Clearing Member or any of its trading privileges;

(iv) if the Clearing House at its discretion considers that suspension is necessary to 

protect the interests of the Clearing House or its Clearing Members (excluding the 

Clearing Member concerned); or

(v) in the event of any Financial Emergency or Force Majeure Event affecting the 

Clearing Member.

(b) Any suspension may occur in relation to the Clearing Member's status as a Clearing 

Member or in respect of certain classes of Contracts or rights of a Clearing Member only. 

A Clearing Member that has been suspended shall, during the term of such suspension 

and thereafter, remain and continue to be:

(i) subject to and bound by these Rules and any agreements between it and the 

Clearing House;

(ii) obliged to pay all fees, fines, assessments or other charges imposed by the 

Clearing House;

(iii) liable pursuant to these Rules for all other obligations arising under Contracts and 

all obligations incurred before, during or after such suspension including, but not 

limited to, obligations to transfer, deposit, maintain and pay Margin and make 

Guaranty Fund Contributions; and

(iv) able to undertake such activities of a Clearing Member as are expressly permitted 

by the Clearing House and required to undertake such activities of a Clearing 

Member as are required by the Clearing House, in each case subject to 

compliance with all reasonable instructions of the Clearing House in relation to 

those activities.
NYDOCS01/1643340.2 96

(c) The Clearing House shall be entitled at its discretion to revoke the suspension of any 

suspended Clearing Member.

(d) The Clearing House may publish details of any suspension or a copy of any suspension 

notice in or together with a Circular, at its discretion except to the extent that a notice is 

required by Rule 208(e).

(e) The Clearing House will issue a Circular promptly following any suspension of a 

Clearing Member or the suspension of any Clearing Member's ability to clear Energy 

Contracts, Financials & Softs Contracts, F&O Contracts, CDS Contracts or FX Contracts 

specifying the name of the Clearing Member affected.

Rule 209 Termination of Clearing Membership3

(a) The Clearing House shall be entitled to terminate the membership of any Clearing 

Member, either generally or in respect of any Relevant Contract Category, upon written 

notice to the Clearing Member:

(i) following the occurrence of any Event of Default affecting that Clearing Member;

(ii) as a result of disciplinary proceedings brought against that Clearing Member 

pursuant to Part 10;

(iii) following any material and unremedied breach by the Clearing Member of these 

Rules;

(iv) upon such Clearing Member ceasing to meet, or being unable to satisfy the 

Clearing House that it is able to meet, any of the membership criteria set out in or 

required pursuant to Rule 201(a) or, if it is a CDS Clearing Member, Rule 201(i), 

or, if it is an FX Clearing Member, Rule 201(j); or

(v) taking effect no less than 30 Business Days after the date of service of the notice.

(b) Rule 918(a)(i), (ii), (iii), (v), (vi), (vii), (viii) and (b) shall apply, mutatis mutandis, 

following service of a notice of termination by the Clearing House, whether generally or 

in respect of a particular Contract Category, under Rule 209(a)(ii)-(v). For such 

purposes, the terms Relevant Contract Category and Relevant Membership Category as 

used in Rule 918 refer to the Contract Category and Membership Category respectively 

to which the notice of termination relates and the terms Relevant Guaranty Fund 

Contributions and Relevant Assessment Contributions as used in Rule 918 shall be 

interpreted accordingly.

(c)

 3 Rule 209 as set forth herein does not apply to CDS Clearing Members. The provisions of Rule 209 under the 

Continuing CDS Rule Provisions remain in effect for CDS Clearing Members (regardless of whether they are also 

F&O Clearing Members or FX Clearing Members). 
NYDOCS01/1643340.2 97

(i) A Clearing Member shall be entitled to terminate its membership of the Clearing 

House, either generally or in respect of any Relevant Contract Category, upon 

service of a Termination Notice to the Clearing House:

(A) taking effect no less than 30 Business Days after the date of the 

Termination Notice Time; or

(B) pursuant to Rule 917(c).

(ii) The membership of a Clearing Member shall terminate automatically upon the 

occurrence of an Insolvency in respect of the Clearing House. In any such 

circumstances, Rule 912 applies.

(iii) The membership of a Clearing Member in respect of a particular Membership 

Category shall terminate automatically upon the occurrence of a Failure to Pay in 

respect of the Clearing House relating to such Membership Category. In any such 

circumstances, Rule 912 applies.

(d) Rules 918(a)(ii), (iv), (v), (vi), (vii), (viii) and (b) shall apply, mutatis mutandis, 

following service of a Termination Notice, whether generally or in respect of a particular 

Contract Category, under Rule 209(c)(i)(A). For such purposes, the terms Relevant 

Contract Category and Relevant Membership Category as used in Rule 918 refer to the 

Contract Category and Membership Category respectively to which the Termination 

Notice relates and the terms Relevant Guaranty Fund Contributions and Relevant 

Assessment Contributions as used in Rule 918 shall be interpreted accordingly. Unless it 

served such notice during a Cooling-off Termination Period, a Clearing Member that 

serves a Termination Notice shall be liable immediately upon service of the Termination 

Notice to pay the Clearing House Assessment Contributions of an amount equal to three 

times its required Relevant Guaranty Fund Contribution (as calculated prior to the time of 

the Cooling-off Trigger Event) in respect of each Relevant Contract Category, such 

amounts to be held as permitted Cover until the Termination Date and applied only as 

permitted in accordance with Part 9 of the Rules. A Clearing Member that has served a 

Termination Notice and made such payments shall not be liable for any further 

replenishments of its Guaranty Fund Contribution or Assessment Contribution, regardless 

of how many Events of Default take place. Any reference in these Rules to Assessment 

Contributions being called or to Guaranty Fund Contributions being replenished or 

applied, in respect of a Clearing Member which has provided such Permitted Cover to the 

Clearing House under this Rule 209(d), shall be interpreted as a reference to the 

Permitted Cover in question being similarly applied.

(e) The Clearing House will issue a Circular promptly following any termination of 

membership of a Clearing Member or the termination of any Clearing Member's ability to 

clear a specified Contract Category, specifying the name of the Clearing Member 

affected. The Clearing House may at its discretion (but shall not be required to) publish a 

copy of any Termination Notice or other termination notice.
NYDOCS01/1643340.2 98

Part 3 Financial Requirements and Payments

Rule 301 Fees, Margin, Contract and other payment obligations

(a) Clearing Members shall be liable to pay such fees and charges as are levied by the 

Clearing House in accordance with published rates from time to time. Unless otherwise 

provided and without limitation, fees shall be payable on each Contract cleared by the 

Clearing House and the Clearing House shall be entitled to levy fees in respect of 

Permitted Cover. The Clearing House may amend its fees and charges and the bases for 

its fees at any time and will notify Clearing Members of any such amendments by means 

of a Circular prior to the same taking effect.

(b) Fees charged to Clearing Members by the Clearing House may include the fees of any 

one or more Markets. The Clearing House shall be entitled to collect fees due from 

Clearing Members on behalf of all Markets of which a Clearing Member is a member or 

participant.

(c) Clearing Members shall be liable to make any payment to the Clearing House that is 

required pursuant to these Rules at the time and in the amount specified by the Rules or 

required in accordance with the Rules. In particular, Clearing Members shall be liable to 

make payment in respect of Margin and Guaranty Fund Contributions from time to time 

in accordance with Part 5, Part 6 and Part 11 of the Rules at the times and in the amounts 

that are required pursuant to the instructions of the Clearing House made pursuant to 

Rule 302.

(d) Clearing Members shall be liable to pay all amounts due under the Contract Terms, upon 

entering into a Contract, as Margin and upon delivery or settlement, as further described 

in these Rules and the Contract Terms at the time and in such amounts as are required 

pursuant to the Contract Terms. Without prejudice to the generality of the foregoing:

(i) in relation to each F&O Contract that is a Future, the parties to such Contract shall 

be liable to make such payments upon settlement and delivery as are required 

pursuant to Part 7, the Contract Terms, the Delivery Procedures and the Finance 

Procedures;

(ii) in relation to each F&O Contract that is an Option, the parties to such Contract 

shall be liable to make such payments as are required pursuant to Part 8, the 

Contract Terms, the Delivery Procedures and the Finance Procedures;

(iii) in relation to each CDS Contract, the parties to such Contract shall be liable to 

make such payments as are required pursuant to Part 15 and the Procedures; and

(iv) in relation to each FX Contract, the parties to such Contract shall be liable to 

make such payments as are required pursuant to Part 17 and the Procedures.

(e) Each Clearing Member will procure that the Clearing House has at all times the right to 

instruct that Clearing Member's Approved Financial Institution to debit its Nominated 

Proprietary Bank Accounts (if any) and Nominated Customer Bank Accounts (if any) and 
NYDOCS01/1643340.2 99

any other account designated by that Clearing Member for the purposes of this Rule 301, 

for payment in respect of fees, charges, fines, penalties, Margin, Guaranty Fund 

Contributions, amounts due pursuant to Contracts (whether upon their formation, 

settlement or delivery) and any other amounts due to the Clearing House or due to any 

Market.

(f) All amounts payable to the Clearing House (except, with the prior written consent of the 

Clearing House, application fees) shall be payable by electronic transfer from an account 

at an Approved Financial Institution only. The Clearing Member shall continue to be 

liable for any amount due under these Rules and no payment obligation of a Clearing 

Member shall be treated as having been satisfied or discharged unless and until all of the 

following steps have taken place in respect of any payment of such amount:

(i) the relevant electronic transfer of funds is actually received by the Clearing House 

in unencumbered, fully cleared and fully available funds in a Clearing House 

Account, being an account at an Approved Financial Institution which is not 

subject to an Insolvency; 

(ii) if the Approved Financial Institution used by the Clearing Member is not a 

Concentration Bank, such Approved Financial Institution has fully performed its 

concentration function in respect of the payment in question, by completing the 

transfer of funds from the Clearing House's account at such Approved Financial 

Institution to the Clearing House's concentration account at a Concentration Bank 

(which Concentration Bank is not subject to an Insolvency), in which account the 

Clearing House has received unencumbered, fully cleared and fully available 

funds, in respect of:

(A) in the case of a payment under Rule 302(a), a net amount reflecting all 

payments processed through that Approved Financial Institution in respect 

of all calls on or payments to or from all Clearing Members using that 

Approved Financial Institution under Rule 302(a) in respect of the 

Business Day in question; or

(B) in the case of a payment other than a payment under Rule 302(a) (such as 

a payment following an intra-day call for Margin or an ad hoc transfer of 

additional cash Permitted Cover to the Clearing House), the amount 

received from the Clearing Member that is seeking to make the payment in 

question; and

(iii) in the case of a payment under Rule 302(a) only, that Approved Financial 

Institution (including if it is a Concentration Bank) has made all relevant 

payments under Rule 302(a) due to the Clearing Member and other Clearing 

Members (in its capacity as an Approved Financial Institution or Concentration 

Bank) in respect of the Business Day in question.

Nothing in this Rule 301(f) shall restrict or prevent the Clearing House or any Clearing 

Member from making any claim against an Approved Financial Institution which has 
NYDOCS01/1643340.2 100

failed to make a payment referred to under this Rule 301(f). In particular: (I) the 

Clearing House shall not be deemed to have had any loss, liability or shortfall made good 

or whole vis-à-vis an Approved Financial Institution by virtue of any further payment by 

a Clearing Member in addition to an attempted payment not credited to its account as a 

result of this Rule 301(f); and (II) an Approved Financial Institution which has failed to 

make any payment referred to in this Rule 301(f) shall remain fully liable to the Clearing 

House or relevant Clearing Member for any such failed payment or account balance 

notwithstanding a reimbursement or additional payment as between a Clearing Member 

and the Clearing House. In the event that: 

(x) a payment is received into a Clearing House Account at an Approved Financial 

Institution but the requirements of Rule 301(f)(ii) or Rule 301(f)(iii) are not 

satisfied;

(y) an affected Clearing Member has satisfied its payment obligations through an 

additional payment which complies with the requirements of this Rule 301(f); and

(z) the Clearing House makes a recovery or irrevocably receives any part or full 

payment from the Approved Financial Institution into one of its accounts at a 

Concentration Bank (which Concentration Bank is not subject to an Insolvency),

then the Clearing House will make payment to affected Clearing Members in respect of 

the recovery or receipt actually made by the Clearing House, net of the Clearing House's 

costs and expenses, pro rata in proportion to the amounts of the original missed 

payments of each affected Clearing Member.

No Clearing Member shall be declared subject to an Event of Default as a result of failing 

to make any payment due to the operation of either Rule 301(f)(ii) or Rule 301(f)(iii), 

unless and until the Clearing House has notified the Clearing Member of the failed 

payment in question and requested that the payment be made using alternative means and 

the Clearing Member has defaulted in making the latter payment (other than solely due to 

the operation of either Rule 301(f)(ii) or Rule 301(f)(iii)). Where the concentration 

function of an Approved Financial Institution that is not subject to an Insolvency is 

adversely affected by a non-payment (including by reason of an Event of Default, dispute 

or operational failure) of a particular Clearing Member, and the Clearing House is 

notified of such non-payment and the Clearing Member concerned, the Clearing House 

will re-issue new payment instructions for concentration payments excluding the nonpayment of the relevant Clearing Member prior to requesting or requiring other Clearing 

Members to use a different Approved Financial Institution under this Rule 301(f).

(g) Interest shall be paid by the Clearing Member to the Clearing House on any unpaid but 

due amount from the date on which the amount becomes due and payable until the date of 

payment at 1% above the rate per annum which is the cost (without proof or evidence of 

any actual cost) to the Clearing House if it were to fund the relevant amount, 

compounded daily.
NYDOCS01/1643340.2 101

(h) In the event that the Clearing House determines that it will suffer or has suffered (directly 

or indirectly) any loss, liability or cost for or on account of any tax in connection with 

any Contract, any amount payable to the Clearing House or in respect of any future 

obligation, or these Rules, the Clearing Member counterparty to such Contract or the 

Clearing Member by which such amount is payable shall be liable to pay to the Clearing 

House, pursuant to Rule 302, an amount equal to such loss, liability, or cost.

(i) All amounts set out in or expressed to be payable to the Clearing House in connection 

with any Contract or these Rules or otherwise and which constitute the consideration for 

a supply made by the Clearing House for the purposes of value added tax, and the value

of any supply made by the Clearing House for value added tax purposes, shall be deemed 

to be exclusive of any value added tax which is chargeable on that supply and 

accordingly if value added tax is chargeable on any supply made by the Clearing House 

the relevant Clearing Member shall pay to the Clearing House (in addition to and at the 

same time as the consideration is paid or provided, or if no consideration is due, at the 

time the supply is made or an appropriate value added tax invoice is issued, whichever is 

earlier) an amount equal to the amount of the value added tax and the Clearing House 

shall issue an appropriate value added tax invoice.

(j) All amounts payable to the Clearing House or by the Clearing House in connection with 

any Contract or these Rules or otherwise shall be paid without any deduction or 

withholding for or on account of tax unless such deduction or withholding is required by 

Applicable Law. If a deduction or withholding for or on account of tax is required to be 

made in relation to an amount payable to the Clearing House, the amount of the payment 

due shall be increased to an amount which (after making the deduction or withholding) 

leaves an amount equal to the payment which would have been due if no such deduction 

or withholding had been required.

(k) Where a Clearing Member has appointed a Disclosed Principal Member, any obligation 

of the Clearing Member to make payment to the Clearing House shall be construed as an 

obligation of the Disclosed Principal Member, any right to receive payment of the 

Clearing Member shall be construed as a right of the Disclosed Principal Member and all 

other provisions of these Rules relating to payment shall be construed accordingly. 

(l) Any payment due to a Clearing Member from the Clearing House will be recognised as 

having been duly made, and the Clearing House's obligations in respect thereof shall be 

treated as having been satisfied and discharged, at the time that the relevant Credit/Debit 

Payment Transfer Order arises relating to such payment (or, if the Clearing Member or 

Approved Financial Institution is not a Participant, would have arisen were the Clearing 

Member or Approved Financial Institution to have been a Participant), provided that the 

Clearing House has reason to believe that the Clearing House Account from which 

payment is to be made has sufficient funds or credit on account. 

(m) The Clearing House will maintain a list of Concentration Banks and Approved Financial 

Institutions and will issue a Circular upon any change to Concentration Banks or 

Approved Financial Institutions.
NYDOCS01/1643340.2 102

(n) The Clearing House will ensure that at all times there is at least one Concentration Bank.

Rule 302 Mechanics for Payments

(a) Amounts payable to or by the Clearing House in a particular currency (as determined in 

accordance with the Finance Procedures) will be calculated and settled for each Account 

based on the designation of the relevant Account, the applicable margin model (net or 

gross) and payment mechanics set forth in this Part 3, the Clearing Procedures, the 

Finance Procedures and Part 16. The Clearing House shall calculate a net amount in 

respect of each Account by offsetting amounts due against amounts payable on that 

Account (except as provided in Rule 1605 for the Swap Customer Account of FCM/BD 

Clearing Members). The Clearing House shall advise each Clearing Member of the net 

amounts due to or from the Clearing Member in respect of each of its Proprietary 

Accounts and each of its Customer Accounts (if any) on each Business Day (or more 

frequently if the Clearing House determines to make an intra-day call in accordance with 

the Finance Procedures) and:

(i) if the net amount for a Proprietary Account is due to the Clearing House, the 

Clearing House shall instruct the Clearing Member's Approved Financial 

Institution to transfer funds from the relevant Nominated Proprietary Bank 

Account of the Clearing Member with the Approved Financial Institution to a 

Clearing House Account in an amount equal to the amount so due;

(ii) if the net amount for a Proprietary Account is due to the Clearing Member, the 

Clearing House shall instruct an Approved Financial Institution to transfer funds 

from a Clearing House Account to the relevant Nominated Proprietary Bank 

Account of the Clearing Member with the Approved Financial Institution in an 

amount equal to the amount so due;

(iii) if the net amount for a Customer Account (other than a Margin-flow Co-mingled 

Account or Swap Customer Account) is due to the Clearing House, the Clearing 

House shall instruct the Clearing Member's Approved Financial Institution to 

transfer funds from the relevant Nominated Customer Bank Account of the 

Clearing Member with the Approved Financial Institution to a Clearing House 

Account in an amount equal to the amount so due;

(iv) if the net amount for a Customer Account (other than a Margin-flow Co-mingled 

Account or Swap Customer Account) is due to the Clearing Member, the Clearing 

House shall instruct an Approved Financial Institution to transfer funds from a 

Clearing House Account to the relevant Nominated Customer Bank Account of 

the Clearing Member with the Approved Financial Institution in an amount equal 

to the amount so due;

(v) if the net amount for a Margin-flow Co-mingled Account is due to the Clearing 

House, the Clearing House shall instruct the Clearing Member's Approved 

Financial Institution to transfer funds from the relevant Nominated Customer 

Bank Account of the Clearing Member with the Approved Financial Institution to 
NYDOCS01/1643340.2 103

a Clearing House Account either: (A) in an amount equal to the total of all net 

amounts due to the Clearing House across all Margin-flow Co-mingled Accounts 

of the Clearing Member (or in respect of all Margin-flow Co-mingled Accounts of 

the Clearing Member with respect to F&O Clearing, FX Clearing or CDS 

Clearing, as the case may be), regardless of whether any amount is due to the 

Clearing Member in respect of the same Margin-flow Co-mingled Accounts; or 

(B) separately in respect of the net amount for each Margin-flow Co-mingled 

Account, in which case the Clearing Member or its Approved Financial Institution 

shall be entitled to settle the net amounts across all the Clearing Member's 

Margin-flow Co-mingled Accounts on a net basis;

(vi) if the net amount for a Margin-flow Co-mingled Account is due to the Clearing 

Member, the Clearing House shall instruct an Approved Financial Institution to 

transfer funds from a Clearing House Account to the relevant Nominated 

Customer Bank Account of the Clearing Member with the Approved Financial 

Institution either: (A) in an amount equal to the total of all net amounts due to the 

Clearing Member across all Margin-flow Co-mingled Accounts of the Clearing 

Member (or in respect of all Margin-flow Co-mingled Accounts of the Clearing 

Member with respect to F&O Clearing, FX Clearing or CDS Clearing, as the case 

may be), regardless of whether any amount is due to the Clearing House in respect 

of the same Margin-flow Co-mingled Accounts; or (B) separately in respect of the 

net amount for each Margin-flow Co-mingled Account, in which case the 

Clearing Member or its Approved Financial Institution shall be entitled to settle 

the net amounts across all the Clearing Member's Margin-flow Co-mingled 

Accounts on a net basis; and

(vii) Rule 1605(h) shall apply to determine the timing, nature and means of making 

payments in relation to any amount due to or from an FCM/BD Clearing Member 

in respect of its Swap Customer Account.

(b) Instructions made pursuant to this Rule 302 may be made by means of a SWIFT message 

(or, in the case of a contingency, such other electronic message, fax, telephone or other 

means as are allowed pursuant to the Finance Procedures) to the relevant Approved 

Financial Institution. Payments pursuant to this Rule 302 shall be made immediately at 

the time and on the date that the obligation to pay arises or at such other time as is 

specified by the Clearing House in writing.

(c) Upon notice from the Clearing House that a transfer of funds from a Clearing Member's 

Nominated Bank Account was not effected as instructed by the Clearing House for any 

reason, the Clearing Member shall deliver to the Clearing House the amount required at 

such time and in such form as the Clearing House may prescribe.

(d) Various authorities and powers are granted to the Clearing House pursuant to clause 5.2 

of the Clearing Membership Agreement for purposes of supporting the payment 

arrangements set out in this Rule 302. For the avoidance of doubt, the reference in the 

fourth sentence of clause 5.2 of the Clearing Membership Agreement that the "Approved 

Financial Institutions will act upon any instructions received from the Clearing House" 
NYDOCS01/1643340.2 104

shall be understood to mean that the "Approved Financial Institutions shall be authorised 

and directed to act upon any instructions received from the Clearing House".

(e) Each Customer Account of a Clearing Member shall be treated separately for purposes of 

any payments under Rule 302(a). Where a Clearing Member has more than one 

Customer Account, there shall be separate payments in respect of each such Customer 

Account (except for Margin-flow Co-mingled Accounts, where payments to the Clearing 

House and payments from the Clearing House may each be separately aggregated across 

all Margin-flow Co-mingled Accounts or separately instructed and mutually offset prior 

to settlement in accordance with Rule 302(a)(v)-(vi)).

Rule 303 Set Off

(a) Subject to Rule 102(q), the Clearing House may set off any obligation due to it from a 

Clearing Member against any obligation owed by the Clearing House to, or for the 

account of, the Clearing Member, regardless of the place of payment, account, branch or 

currency of either obligation. If the obligations referred to in this Rule 303(a) are in 

different currencies, the Clearing House may convert either obligation at a market rate of 

exchange in its usual course of business for the purpose of the set off.

(b) Subject to Rule 102(q), the Clearing House shall be entitled to make any necessary 

adjustments to the Clearing Member's Proprietary Accounts and Customer Accounts 

resulting from exercise of its rights of set off.

(c) The rights of the Clearing House in this Rule 303 are without prejudice to any rights of 

lien, set-off, netting, liquidation, combination of accounts or appropriation, or to instruct 

the same or any other rights or remedies of the Clearing House or any Approved 

Financial Institution, whether under these Rules or otherwise.

(d) Without prejudice to Applicable Laws of mandatory application following an Insolvency, 

notwithstanding any existing or future agreement and except as expressly provided in 

these Rules, the Clearing Membership Agreement, any Sponsored Principal Clearing 

Agreement, any Sponsor Agreement, the Procedures or a Contract, each Clearing 

Member irrevocably waives any and all rights it may have to set off, net, recoup, combine 

accounts or otherwise withhold or suspend or condition payment or performance of any 

obligation between the Clearing House and such Clearing Member under these Rules or 

any Contract against any obligations between the Clearing House and such Clearing 

Member or any branch or Affiliate of the Clearing House or of such Clearing Member, 

under any other agreements.

Rule 304 Sponsored Principals and Sponsors

(a) This Part 3 applies to Sponsored Principals in the same way as it applies to Clearing 

Members, with the following modifications:

(i) Rule 301(k) does not apply.
NYDOCS01/1643340.2 105

(ii) Rule 302(a) does not apply, except for the first two sentences thereof. The 

Clearing House shall advise each Sponsored Principal (or, if the Sponsor acts as 

the Sponsored Principal's Representative for purposes of making payments, the 

Sponsor) of the net amount due to or from the Sponsored Principal in respect of 

its Individually Segregated Sponsored Account on each Business Day (or more 

frequently if the Clearing House determines to make an intra-day call in 

accordance with the Finance Procedures) and:

(A) if the net amount is due to the Clearing House, the Clearing House shall 

instruct the Sponsored Principal's Approved Financial Institution to 

transfer funds from the relevant Nominated Account with the Approved 

Financial Institution to a Clearing House Account in an amount equal to 

the amount so due; and

(B) if the net amount is due to the Sponsored Principal, the Clearing House 

shall instruct the Sponsored Principal's Approved Financial Institution to 

transfer funds from a Clearing House Account to the relevant Nominated 

Account with the Approved Financial Institution in an amount equal to the 

amount so due;

(iii) Rule 302(d) does not apply. Various authorities and powers are granted to the 

Clearing House pursuant to clause 5.2 of the Sponsored Principal Clearing 

Agreement and clause 5.2 of the Sponsor Agreement for purposes of supporting 

the payment arrangements set out in this Part 3.

(iv) Rule 302(e) does not apply.

(v) Rule 303 does not permit the Clearing House to exercise rights of set off as 

between any obligation, right or liability arising in connection with an 

Individually Segregated Sponsored Account and any between any obligation, 

right or liability arising in connection with any Customer Account (not being an 

Individually Segregated Sponsored Account) in respect of which the Sponsored 

Principal is a Customer.

(vi) If the Sponsor acts as the Sponsored Principal's Representative for purposes of 

making payments:

(A) any payment made by a Sponsor to the Clearing House in respect of an 

Individually Segregated Sponsored Account shall discharge by an 

equivalent amount the obligations of the Sponsored Principal to the 

Clearing House; and

(B) any payment made to a Sponsor by the Clearing House in respect of an 

Individually Segregated Sponsored Account shall discharge by an 

equivalent amount the obligations of the Clearing House to the Sponsored 

Principal.
NYDOCS01/1643340.2 106

(vii) Nothing in this Part 3 requires a Sponsored Principal to transfer Guaranty Fund 

Contributions to the Clearing House.

Rule 305 National Grid

Solely in relation to ICE Endex UK Transactions:

(a) the Clearing House may make payments from a Clearing House Account to the Clearing 

Member of National Grid and make an equivalent debit to a relevant Clearing Member's 

Nominated Bank Account in accordance with the provisions of TPD X.2.8 of the 

Network Code or, where it believes that a Cash Call (as defined in the Network Code) is 

imminently to be made by National Grid in accordance with TPD X of the Network 

Code, in anticipation of such Cash Call being made, in an amount equal to the amount for 

which the Clearing House reasonably believes such Cash Call is to be made.

(b) For the avoidance of doubt, there shall be no double recovery as between the Clearing 

House and National Grid or its Clearing Member of amounts payable under the 

provisions of these Rules and the Network Code.
NYDOCS01/1643340.2 107

Part 4 Clearing Mechanism

Rule 401 Formation of Contracts

(a) Subject to Rule 403 and Rule 404, two Contracts shall arise automatically, one between 

the Selling Counterparty and the Clearing House and the other between the Clearing 

House and the Buying Counterparty (or a single Contract shall arise between the Clearing 

House and a Buying Counterparty or Selling Counterparty where applicable in the case of 

Rule 401(a)(vi)), at the moment that:

(i) in the case of any ICE Endex Matched Transaction, ICE Endex UK Matched 

Transaction, ICE Futures Europe Matched Transaction, ICE Futures US Matched 

Transaction, Financials & Softs Matched Transaction or ICE Natural Gas

Continental Spot Matched Transaction, the relevant orders are matched on ICE 

Endex, ICE Endex UK, ICE Endex Continental, ICE Futures Europe, ICE Futures 

US or LIFFE, as applicable;

(ii) [Not used.];

(iii) in the case of any ICE Endex Block Transaction, ICE Futures Europe Block 

Transaction, ICE Futures US Block Transaction or Financials & Softs Block 

Transaction: ICE Endex, ICE Futures Europe, ICE Futures US or LIFFE, as 

applicable, receives and has recorded on its system complete data in respect of the 

Transaction;

(iv) [Not used.];

(v) in the case of Transactions generated by ICE Endex, ICE Endex UK, ICE Endex 

Continental, ICE Futures Europe, ICE Futures US or LIFFE as a result of the 

operation of their contra trade, error trade, invalid trade, cancelled trade, trade 

correction, error correction, manifest error or similar policies and rules or 

procedures relating thereto or otherwise, upon notice of the final terms of the 

Transaction being received by the Clearing House;

(vi) in the case of a Contract that is formed as a result of another Contract being 

Invoiced Back by the Clearing House, immediately upon notice of the existence 

and final terms of the new Contract being given by the Clearing House to the 

Clearing Member or Sponsored Principal affected;

(vii) in the case of a Contract (including a Contract of Sale) that forms as a result of an 

Option being exercised in accordance with Part 8, immediately upon such 

exercise taking effect pursuant to Part 8;

(viii) in the case of an F&O Contract that is allocated by one Clearing Member or a 

Sponsored Principal to a different Person (such Person receiving the allocation 

itself also being a Clearing Member or Sponsored Principal) by agreement of both 

parties subsequent to that F&O Contract arising but on the same day as that on 
NYDOCS01/1643340.2 108

which such Contract arose, upon both such parties having recorded their 

agreement to such allocation on the Clearing House's systems;

(ix) in the case of a CDS Contract (other than a CDS Contract arising pursuant to Rule 

401(a)(x)), the time specified pursuant to the CDS Procedures occurs for the 

acceptance of CDS Contracts on any day, provided that no such CDS Contract 

shall arise unless the Clearing House has provided an Acceptance Notice to the 

Buying Counterparty and Selling Counterparty in accordance with the CDS 

Procedures in relation to the CDS Contract;

(x) in the case of a CDS Contract arising under Rule 905(c), the time specified by the 

Clearing House for the entry into of the relevant CDS Contract occurs, provided 

that the Clearing House has given notice to the relevant CDS Clearing Member of 

the particulars of the CDS Contract involved and the price or Initial Payment at 

which such CDS Contract will be recorded on the Clearing House's books and 

records;

(xi) in the case of a CDS Contract arising following the submission of end-of-day 

prices by a CDS Clearing Member pursuant to Rule 503(g), at the time specified 

by the Clearing House for the entry into of the relevant CDS Contract, provided 

that (A) the Clearing House has given notice to the relevant CDS Clearing 

Member of the particulars of the CDS Contract involved and the price or Initial 

Payment at which such CDS Contract will be recorded on the Clearing House's 

books and records in accordance with the CDS Procedures; and (B) no such CDS 

Contract shall arise unless the Clearing House has provided an Acceptance Notice 

to the Buying Counterparty and Selling Counterparty (each of which are CDS 

Clearing Members but not Sponsored Principals, acting for one of their

Proprietary Accounts) in accordance with the CDS Procedures in relation to the 

CDS Contract;

(xii) in the case of an FX Contract (other than an FX Contract arising pursuant to 

Rule 401(a)(vi)), the time specified pursuant to the Procedures occurs for the 

acceptance of the FX Contract, provided that no such FX Contract shall arise 

unless the Clearing House has provided an FX Acceptance Notice to the Buying 

Counterparty and Selling Counterparty in accordance with the Procedures in 

relation to the FX Contract;

(xiii) in the case of a Contract arising under Rule 404(c)(i), at the time of execution of 

relevant documentation or otherwise when a replacement Contract arises in 

accordance with that provision; and

(xiv) in the case of a Contract opposite to a Linked Outgoing Contract arising under 

Rule 410(d) on confirmed receipt by the relevant Participating Exchange, or in the 

case of a Linked Incoming Contract arising under Rule 410(e), on confirmed 

receipt by the Clearing House, in either case of the relevant transfer, as detailed 

further in Rule 410(d) or (e) as applicable.
NYDOCS01/1643340.2 109

(b) For F&O Contracts only, a contract or contracts shall arise between the Clearing House 

and the Buying Counterparty and/or the Clearing House and the Selling Counterparty at 

the moment that an alternative delivery is agreed in respect of a Contract where, pursuant 

to the Clearing Procedures and Market Rules, a new collateral contract arises as a result 

of the alternative delivery being agreed, at the time and subject to the conditions and 

effects on existing Contracts specified in the Clearing Procedures.

(c) Other than as specifically set out in the CDS Procedures or FX Procedures, the Clearing 

House shall be entitled to rely conclusively on the accuracy and authenticity of any and 

all information and data regarding any Transaction submitted to the Clearing House by or 

on behalf of a Market, Exchange, Repository, CDS Trade Execution/Processing Platform, 

FX Trade Execution/Processing Platform, Clearing Member, Sponsored Principal, 

Sponsor or Representative of a Clearing Member, Sponsored Principal or Sponsor or 

Deriv/SERV, whether or not a Clearing Member, Sponsored Principal, Sponsor or one of 

their Representatives in fact authorised the submission of such information or the details 

so submitted.

(d) In the case of a new Contract that forms as a result of another Contract being Invoiced 

Back pursuant to Rule 401(a)(vi), the new Contract shall be on the same terms as the 

original Contract, except that the roles of Buying Counterparty and the Clearing House 

or, as the case may be, the Selling Counterparty and the Clearing House shall be reversed 

and the Clearing House shall be entitled, at its discretion, to determine the price or Initial 

Payment at which the Contract was bought or sold and any delivery or settlement price.

(e) In the case of a Contract that forms as a result of another Contract being subject to 

allocation pursuant to Rule 401(a)(viii), the new Contract shall be on the same terms as 

the original Contract, except that the identity of the Clearing Member or Sponsored 

Principal being the Buying Counterparty or Selling Counterparty shall be different, in 

accordance with the allocation instructions received by the Clearing House. The Clearing 

Member that was party to the original Contract and the Clearing House shall each 

automatically and immediately be released and discharged from all their rights, liabilities 

and obligations in respect of the original Contract upon formation of the new Contract.

(f) Upon request by the Clearing House, a Buying Counterparty or Selling Counterparty 

shall promptly confirm or otherwise notify the details of any Contract or Transaction to 

the Clearing House in such form and manner as the Clearing House requests. Any such 

confirmation or notification shall not of itself affect the status or terms of any Contract.

(g) Each Clearing Member shall promptly and accurately designate each new Contract (in the 

case of CDS Contracts through the submission of CDS Trade Particulars, in the case of

FX Contracts through the submission of FX Trade Particulars and in the case of F&O 

Contracts through the ICE Systems) in accordance with Applicable Laws as: (i) related 

either to its Proprietary Position Account, one of its Customer Position Accounts (if any) 

or Position Account linked to an Individually Segregated Sponsored Account for which it 

acts as Sponsor; and (ii) in the case of CDS Contracts as related to a particular CDS SubAccount or in the case of F&O Contracts or FX Contracts to any relevant sub-account in 

the ICE Systems. If a Clearing Member or Sponsored Principal becomes aware of any 
NYDOCS01/1643340.2 110

event or circumstance which results in any designation previously made by it under this 

Rule 401(g) having been incorrect or requiring amendment, it shall provide a further 

designation to the Clearing House, specifying any required transfers between accounts or 

sub-accounts which, if acted upon by the Clearing House, would result in any Contract 

affected by such event or circumstance being correctly designated as for the appropriate 

Position Account, CDS Sub-Account (if applicable) and sub-account in the ICE Systems 

(if applicable). Each Clearing Member having a Customer Account shall submit to the 

Clearing House on a daily basis (or more frequent basis, on request) accurate data on the 

breakdown of its entire Open Contract Position for each such Customer Account on a per 

Customer basis. The Clearing House shall be entitled to act and shall (subject, in the case 

of any transfers, to the requirements of Rule 408(a)) act upon all designations and 

information submitted by Clearing Members in recording Contracts in Position Accounts, 

CDS Sub-Accounts or other sub-accounts designated by the Clearing Member or 

otherwise provided under this Rule 401(g) from time to time, without the need for any 

further enquiry on the part of the Clearing House.

(h) Where a Clearing Member has appointed a Disclosed Principal Member, the Disclosed 

Principal Member shall be the Buying Counterparty or the Selling Counterparty (as 

applicable) instead of the relevant Clearing Member in respect of all Contracts arising 

under this Rule 401 to which that Clearing Member would, but for the requirements of 

this Rule 401(h), otherwise be party. All provisions of these Rules relating to Contracts 

and Clearing Members shall be construed accordingly.

(i) In order for a Contract to arise pursuant to:

(i) Rule 401(a)(i), (iii), (v), (vii) or (viii); or

(ii) Rule 401(a)(vi) in relation to an Energy Contract,

each Clearing Member that is a Buying Counterparty or Selling Counterparty must be an 

Energy Clearing Member and an F&O Clearing Member and each Sponsored Principal 

that is a Buying Counterparty or Selling Counterparty must be authorised to clear Energy 

and F&O.

In order for a Contract to arise pursuant to:

(iii) Rule 401(a)(i), (iii), (v), (vii), (viii) or (xiv); or

(iv) Rule 401(a)(vi) in relation to a Financials & Softs Contract,

each Clearing Member that is a Buying Counterparty or Selling Counterparty must be an 

Financials & Softs Clearing Member and an F&O Clearing Member and each Sponsored 

Principal that is a Buying Counterparty or Selling Counterparty must be authorised to 

clear Financials & Softs and F&O.

(j) In order for a Contract to arise pursuant to:

(i) Rule 401(a)(ix), (x) or (xi); or
NYDOCS01/1643340.2 111

(ii) Rule 401(a)(vi) or 401(a)(xiii) in relation to a CDS Contract,

each Clearing Member that is a Buying Counterparty or Selling Counterparty must be an 

CDS Clearing Member and each Sponsored Principal that is a Buying Counterparty or 

Selling Counterparty must be authorised to clear CDS.

(k) In order for a Contract to arise pursuant to:

(i) Rule 401(a)(xii); or

(ii) Rule 401(a)(vi) or Rule 401(a)(xiii) in relation to an FX Contract,

each Clearing Member that is a Buying Counterparty or Selling Counterparty must be an 

FX Clearing Member and each Sponsored Principal that is a Buying Counterparty or 

Selling Counterparty must be authorised to clear FX.

(l)

(i) On each occasion that a Contract arises under Rule 401(a), each affected Clearing 

Member, Sponsored Principal, Customer and the Clearing House, as applicable, 

shall ensure that the details of such Contract and/or any related Customer-CM 

Transaction they have concluded, as the case may be, and any modification or 

termination of such Contract and/or Customer-CM Transaction, as applicable, is 

reported to a Repository, in accordance with Applicable Laws, no later than the 

working day following the conclusion, modification or termination of the 

Contract, as applicable, and in accordance with any applicable Procedures. 

(ii) In the case of an F&O Contract, the relevant Market shall be authorised to submit 

the terms of the F&O Contract (and any related Customer-CM Transaction) to any 

Repository as a delegate for the Clearing House, Clearing Member, Sponsored 

Principal and Customer, as applicable, save where the relevant Clearing Member 

notifies the Clearing House or Market in writing that it does not require the 

Market to act as such (whether generally or in respect of particular Customers, 

Sponsored Principals or kinds of Contract).

(iii) In the case of an FX Contract a submission to a Repository shall include identical 

terms as the original submission for clearing of the FX Trade Particulars or the 

FX Contract arising under Rule 401(a)(xii), as applicable, adjusted to take into 

account any netting and aggregation of FX Contracts pursuant to Rule 406.

(iv) In the case of a CDS Contract: 

(A) each affected Clearing Member, Sponsored Principal, Customer and the 

Clearing House, as applicable, shall ensure that the details of any 

Transaction, Contract and/or Customer-CM Transaction, are also 

submitted to Deriv/SERV in accordance with the CDS Procedures;
NYDOCS01/1643340.2 112

(B) the submission referred to in (A) above shall include identical terms as the 

original submission for clearing of the CDS Trade Particulars or the CDS 

Contract arising under Rule 401(a)(x) or (xi), as applicable, adjusted to 

take into account netting and aggregation of CDS Contracts pursuant to 

Rule 406; and

(C) the Clearing House shall be authorised to submit the terms of a 

Transaction or Contract to Deriv/SERV. 

(v) In the case of either a CDS Contract or an FX Contract, the Clearing House shall 

be authorised to submit the terms of such Contract (and any related Customer-CM 

Transaction) to any Repository as a delegate for the Clearing Member, Sponsored 

Principal and Customer, as applicable, save where the relevant Clearing Member 

notifies the Clearing House in writing that it does not require the Clearing House 

to act as such (whether generally or in respect of particular Customers, Sponsored 

Principals or kinds of Contract.)

(m) Where an F&O Contract (other than an ICE Futures US Contract) arises pursuant to 

Rule 401 as a result of trading, submission of trade data or other action by or relating to a 

Customer of a Non-FCM/BD Clearing Member, an opposite Customer-CM F&O 

Transaction shall arise between such Customer and Clearing Member (and may be void 

or voided) and further corresponding transactions may arise between Customers, in the 

manner specified by and in accordance with:

(i) in the case of Energy Contracts arising as a result of ICE Endex Transactions, the 

ICE Endex Rules;

(ii) in the case of Energy Contracts arising as a result of the ICE Endex UK

Transactions, the ICE Endex UK Rules;

(iii) in the case of Energy Contracts arising as a result of ICE Futures Europe 

Transactions, the ICE Futures Europe Rules; 

(iv) in the case of Energy Contracts arising as a result of ICE Natural Gas Continental 

Spot Transactions, the ICE Endex Continental Rules; or

(v) in the case of Financials & Softs Contracts arising as a result of Financials & 

Softs Transactions, the LIFFE Rules or the ICE Futures Europe Rules, as 

applicable.

(n) Where a CDS Contract arises pursuant to Rule 401 for the Customer Account of a NonFCM/BD CDS Clearing Member, a Customer-CM CDS Transaction shall arise (or, any 

previously existing transaction shall be amended and restated in the form of a CustomerCM CDS Transaction) between the Customer and that Non-FCM/BD CDS Clearing 

Member. Where an FX Contract arises pursuant to Rule 401 for the Customer Account 

of a Non-FCM/BD Clearing Member, a Customer-CM FX Transaction shall arise (or, 

any previously existing transaction shall be amended and restated in the form of a 
NYDOCS01/1643340.2 113

Customer-CM FX Transaction) between the Customer and that Non-FCM/BD Clearing 

Member.

(o) When a Clearing Member enters into any Contract, becomes subject to a guarantee in 

respect of a Contract, takes any action which results in a Contract arising for its own 

account, becomes bound joint and severally with a Sponsored Principal in respect of a 

Contract, or has a Contract recorded in a Proprietary Account or Customer Account in its 

name (or, in respect of an Individually Segregated Sponsored Account, the Sponsored 

Principal's name), it may do so in only one of the following capacities:

(i) if it is an FCM/BD Clearing Member, as a clearing member in relation to a 

transaction or transactions connected with the provision of services to one or more 

Non-DCM/Swap Customers, in which case the Contract shall be designated by 

the Clearing Member in accordance with Rule 401(g) as for a Non-DCM/Swap 

Customer Account and recorded by the Clearing House in accordance with such 

designation;

(ii) if it is an FCM/BD Clearing Member, as a clearing member in relation to a 

transaction or transactions connected with the provision of services to one or more 

DCM Customers, in which case the Contract shall be designated by the Clearing 

Member in accordance with Rule 401(g) as for a DCM Customer Account and 

recorded by the Clearing House in accordance with such designation;

(iii) if it is an FCM/BD Clearing Member, as a clearing member in relation to a 

transaction or transactions connected with the provision of services to one or more 

Swap Customers, in which case the Contract shall be designated by the Clearing 

Member in accordance with Rule 401(g) as for a Swap Customer Account and 

recorded by the Clearing House in accordance with such designation;

(iv) if it is an FCM/BD Clearing Member, as a clearing member in relation to a 

transaction or transactions connected with the provision of services to one or more 

SBS Customers, in which case the Contract shall be designated by the Clearing 

Member in accordance with Rule 401(g) as for an SBS Customer Account and 

recorded by the Clearing House in accordance with such designation;

(v) if it is an FCM/BD Clearing Member, as a clearing member in relation to a 

transaction or transactions connected with the provision of services to one or more 

General Customers in respect of F&O Contracts in which case the Contract shall 

be designated by the Clearing Member in accordance with Rule 401(g) as for a 

General Customer Account and recorded by the Clearing House in accordance 

with such designation;

(vi) [Not Used.]

(vii) if it is a Non-FCM/BD Clearing Member, as a clearing member in relation to a 

transaction or transactions connected with the provision of services to one or more 

Segregated Customers in respect of F&O Contracts, in which case the Contract
NYDOCS01/1643340.2 114

shall be designated by the Clearing Member in accordance with Rule 401(g) as 

for:

(A) a Segregated Customer Omnibus Account For F&O if the client chooses 

omnibus account segregation and has not requested use of an Omnibus

Margin-flow Co-mingled Account;

(B) an Individually Segregated Sponsored Account if the client chooses 

individual client segregation and has been admitted to the Clearing House 

as a Sponsored Principal;

(C) an Individually Segregated Margin-flow Co-mingled Account if the client 

chooses individual client segregation and has not been admitted to the 

Clearing House as a Sponsored Principal; or

(D) an Omnibus Margin-flow Co-mingled Account if the client chooses 

omnibus client segregation but requests to do so only as part of a 

particular group of Customers,

and in either case the Contract shall be recorded by the Clearing House in 

accordance with such designation; 

(viii) if it is a Non-FCM/BD Clearing Member, as a clearing member in relation to a 

transaction or transactions connected with the provision of services to one or more 

Segregated TTFCA Customers in respect of F&O Contracts, in which case the 

Contract shall be designated by the Clearing Member in accordance with 

Rule 401(g) as for:

(A) a Segregated TTFCA Customer Omnibus Account For F&O if the client 

chooses omnibus account segregation and has not requested use of an 

Omnibus Margin-flow Co-mingled Account;

(B) an Individually Segregated Sponsored Account if the client chooses 

individual client segregation and has been admitted to the Clearing House 

as a Sponsored Principal; 

(C) an Individually Segregated Margin-flow Co-mingled Account if the client 

chooses individual client segregation and has not been admitted to the 

Clearing House as a Sponsored Principal; or

(D) an Omnibus Margin-flow Co-mingled Account if the client chooses 

omnibus client segregation but requests to do so only as part of a 

particular group of Customers,

and in either case the Contract shall be recorded by the Clearing House in 

accordance with such designation; 
NYDOCS01/1643340.2 115

(ix) if it is a Non-FCM/BD Clearing Member, as a clearing member in relation to a 

transaction or transactions connected with the provision of services to one or more 

Segregated Customers in respect of CDS Contracts, in which case the Contract 

shall be designated by the Clearing Member in accordance with Rule 401(g) as 

for:

(A) a Segregated Customer Omnibus Account For CDS if the client chooses 

omnibus account segregation and has not requested use of an Omnibus

Margin-flow Co-mingled Account;

(B) an Individually Segregated Sponsored Account if the client chooses 

individual client segregation and has been admitted to the Clearing House 

as a Sponsored Principal; 

(C) an Individually Segregated Margin-flow Co-mingled Account if the client 

chooses individual client segregation and has not been admitted to the 

Clearing House as a Sponsored Principal; or

(D) an Omnibus Margin-flow Co-mingled Account if the client chooses 

omnibus client segregation but requests to do so only as part of a 

particular group of Customers,

and in either case the Contract shall be recorded by the Clearing House in

accordance with such designation; 

(x) if it is a Non-FCM/BD Clearing Member, as a clearing member in relation to a 

transaction or transactions connected with the provision of services to one or more 

Segregated TTFCA Customers in respect of CDS Contracts, in which case the 

Contract shall be designated by the Clearing Member in accordance with 

Rule 401(g) as for:

(A) a Segregated TTFCA Customer Omnibus Account For CDS if the client 

chooses omnibus account segregation and has not requested use of an 

Omnibus Margin-flow Co-mingled Account;

(B) an Individually Segregated Sponsored Account if the client chooses 

individual client segregation and has been admitted to the Clearing House 

as a Sponsored Principal; 

(C) an Individually Segregated Margin-flow Co-mingled Account if the client 

chooses individual client segregation and has not been admitted to the 

Clearing House as a Sponsored Principal; or

(D) an Omnibus Margin-flow Co-mingled Account if the client chooses 

omnibus client segregation but requests to do so only as part of a 

particular group of Customers,
NYDOCS01/1643340.2 116

and in either case the Contract shall be recorded by the Clearing House in 

accordance with such designation; 

(xi) if it is a Non-FCM/BD Clearing Member, as a clearing member in relation to a 

transaction or transactions connected with the provision of services to one or more 

Segregated Customers in respect of FX Contracts, in which case the Contract shall 

be designated by the Clearing Member in accordance with Rule 401(g) as for:

(A) a Segregated Customer Omnibus Account For FX if the client chooses 

omnibus account segregation and has not requested use of an Omnibus

Margin-flow Co-mingled Account;

(B) an Individually Segregated Sponsored Account if the client chooses 

individual client segregation and has been admitted to the Clearing House 

as a Sponsored Principal; 

(C) an Individually Segregated Margin-flow Co-mingled Account if the client 

chooses individual client segregation and has not been admitted to the 

Clearing House as a Sponsored Principal; or

(D) an Omnibus Margin-flow Co-mingled Account if the client chooses 

omnibus client segregation but requests to do so only as part of a 

particular group of Customers,

and in either case the Contract shall be recorded by the Clearing House in 

accordance with such designation; 

(xii) if it is a Non-FCM/BD Clearing Member, as a clearing member in relation to a 

transaction or transactions connected with the provision of services to one or more 

Segregated TTFCA Customers in respect of FX Contracts, in which case the 

Contract shall be designated by the Clearing Member in accordance with 

Rule 401(g) as for:

(A) a Segregated TTFCA Customer Omnibus Account For FX if the client 

chooses omnibus account segregation and has not requested use of an 

Omnibus Margin-flow Co-mingled Account;

(B) an Individually Segregated Sponsored Account if the client chooses 

individual client segregation and has been admitted to the Clearing House 

as a Sponsored Principal; 

(C) an Individually Segregated Margin-flow Co-mingled Account if the client 

chooses individual client segregation and has not been admitted to the 

Clearing House as a Sponsored Principal; 

(D) an Omnibus Margin-flow Co-mingled Account if the client chooses 

omnibus client segregation but requests to do so only as part of a 

particular group of Customers,
NYDOCS01/1643340.2 117

and in either case the Contract shall be recorded by the Clearing House in 

accordance with such designation; or

(xiii) as a clearing member in any other capacity (including where the Clearing Member 

does not provide any services to any Customer) in which case the Contract shall 

be designated by the Clearing Member in accordance with Rule 401(g) as for a

Proprietary Account of the Clearing Member and recorded by the Clearing House 

in accordance with such designation.

(p) For the avoidance of doubt, for the purposes of section 187 of the Companies Act 1989, a 

Clearing Member with more than one Account enters into Contracts recorded in its each 

such Account in a different capacity to that in which it enters into Contracts recorded in 

any other Account.

Rule 402 Relationship between Buying Counterparties, Selling Counterparties and 

Clearing House

(a) Save to the extent provided in Part 16 for FCM/BD Clearing Members and Rule 401(h)

each Clearing Member or Sponsored Principal that is party to a Contract shall act as 

principal and not as agent. In performing its obligations and exercising its rights under 

these Rules, the Clearing House shall treat the entitlement of Clearing Members and 

Sponsored Principals to rights pursuant to Contracts to be a full legal and beneficial 

entitlement and not subject to any Encumbrance in favour of any Person other than the 

Clearing House (other than pursuant to the Contract Terms).

(b) Upon the formation of a Contract in accordance with Rule 401, any Clearing Member or 

Sponsored Principal that has any Transaction Rights or Obligations in relation to the 

original Transaction shall be automatically and immediately released and discharged 

from all and any such Transaction Rights or Obligations other than: (i) any Transaction 

Rights or Obligations falling due for performance before the formation of such Contract; 

and (ii) any Transaction Rights or Obligations relating to any Initial Payment under any 

Bilateral CDS Transaction recorded in Deriv/SERV before submission for Clearing.

(c) The liabilities and obligations of the Clearing House pursuant to Contracts extend only to, 

and are enforceable only by, Clearing Members and Sponsored Principals. Without 

limiting the generality of the foregoing, the Clearing House shall have no liability or 

obligation whatsoever to any Customer (other than a Sponsored Principal) of a Clearing 

Member or any client of such a Customer.

(d) The Clearing House shall have no liability or obligation in relation to any Transaction 

whatsoever, unless and until a Contract arises in accordance with Rule 401 and is not 

void; in which case its liabilities shall be pursuant to the Contract only. The Clearing 

House's obligations and liabilities under any Contract shall be limited to those pursuant to 

the Contract Terms and these Rules, and are subject to the Contract not being void 

pursuant to Rule 403 and to the Clearing House's rights in relation to voidable Contracts 

pursuant to Rule 404.
NYDOCS01/1643340.2 118

(e) As between the Clearing House and each Clearing Member, all Contracts, these Rules 

and the relevant Clearing Membership Agreement (and any relevant Sponsor Agreement) 

are entered into in reliance on the fact that all such documents constitute a single 

agreement between the Clearing House and such Clearing Member. Were it not for these 

Rules, the Clearing Membership Agreement and other Contracts, neither the Clearing 

House nor such Clearing Member would enter into any Contracts with the other. As 

between the Clearing House and each Sponsored Principal, all Contracts, these Rules and 

the relevant Sponsored Principal Clearing Agreement are entered into in reliance on the 

fact that all such documents constitute a single agreement between the Clearing House 

and such Sponsored Principal. Were it not for these Rules, the Sponsored Principal 

Clearing Agreement and other Contracts (and the existence of the Sponsor Agreement 

and designation of the Sponsored Principal as being covered thereunder by the Sponsor) 

neither the Clearing House nor such Sponsored Principal would enter into any Contracts 

with the other.

(f) In the case of a Contract between the Clearing House and an FCM/BD Clearing Member 

that is recorded in a Customer Account, the Contract will remain valid and binding on the 

FCM/BD Clearing Member, and the FCM/BD Clearing Member will be liable to perform 

under the Contract as set forth in Part 16, regardless of the validity of any obligations in 

respect of the Contract to which the Customer is or was intended to be bound.

Rule 403 F&O Contracts that are Void from Inception

(a) No F&O Contract will arise (it being void ab initio) and the Clearing House shall have no 

obligation or liability to any Person in respect of a Transaction for which incomplete, 

erroneous or conflicting details are received by the relevant Market.

(b) In the event of an F&O Contract being void:

(i) the Clearing House shall immediately notify the affected Buying Counterparty 

and Selling Counterparty and any relevant Market;

(ii) all amounts paid pursuant to the purported F&O Contract shall be returned by the 

affected Buying Counterparty and Selling Counterparty and the Clearing House to 

their respective contractual counterparties, in each case without interest; and

(iii) any Transaction Rights or Obligations shall be deemed never to have been 

affected by Rule 402(b).

(c) Nothing in this Rule 403 of itself is intended to result in any Transaction or Transaction 

Rights or Obligations being void or voided as between the original parties thereto.

Rule 404 Contracts that are Voidable

(a) In relation only to F&O Contracts, the Clearing House shall have the discretion to avoid 

any Contract (which is not void ab initio pursuant to Rule 403) if the relevant Contract or 

Transaction (or related information or data received by the Clearing House, as applicable) 
NYDOCS01/1643340.2 119

whether in whole or in part, as against any Clearing Member, Sponsored Principal or 

Sponsor that is or would be bound thereto:

(i) conflicts or appears to conflict with information received by the Clearing House 

in relation to such Contract or Transaction from another source, including 

(without limitation) information received from a Market, Exchange, any other 

Clearing Member, Sponsored Principal, Sponsor, Governmental Authority or any 

Representative of any such Person;

(ii) results or appears to result from a manifest error, or communications or 

information technology error or problem;

(iii) is or appears to be connected with fraud, illegality, insider dealing, market abuse, 

money laundering or any other breach of Applicable Laws;

(iv) is or appears to be a result of a Force Majeure Event;

(v) is one which any Governmental Authority or any Market requires or requests in 

writing that the Clearing House treat as void or voided;

(vi) is one which any Applicable Law provides is void or voided or which any 

Applicable Law requires the Clearing House to treat as void or voided;

(vii) is one in respect of which the Clearing House has requested additional Margin or 

Permitted Cover from the Clearing Member or Sponsored Principal and no 

Margin or Permitted Cover is provided by the time required;

(viii) was entered into in breach of a representation by a Clearing Member or Sponsored 

Principal arising under the Rules or the Procedures; 

(ix) is otherwise made or received in such circumstances or in such a manner that 

acceptance of the Contract or Transaction would be inadvisable, in the opinion of 

the Clearing House, for the Clearing House's own protection, the protection of 

Clearing Members generally, Energy Clearing Members generally, Financials & 

Softs Clearing Members generally, F&O Clearing Members generally, Sponsored 

Principals or the protection of a Market or marketplace in any class of Contracts; 

or

(x) solely in respect of ICE Endex UK Transactions, ICE Endex UK Contracts, ICE 

Natural Gas Continental Spot Transactions and/or ICE Natural Gas Continental 

Spot Contracts, is one in relation to which any corresponding Trade Nomination 

has been rejected by National Grid, GTS, Fluxys Belgium or Huberator (as such 

Persons are defined in the Delivery Procedures), as applicable.

(b) If any CDS Contract or FX Contract, as against any Clearing Member, Sponsored 

Principal or Sponsor that is or would be bound thereto:
NYDOCS01/1643340.2 120

(i) is one which any Governmental Authority requires or requests in writing that the 

Clearing House treat as void or voided;

(ii) is one which any Applicable Law provides is void or voided, or requires the 

Clearing House to treat as void or voided;

(iii) is one which, whether in whole or in part, pursuant to any Applicable Law is 

voidable; or

(iv) is unenforceable by the Clearing House,

then the Clearing House shall act in accordance with Rule 404(c). A Contract shall not 

be subject to Rule 404(b)(iii) or (iv) if a Buying Counterparty or Selling Counterparty is 

subject to fraud, illegality, insider dealing, market abuse, money laundering, breach of 

Applicable Laws or other grounds for the Contract being void, voidable or unenforceable 

solely as a result of it having submitted a Transaction in circumstances in which the 

simultaneously arising Contract to which another Buying Counterparty or Selling 

Counterparty is subject to Rule 404(b)(iii) or (iv).

(c) If any of the circumstances set out in Rule 404(b)(i) and (ii) arises, the Clearing House 

shall comply with any relevant request, requirement or provision, and, if Rule 404(b)(iii)

or (iv) applies, it may at its discretion avoid the relevant Contract. If the Clearing House 

exercises its discretion to avoid a Contract or any Contract is otherwise void or voided, 

the Clearing House may, at its discretion, take action in accordance with this Rule 404(c). 

Where it does take action under this Rule 404(c), it may take the steps set out in 

paragraph (i) below or, if that is not reasonably practicable, it may take the steps set out 

in paragraph (ii) below, in relation to the affected Contract(s):

(i) direct the Buying Counterparty or Selling Counterparty who was counterparty to 

the void or voided Contract to enter into a replacement Contract of equal 

economic terms to the void or voided Contract or sign documentation confirming 

the validity of an existing Contract, in which case the Buying Counterparty or 

Selling Counterparty in question (and, if it is a Sponsored Principal, its Sponsor) 

shall forthwith execute or sign such documentation as is directed by the Clearing 

House, which documentation may contain any terms specified by the Clearing 

House, in order to establish a replacement Contract as near as possible of equal 

terms to the Contract that is void or voided or confirm the validity of an existing 

Contract (and in the case of a CDS Contract recorded in a Customer Account, the 

CDS Contract will then stand regardless of whether or not the Customer is bound 

by any related Customer-CM Transaction or, in the case of an FCM/BD Clearing 

Member of the existence of any agency or other relationship between the 

Customer and the Clearing Member in respect of the CDS Contract); or

(ii) enter into such contracts for its own account as it considers necessary for the 

Clearing House to achieve a balanced book of Contracts, in which case:

(A) the Buying Counterparty or Selling Counterparty who was counterparty to 

the void or voided Contract shall be liable to pay the Clearing House for 
NYDOCS01/1643340.2 121

all of the Clearing House's costs, expenses and losses incurred in 

establishing such contracts;

(B) the Clearing House shall be entitled to retain all Margin and Guaranty 

Fund Contributions of the Buying Counterparty or Selling Counterparty 

(or, if it is a Sponsored Principal, its Sponsor) in question that would 

otherwise be returned or returnable to such Buying Counterparty or 

Selling Counterparty (or, if it is a Sponsored Principal, its Sponsor) as a 

result of the Contract being voided and apply the same as against any 

amount due to the Clearing House under Rule 404(c)(ii)(A); and

(C) the Clearing House shall be entitled to call additional Margin from the 

Buying Counterparty or Selling Counterparty in question from the time at 

which the Contract is void until the time that the Clearing House has 

achieved a balanced book and has been reimbursed in respect of all its 

costs, expenses and losses incurred in establishing such contracts,

provided that, for the avoidance of doubt, any amounts received by the Clearing 

House in the process of achieving a balanced book which are in excess of its 

costs, expenses and losses incurred in establishing such contracts will be 

repayable to the affected Buying Counterparty or Selling Counterparty.

(d) If the Clearing House directs a Buying Counterparty or Selling Counterparty (and, if it is 

a Sponsored Principal, its Sponsor) to enter into a replacement Contract or sign 

documentation confirming the validity of an existing Contract under Rule 404(c)(i), any 

failure by the Buying Counterparty or Selling Counterparty (or, if it is a Sponsored 

Principal, its Sponsor) to do so or to take the steps set out in Rule 404(e) at or before the 

time reasonably specified by the Clearing House shall constitute grounds for the Clearing 

House declaring an Event of Default in respect of the Buying Counterparty or Selling 

Counterparty (and, if it is a Sponsored Principal, its Sponsor), regardless of any event or 

circumstance which might (but for this provision) constitute a Force Majeure Event. If a 

Buying Counterparty or Selling Counterparty (or, if it is a Sponsored Principal, its 

Sponsor) is restricted or prevented by Applicable Law from entering into or signing a 

valid replacement Contract or signing documentation confirming the validity of an 

existing Contract, such restriction or prevention (in conjunction with the failure of the 

Buying Counterparty or Selling Counterparty (or, if it is a Sponsored Principal, its 

Sponsor) to enter into a replacement Contract or sign effective documentation confirming 

the validity of an existing Contract where directed to do so by the Clearing House 

pursuant to Rule 404(c)(i) or to take the steps set out in Rule 404(e)) shall of itself 

constitute grounds for the Clearing House declaring an Event of Default in respect of the 

Buying Counterparty or Selling Counterparty (or, in the case of a Sponsor which has so 

failed to perform, such Sponsor), regardless of any event or circumstance which might 

(but for this provision) constitute a Force Majeure Event.

(e) If, in relation to an F&O Contract, any of the circumstances in Rule 404(a) arises or if, in 

the case of a CDS Contract or FX Contract only, any of the circumstances set out in 

Rule 404(b) arises and no replacement Contract is established and the position is not 
NYDOCS01/1643340.2 122

otherwise dealt with pursuant to Rule 404(c), the Clearing House shall immediately 

notify the affected Buying Counterparty and Selling Counterparty and any relevant 

Market. Upon such notification:

(i) the Clearing House, Buying Counterparty and Selling Counterparty shall each 

immediately be released from all rights, liabilities and obligations under any 

affected Contract;

(ii) the affected Contract shall become null and void;

(iii) all amounts paid pursuant to the Contract shall immediately be returned by the 

Buying Counterparty, Selling Counterparty and Clearing House to their respective 

contractual counterparties, in each case without interest;

(iv) in the case of an F&O Contract;

(A) any Transaction Rights or Obligations shall be deemed never to have been 

affected by Rule 402(b);

(B) each affected Buying Counterparty and Selling Counterparty shall submit, 

or, as the case may be, resubmit the terms of the Transaction to the 

relevant Repository (if any); and

(C) each affected Buying Counterparty and Selling Counterparty or the 

Clearing House, as the case may be, shall cancel any submission to any 

Repository relating to the voided F&O Contracts made pursuant to Rule 

401(l).

(v) in the case of two CDS Contracts (resulting from the same CDS Trade Particulars) 

being voided in circumstances in which the CDS Trade Particulars reflect a 

transaction (including any Bilateral CDS Transaction) that is not void or would 

itself not have been void:

(A) if the CDS Trade Particulars represent a Bilateral CDS Transaction or 

other transaction that was contractually binding prior to being submitted 

for Clearing:

(1) the Bilateral CDS Transaction shall be deemed never to have been 

terminated; and

(2) each affected Buying Counterparty and Selling Counterparty shall 

submit, or, as the case may be, resubmit the terms of the Bilateral 

CDS Transaction or other transaction to Deriv/SERV and the 

relevant Repository;

(B) each affected Buying Counterparty and Selling Counterparty or the 

Clearing House, as the case may be, shall cancel any submission to 
NYDOCS01/1643340.2 123

Deriv/SERV and the relevant Repository relating to the voided CDS 

Contracts made pursuant to Rule 401(l); and

(C) any Transaction Rights or Obligations shall be deemed never to have been 

affected by Rule 402(b), except to the extent that any equivalent obligation 

under a CDS Contract corresponding to a Transaction Right or Obligation 

has been performed or part-performed; and

(vi) in the case of two FX Contracts (resulting from the same FX Trade Particulars) 

being voided in circumstances in which the FX Trade Particulars reflect an FX 

transaction that is not void or would itself not have been void:

(A) if the FX Trade Particulars represent an FX transaction that was 

contractually binding prior to being submitted for Clearing:

(1) any such FX transaction shall be deemed never to have been 

terminated; and

(2) each affected Buying Counterparty and Selling Counterparty shall 

submit, or, as the case may be, resubmit the terms of such FX 

transaction to the relevant Repository;

(B) each affected Buying Counterparty and Selling Counterparty or the 

Clearing House, as the case may be, shall cancel any submission to any 

Repository relating to the voided FX Contracts made pursuant to Rule 

401(l); and

(C) any Transaction Rights or Obligations shall be deemed never to have been 

affected by Rule 402(b).

(f) Nothing in this Rule 404 of itself is intended to result in any Transaction or Transaction 

Rights or Obligations being void or voided as between the original parties thereto, except 

to the extent that any equivalent obligation under a Contract corresponding to a 

Transaction Right or Obligation has been performed or part-performed.

(g) For the avoidance of doubt, Rules 404(b), (c) and (d) shall only apply to CDS Contracts 

and FX Contracts and shall not apply to F&O Contracts.

(h) The Clearing House will notify any relevant Market when it avoids a Contract under this 

Rule 404.

Rule 405 Representations and Warranties on Contract Formation

(a) In relation to each Contract, the Clearing House will, and will be entitled to, rely on

representations and warranties, deemed automatically to arise pursuant to these Rules 

from each Buying Counterparty and Selling Counterparty proposing to become or 

becoming party to any Contract, that:
NYDOCS01/1643340.2 124

(i) it is in full compliance with the Rules;

(ii) its obligations under the Clearing Membership Agreement and any Sponsor 

Agreement (or, in the case of a Sponsored Principal, its obligations under the 

Sponsored Principal Clearing Agreement), any Contract and Credit Support 

Document to which it is a party constitute its legal, valid and binding obligations, 

enforceable in accordance with their respective terms (subject to applicable 

bankruptcy, reorganisation, insolvency, moratorium or similar laws affecting 

creditors' rights generally and subject, as to enforceability, to equitable principles 

of general application (regardless of whether enforcement is sought in a 

proceeding in equity or at law));

(iii) no Event of Default or Potential Event of Default with respect to it has occurred 

and is continuing and no such event or circumstance would occur as a result of its 

entering into or performing its obligations under the Clearing Membership 

Agreement (or, in the case of a Sponsored Principal, the Sponsored Principal 

Clearing Agreement), any Contract or any Credit Support Document to which it is 

a party;

(iv) there is not pending or, to its knowledge, threatened against it or any of its Credit 

Support Providers any action, suit or proceeding at law or in equity or before any 

court, tribunal, governmental body, agency or official or any arbitrator that is 

likely to affect the legality, validity or enforceability against it of the Clearing 

Membership Agreement (or, in the case of a Sponsored Principal, the Sponsored 

Principal Clearing Agreement), any Contract or any Credit Support Document to 

which it is a party or its ability to perform its obligations under the Clearing 

Membership Agreement, any Sponsor Agreement (or, in the case of a Sponsored 

Principal, the Sponsored Principal Clearing Agreement), any Contract or such 

Credit Support Document;

(v) except as expressly provided in Part 16 of the Rules in respect of FCM/BD 

Clearing Members and Rule 401(h) in respect of Disclosed Principal Members, it 

is acting for its own account and as principal and not as agent;

(vi) it has made its own independent decisions to enter cleared Contracts and as to 

whether the entry into of cleared Contracts is appropriate or proper for it based 

upon its own judgment and upon advice from such advisers as it has deemed 

necessary;

(vii) it is not relying on any communication (written or oral) of the Clearing House as 

investment advice or as a recommendation to enter into the Contract, it being 

understood that information and explanations related to the terms and conditions 

of a Contract will not be considered investment advice or a recommendation to 

enter into a Contract;

(viii) no communication (written or oral) received from the Clearing House will be 

deemed to be an assurance or guarantee as to the expected results of that Contract;
NYDOCS01/1643340.2 125

(ix) it is capable of assessing the merits of and understanding (on its own behalf or 

through independent professional advice), and understands and accepts, the terms, 

conditions and risks of the Contract and it is also capable of assuming, and 

assumes, the risks of the Contract;

(x) the Clearing House is not acting as a fiduciary for or an adviser to it in respect of 

the Contract; and

(xi) if it is a Clearing Member, where the Contract is to be recorded in one of its 

Customer Accounts or is otherwise related to a Customer-CM Transaction, it 

acknowledges its obligation in Rule 202(a)(ii) and that compliance with 

Applicable Laws in the context of entering into Customer transactions includes 

compliance with Applicable Laws relating to customer due diligence in respect of 

its Customer and Applicable Laws relating to sanctions administered or imposed 

by the European Union, H.M. Treasury, the Office of Foreign Assets Control of 

the U.S. Department of the Treasury, the United Nations Security Council or any 

other relevant Governmental Authority affecting the Customer or any of its 

Customer's assets.

(b) In relation to each Contract (other than a Contract arising pursuant to Rule 401(a)(v), 

Rule 401(a)(vi), Rule 401(a)(x), Rule 401(a)(xi), Rule 401(a)(xiii) or Rule 401(a)(xiv)), 

the Clearing House will, and will be entitled to, rely on representations and warranties, 

deemed automatically to arise pursuant to these Rules from each Buying Counterparty 

and Selling Counterparty proposing to become or becoming party to any Contract, that:

(i) the data submitted to the Exchange (if applicable) or the Clearing House (or 

submitted by the Participating Exchange, if applicable):

(A) is complete and correct in all respects; and

(B) has been duly authorised by it (including, in connection with a CDS 

Contract, that any CDS Trade Execution/Processing Platform used by it 

for the submission of CDS Trade Particulars has been duly authorised by it 

for the submission of data relating to CDS Trade Particulars in accordance 

with the CDS Procedures; and, in connection with an FX Contract, that 

any FX Trade Execution/Processing Platform used by it for the submission 

of FX Trade Particulars has been duly authorised by it for the submission 

of data relating to FX Trade Particulars in accordance with the FX 

Procedures); and

(ii) Market Rules (if applicable), the CDS Trade Execution/Processing Platform's 

procedures (if applicable), the FX Trade Execution/Processing Platform's 

procedures (if applicable), the rules of the Participating Exchange (if applicable) 

and all Applicable Laws have been complied with by it and any relevant 

Customer in respect of the Transaction or Participating Exchange Transaction.

(c) In relation to each Contract that arises pursuant to Rule 401(a)(iii), Rule 401(a)(viii), 

Rule 401(a)(ix), Rule 401(a)(xii) and Rule 401(a)(xiv), the Clearing House will, and will 
NYDOCS01/1643340.2 126

be entitled to, rely on representations and warranties deemed automatically to arise 

pursuant to these Rules from each Buying Counterparty and Selling Counterparty 

proposing to become or becoming party to any Contract, that:

(i) all and any previously subsisting contracts, rights, obligations or liabilities in 

connection with the subject matter of the Transaction or proposed Contract are on 

equal terms to that of the relevant Contract Terms (save as to the parties) and, in 

the case of rights, are free from all Encumbrances (excluding liabilities and 

obligations arising pursuant to the Contract Terms); and

(ii) any Person other than the Buying Counterparty and Selling Counterparty to whom 

any contracts, rights, obligations or liabilities referred to in Rule 405(c)(i) pertain 

has agreed with it, or such other Person as is relevant, to be released from all of its 

rights, obligations and liabilities as a result of Contracts arising pursuant to 

Rule 401(a) (save for any contracts, rights, obligations or liabilities as between the 

Clearing Member and its Customer (under a Customer-CM Transaction or 

otherwise) or between any Customer and its customers and so on, in relation to 

the subject matter of the Contract on a back-to-back basis with a Contract, and 

further except as provided in Part 16).

(d) Clearing Members will become party to, and liable under, Contracts each and every time 

a Contract arises from a Transaction as a result of the action or omission of its 

Representatives, regardless of any circumstance in relation to such Transaction, including 

without limitation whether the person submitting the Transaction was authorised to do so 

by the Clearing Member or its Representative or whether the Transaction caused a 

Representative to exceed the Clearing House's credit or other parameters set for such 

Representative, a Market's or Exchange's position limits or the Clearing House's Position 

Limits or otherwise was in breach of the Rules or any of the Clearing Member's or 

Clearing House's policies, procedures or controls.

(e) When a CDS Contract arises, the Clearing House shall make the warranties and the 

Buying Counterparty and Selling Counterparty shall make the additional representations 

and warranties as in each case are set out in the CDS Procedures.

(f) The Clearing House shall be entitled to assume, without enquiry, that at each time at 

which a Customer-CM Transaction arises, the respective obligations of the Clearing 

Member and Customer under such Customer-CM Transaction constitute its legal, valid 

and binding obligations enforceable in accordance with its terms, subject to applicable 

bankruptcy, reorganisation, insolvency, moratorium or similar laws affecting creditors' 

rights generally and subject, as to enforceability, to equitable principles in general 

application (regardless of whether enforcement is sought in a proceeding in equity or at 

law).

Rule 406 Open Contract Positions

(a) At the end of each day or at such other frequency as the Clearing House determines at its 

discretion either generally or in respect of any Clearing Member or Sponsored Principal, 
NYDOCS01/1643340.2 127

the Clearing House will calculate Open Contract Positions in its books and records. 

Settlement or revaluation of Open Contract Positions and Contracts will take place 

pursuant to the applicable Contract Terms and, for F&O Contracts, through the Clearing 

Processing System. The Clearing House shall have no obligation to notify any Clearing 

Member, Sponsored Principal or any other Person of Open Contract Positions or 

Contracts other than through the Clearing Processing System or otherwise than in 

accordance with the Rules and the Clearing Procedures.

(b) If an F&O Clearing Member so instructs the Clearing House in accordance with the 

Clearing Procedures, the Clearing House will net particular buy and sell positions (for a 

Set of Futures that are F&O Contracts), or Long and Short positions (for a Set of Options 

that are F&O Contracts) within the Clearing Member's Open Contract Position in respect 

of one of a Clearing Member's Customer Position Accounts, provided that no buy or sell 

positions or Long or Short positions in respect of one Customer are to be netted against 

buy or sell positions or Long or Short positions in respect of another Customer. The 

Clearing House and relevant Clearing Member will reflect each aggregation and netting 

under this Rule 406(b) in the records of the Repository (if any) designated by the 

Clearing House for F&O Contracts.

(c) Subject to its obligations under Rule 406(b), the Clearing House may at its discretion 

treat any F&O Contract pursuant to which a Clearing Member or Sponsored Principal is 

the Buying Counterparty and another F&O Contract of the same Set pursuant to which 

the same Clearing Member or Sponsored Principal is the Selling Counterparty 

simultaneously as being netted, set off and mutually closed out and terminated upon 

calculation of the Open Contract Position in respect of such F&O Contracts, subject to 

the Clearing Member or Sponsored Principal having made all then due payments 

pursuant to the Contract Terms in respect of such F&O Contracts and to separate 

treatment of Open Contract Positions in each Proprietary Account and each Customer 

Account. Where the position as Buying Counterparty is not of the same size as a position 

a Selling Counterparty, the Contracts in question shall be closed out and terminated in 

part. For the avoidance of doubt, any contractual netting of F&O Contracts is subject to 

Rule 102(q) and there shall be separate treatment (and no offsetting and close-out or 

resulting termination nor any aggregation or consolidation) as between any of: (A) any 

F&O Contract recorded in a particular Proprietary Account; (B) any F&O Contract 

recorded in a particular Customer Account or Individually Segregated Sponsored 

Account; or (C) any two F&O Contracts that are recorded in different Customer 

Accounts or Individually Segregated Sponsored Accounts. The Clearing House and 

relevant Clearing Member will reflect each aggregation and netting under this 

Rule 406(c) in the records of the Repository (if any) designated by the Clearing House 

for F&O Contracts.

(d) CDS Clearing Members and Sponsored Principals that clear CDS shall elect in 

accordance with the CDS Procedures between one of three different methods for the 

aggregation and netting of CDS Contracts (listed in paragraphs (i) to (iii) below), 

separately in respect of each of its CDS Sub-Accounts. If a CDS Clearing Member or 

Sponsored Principal has only one CDS Sub-Account, then only one election under this 

Rule 406(d) is required. Any aggregation and netting of CDS Contracts pursuant to this 
NYDOCS01/1643340.2 128

Rule 406(d) shall take place pursuant to a novation, through termination of the relevant 

existing CDS Contract of the same Set or some or all of the relevant existing CDS 

Contracts of the same Set in the same CDS Sub-Account in consideration for the entry 

into of a new replacement single CDS Contract replacing those CDS Contracts so being 

aggregated and/or netted. Such aggregation and netting will take place at the times, and 

will affect those CDS Contracts, set out in or determined in accordance with the CDS 

Procedures, which will provide for aggregation and netting in relation to each CDS 

Sub-Account at least weekly. The Clearing House and relevant CDS Clearing Member 

or Sponsored Principal will reflect each aggregation and netting under this Rule 406(d) in 

the records of Deriv/SERV in accordance with the CDS Procedures. Subject to 

Rule 406(e):

(i) where a CDS Clearing Member or Sponsored Principal elects to manage a CDS 

Sub-Account on a 'trade by trade' basis, there will be no netting, offsetting, 

consolidation, aggregation, novation, termination or replacement of CDS 

Contracts recorded in that CDS Sub-Account;

(ii) where a CDS Clearing Member or Sponsored Principal elects to manage a CDS 

Sub-Account on a 'gross' basis:

(A) there shall be no regular netting or offsetting of CDS Contracts recorded in 

that CDS Sub-Account;

(B) CDS Contracts recorded in that CDS Sub-Account, to the extent they are 

in the same Set and where the CDS Clearing Member or Sponsored 

Principal acts as Buying Counterparty, will, by operation of this provision, 

be aggregated, terminated and replaced by a single CDS Contract at the 

relevant times specified in this Rule 406(d), with a Floating Rate Payer 

Calculation Amount equal to the total of the Floating Rate Payer 

Calculation Amounts of those CDS Contracts; and

(C) CDS Contracts recorded in that CDS Sub-Account, to the extent they are 

in the same Set and where the CDS Clearing Member or Sponsored 

Principal acts as Selling Counterparty, will, by operation of this provision, 

be aggregated, terminated and replaced by a single CDS Contract, being a 

different CDS Contract to the CDS Contract referred to in 

Rule 406(d)(ii)(B), at the relevant times specified in this Rule 406(d), with 

a Floating Rate Payer Calculation Amount equal to the total of the 

Floating Rate Payer Calculation Amounts of those CDS Contracts;

(iii) where a CDS Clearing Member or Sponsored Principal elects to manage a CDS 

Sub-Account on a 'net' basis, CDS Contracts recorded in that CDS Sub-Account, 

to the extent they are in the same Set, will, by operation of this provision, be 

terminated and replaced by a single CDS Contract, at the relevant times specified 

in this Rule 406(d), with a Floating Rate Payer Calculation Amount equal to the 

net of the Floating Rate Payer Calculation Amounts of those CDS Contracts;
NYDOCS01/1643340.2 129

(iv) where a CDS Clearing Member or Sponsored Principal makes no election in 

respect of a CDS Sub-Account linked to one of its Proprietary Accounts, it shall 

be deemed to have elected to manage that CDS Sub-Account on a 'net' basis and 

Rule 406(d)(iii) shall apply; and

(v) where there is no election made in respect of a CDS Sub-Account linked to a 

Customer Account or an Individually Segregated Sponsored Account, the CDS 

Clearing Member or Sponsored Principal shall be deemed to have elected that 

such CDS Sub-Account will be managed on a 'trade by trade' basis and 

Rule 406(d)(i) shall apply.

(e) Notwithstanding Rule 406(d), but without prejudice to Rule 102(q):

(i) following an Applicable Credit Event, the Clearing House shall be entitled to 

aggregate, consolidate, set off, close out and terminate CDS Contracts (as 

applicable) to result in one or more CDS Contracts per Set regardless of the 

election in Rule 406(d), to the extent permitted under these Rules and the CDS 

Procedures;

(ii) if a CDS Contract becomes a self-referencing CDS Contract (in the circumstances 

further detailed in the Procedures), the Clearing House shall be entitled to set off, 

close out and terminate CDS Contracts (as applicable) to result in one or more 

CDS Contracts per Set regardless of the election in Rule 406(d), to the extent 

permitted under the Rules and CDS Procedures;

(iii) following an Event of Default, Part 9 of the Rules shall prevail and apply in 

relation to all matters concerning aggregation, consolidation, set off, closing out 

and termination of Contracts;

(iv) for the avoidance of doubt, Rule 406(d) is subject to Rule 102(q) and there shall 

be separate treatment (and no offsetting and close-out or resulting termination nor 

any aggregation or consolidation) as between any of: (A) any CDS Contract 

recorded in a Proprietary Account; (B) any CDS Contract recorded in a particular 

Customer Account or Individually Segregated Sponsored Account; or (C) any 

CDS Contract recorded in a different Customer Account or Individually 

Segregated Sponsored Account;

(v) an election under Rule 406(d)(i) or Rule 406(d)(ii) shall not prevent a CDS 

Clearing Member or Sponsored Principal from requesting on an ad hoc basis that 

the Clearing House net, set off, consolidate or aggregate any particular CDS 

Contracts (or parts of any CDS Contracts) in a manner that would be permitted 

under Rule 406(d)(iii) (if that Rule were applicable to the relevant CDS SubAccount) nor shall it prevent the Clearing House from accepting any such request 

(and the Clearing House shall not unreasonably withhold or delay its consent to 

any such ad hoc netting, set off, consolidation or aggregation);

(vi) Rule 406(d) does not affect the definition or calculation of the Open Contract 

Position of a CDS Clearing Member or Sponsored Principal, nor does it affect any 
NYDOCS01/1643340.2 130

Margin or Guaranty Fund Contribution requirements applicable to a CDS 

Clearing Member, Sponsor or Sponsored Principal which shall at all times to the 

extent that the same are based upon parameters relating to Contracts be based 

upon the Open Contract Position in each Set, notwithstanding the gross CDS 

Contracts to which a CDS Clearing Member or Sponsored Principal is party or 

elections in relation to CDS Sub-Accounts;

(vii) if the records of trades in Deriv/SERV or a Repository do not reflect the CDS 

Contracts to which a CDS Clearing Member or Sponsored Principal and the 

Clearing House are party, then the CDS Clearing Member or Sponsored Principal 

and the Clearing House will together correct the records of Deriv/SERV or the 

relevant Repository accordingly; and

(viii) where Rule 406(d)(ii) or Rule 406(d)(iii) applies to a CDS Sub-Account, Fixed 

Amounts for the CDS Contracts recorded in that CDS Sub-Account shall be 

calculated on the basis of the average Floating Rate Payer Calculation Amounts 

for the affected period.

(f) There shall be no regular contractual netting or aggregation of FX Contracts. FX 

Contracts will be recorded separately and on a gross basis in all Accounts. 

Notwithstanding this Rule 406(f):

(i) following an Event of Default, Part 9 of the Rules shall prevail and apply in 

relation to all matters concerning aggregation, consolidation, set off, closing out 

and termination of Contracts;

(ii) Rule 406(f) does not affect the definition or calculation of any Margin or 

Guaranty Fund Contribution requirements applicable to an FX Clearing Member 

or Sponsored Principal that clears FX;

(iii) Rule 406(f) does not prevent the netting and offset of an FX Contract against 

another FX Contract, if the second FX Contract arose as a result of the Invoicing 

Back of the first FX Contract by the Clearing House under Rule 104;

(iv) for the avoidance of doubt, any contractual netting of FX Contracts is subject to 

Rule 102(q) and there shall be separate treatment (and no offsetting and close-out 

or resulting termination nor any aggregation or consolidation) as between any of: 

(A) any FX Contract recorded in a particular Proprietary Account of the Clearing 

Member; (B) any FX Contract recorded in a particular Customer Account or 

Individually Segregated Sponsored Account; or (C) any FX Contract recorded in a 

different Customer Account or Individually Segregated Sponsored Account;

(v) if the Clearing House nets and offsets or combines and replaces any opposite FX 

Contracts (or any part of an FX Contract) of a Defaulter pursuant to Rule 902 to 

Rule 907, then the Clearing House shall be entitled to net and offset or combine 

and replace up to an equal amount of FX Contracts (or any part of an FX 

Contract) of other Clearing Members or Sponsored Principals (which are not 

Defaulters) of the same Set as those FX Contracts of the Defaulter that were 
NYDOCS01/1643340.2 131

netted and offset or combined and replaced, and upon any such netting and 

offsetting or combination and replacement being notified by the Clearing House 

to a Clearing Member or Sponsored Principal, the FX Contracts to which the 

netting and offsetting or combination and replacement applies shall automatically 

be terminated (and, in the case of a combination or partial offset, replaced with a 

new FX Contract) without need for any further action on the part of any Person, 

provided that:

(A) the Clearing House shall only net or offset two or more Financially-Settled 

FX Contracts of a Clearing Member or Sponsored Principal that is not a 

Defaulter, in whole or in part, where such Financially-Settled FX 

Contracts are in the same Set and the Clearing Member or Sponsored 

Principal in question is Reference Currency Buyer under one of the 

Financially-Settled FX Contracts and Reference Currency Seller under the 

other Financially-Settled FX Contract;

(B) the Clearing House shall only combine and replace two or more 

Financially-Settled FX Contracts (or parts thereof) of a Clearing Member 

or Sponsored Principal that is not a Defaulter:

(1) if the Clearing Member or Sponsored Principal is Reference 

Currency Buyer under one of the Financially-Settled FX Contracts 

in respect of a particular currency and Reference Currency Seller 

under the other Financially-Settled FX Contract in respect of the 

same currency, and those two Financially-Settled FX Contracts 

have the same FX Settlement Date; and

(2) if the replacement FX Contract is also a Financially-Settled FX 

Contract, with the obligations and rights of the Clearing Member 

or Sponsored Principal referring to the two currencies of the 

original FX Contracts (which were not the same), but with the 

same FX Settlement Date as the original FX Contracts and based 

on obligations with reference to the two remaining currencies as 

stood under the original FX Contracts; and

(C) the Clearing Members or Sponsored Principals to which any netting, 

offsetting, combination or replacement applies shall be selected by the 

Clearing House based on an objective, automated selection process; and

(vi) the Clearing House and relevant FX Clearing Member or Sponsored Principal will 

reflect each aggregation and netting in the records of the Repository in which the 

FX Contract is recorded.

(g) All Intellectual Property in data relating to Transactions, Contracts and Open Contract 

Positions provided to the Clearing House under these Rules or generated by the Clearing 

House shall be the property of the Clearing House (except as otherwise agreed with a 

Market and that, in relation to CDS Contracts or FX Contracts, this shall be subject to any 
NYDOCS01/1643340.2 132

provision to the contrary in any agreement in writing between the Clearing House and a 

CDS Clearing Member or FX Clearing Member, respectively). Such data may be 

provided by the Clearing House to Deriv/SERV and any Market, Exchange, CDS Trade 

Execution/Processing Platform, FX Trade Execution/Processing Platform, Repository or 

any member of the ICE Group and used by the Clearing House or such other Persons for 

any commercial or other purpose, subject in each case to the restrictions in Rule 106(a). 

Each Clearing Member's, Sponsor's, Sponsored Principal's and Customer's rights in such 

Intellectual Property shall be automatically assigned to the Clearing House by virtue of 

this provision as such rights arise. This Rule 406(g) is subject, in relation to CDS 

Clearing and FX Clearing, to any further restrictions in any agreement in writing between 

the Clearing House and a CDS Clearing Member or FX Clearing Member, as the case 

may be.

Rule 407 Reporting of Open Contract Positions Carried by Other Clearing Members

If an F&O Clearing Member or Sponsored Principal (for the purposes of this Rule 407 only, the 

"Position Giver") has Customer or proprietary positions in respect of any Contract carried for it 

in a Customer Account of another F&O Clearing Member (for the purposes of this Rule 407

only, the "Position Holder"), the Position Giver shall give written notice to the Clearing House 

of the name of the Position Holder and the extent of its position on the Business Day following 

the Business Day on which a position was carried by the Position Holder.

Rule 408 Transfer of Contracts

(a) No Person other than the Clearing House shall be entitled to assign, allocate or transfer, 

or create any Encumbrance whatsoever in relation to, any of its rights, liabilities or 

obligations under a Contract or the Rules except:

(i) that all rights and obligations of a Clearing Member or Sponsored Principal 

pursuant to a Contract may be transferred, novated or terminated and replaced 

from one Clearing Member or Sponsored Principal to another Clearing Member 

or Sponsored Principal with the agreement of each of the two Clearing Members 

(or any Sponsored Principal taking the place of any Clearing Member) involved 

(and, if required under Applicable Law for Open Contract Positions in a Customer 

Account, the consent of the relevant Customers), and the consent of the Clearing 

House and relevant Market (if any), subject to such conditions as the Clearing 

House at its discretion stipulates and, in relation to CDS Contracts, subject to the 

requirements set out in the CDS Procedures;

(ii) as a result of an allocation resulting in a Clearing Member or Sponsored Principal 

being the 'Buying Counterparty' or 'Selling Counterparty' as such terms are 

defined in Rule 101;

(iii) as a result of an allocation pursuant to Rule 401(a)(viii);

(iv) as a result of a CDS Contract arising pursuant to Rule 905(c) and Rule 401(a)(x);

(v) as a result of a Transfer of Contracts pursuant to Rule 904; or
NYDOCS01/1643340.2 133

(vi) as a result of a transfer of a Linked Outgoing Contract under Rule 401(a)(xiv) and 

Rule 410.

(b) Any purported transfer of any rights, liabilities or obligations under a Contract or the 

Rules other than in accordance with Rule 408(a) shall be null and void.

Rule 409 Amendment of Contract Terms

(a) The terms of any Contract may only be amended, waived or varied with the prior written 

consent of the Clearing House.

Rule 410 Link Agreements

(a) In this Rule 410, the following terms shall have the meanings set out below:

The term "Cleared Exchange" means an Exchange to which the Clearing House 

provides clearing services. 

The term "Clearing Member Link Agreement" means a written agreement in one or 

more forms amongst a Cleared Exchange, the Clearing House and a Participating 

Exchange to which, amongst others, a Clearing Member is party. A Clearing Member 

Link Agreement has the function, amongst other things, of facilitating the transfer of 

Contracts and transactions in accordance with this Rule 410. 

The term "Link Agreement" means an agreement entered into between the Clearing 

House and a Participating Exchange and, if applicable, a Cleared Exchange for the 

purposes of facilitating the transfer of Contracts from the Clearing House to the 

Participating Exchange or vice-versa. 

The term "Linked Outgoing Contract" means a Contract or notional Contract which is 

subject to a transfer to a Participating Exchange from the Clearing House pursuant to a 

Link Agreement, giving rise to an offsetting Contract under Rule 410(d).

The term "Linked Incoming Contract" means a Contract which arises under 

Rule 410(e) following the transfer from a Participating Exchange to the Clearing House 

of a Participating Exchange Transaction pursuant to a Link Agreement.

The term "Participating Exchange" means an organisation (whether an Exchange, 

association or otherwise) which operates a derivatives market and which has concluded a 

Link Agreement with the Clearing House. For the purposes of this Rule 410, a 

Participating Exchange shall not include a Cleared Exchange but shall, where the context 

requires, be read as referring alternatively to the Clearing Organisation which provides 

clearing services to the relevant Participating Exchange.

The term "Participating Exchange Transaction" means a transaction arising under the 

rules of a Participating Exchange which, pursuant to a Link Agreement, may be 

transferred to the Clearing House and, if accepted by the Clearing House in accordance 

with a Link Agreement, give rise to a Linked Incoming Contract.
NYDOCS01/1643340.2 134

(b) Linked Outgoing Contracts are transferred from the Clearing House to a Participating 

Exchange in accordance with the provisions of this Rule 410. Any such transfer shall 

include all affected Linked Outgoing Contracts nominated by a Clearing Member for 

transfer to a Participating Exchange, regardless of whether they have been contractually

netted under Rule 406.

(c) In accordance with the Procedures and subject to other provisions in this Rule 410, the 

Clearing House shall:

(i) calculate each Clearing Member's Open Contract Position with respect to Linked 

Outgoing Contracts; and 

(ii) transmit details of each Clearing Member's Linked Outgoing Contracts arising on 

such Business Day, to the relevant Participating Exchange in accordance with 

procedures and timings agreed from time to time with the relevant Participating 

Exchange. 

(d) On confirmed receipt by the relevant Participating Exchange, in accordance with such 

procedures as may be agreed from time to time between the Clearing House and the 

Participating Exchange pursuant to a Link Agreement, when each relevant Linked 

Outgoing Contract referred to in Rule 410(c) is transferred, an offsetting or opposite 

Contract shall arise in accordance with Rule 401(a)(xiv) between the Clearing House and 

the Clearing Member which is identical in terms to and for the same number of lots as the 

Linked Outgoing Contract save as to the position of the parties as Buying Counterparty or 

Selling Counterparty which shall be reversed. The offsetting or opposite Contract and 

Linked Outgoing Contract may be subject to contractual netting under Rule 406(c).

(e) A Participating Exchange may transmit details of Participating Exchange Transactions to 

be Cleared by the Clearing House in accordance with procedures and timings agreed 

from time to time with the Clearing House. On confirmed receipt by the Clearing House 

of full details of a Participating Exchange Transaction, in accordance with a Link 

Agreement and such procedures as may be agreed from time to time with a Participating 

Exchange, a Linked Incoming Contract shall arise in accordance with Rule 401(a)(xiv)

between the Clearing House and each of the relevant Clearing Members identical to and 

for the same number of lots as the relevant Participating Exchange Transactions (save as 

to the identity of the Clearing Organisation, if any, which shall be the Clearing House). 

(f) This Rule 410(f) is applicable in situations of impossibility or difficulty of transfer of an 

Outgoing Linked Contract or Participating Exchange Transaction.

(i) The provisions of this Rule 410(f) shall apply if it is not possible to effect a 

transfer of Linked Outgoing Contracts or Participating Exchange Transactions on 

the relevant Business Day for any reason (other than default as referred to in 

Part 9) including, without limitation, as a result of: 

(A) any action taken by a Cleared Exchange, regulatory body or governmental 

authority;
NYDOCS01/1643340.2 135

(B) any change in Applicable Law; 

(C) failure of any systems, communication facilities or other technology 

affecting the Clearing House, the relevant Participating Exchange or the 

Cleared Exchange; and/or

(D) a Force Majeure Event.

(ii) If details of Linked Outgoing Contracts cannot be transmitted on the relevant 

Business Day or the relevant Participating Exchange cannot receive such details 

or despatch a confirmation, so that such Contracts cannot be transferred on the 

Business Day on which they arose, such Contracts shall not be subject to transfer 

on that Business Day and shall remain open Contracts with the Clearing House 

subject to the Rules. Details of such Contracts which remain open may be 

transmitted to the relevant Participating Exchange on the next day on which such 

Contracts are permitted to be transferred under the relevant Link Agreement and 

on which it is possible for details of such Contracts to be transmitted. 

(iii) If details of Participating Exchange Transactions cannot be transferred on the day 

on which such transactions were entered into on the Participating Exchange, such 

transactions shall not be subject to any transfer, and may remain subject to the 

rules of the Participating Exchange and shall not give rise to any Contract until 

such time as they are transferred to the Clearing House. Such transactions may be 

transferred to the Clearing House on the next day on which such transactions are 

permitted to be so transferred under the relevant Link Agreement and on which it 

is possible to do so. 

(iv) Nothing in this Rule 410(f) shall restrict or qualify the applicability of Rule 112 in 

a situation in which this Rule 410(f) applies.

(v) On the termination of an applicable Link Agreement, Linked Outgoing Contracts 

and Participating Exchange Transactions subject to such agreement that arise after 

such termination taking effect shall cease to be subject to any transfer under this 

Rule 410. Termination of any Link Agreement shall not affect the validity of any 

existing Contract.

(vi) In the event of a default by a member of a Participating Exchange (where such 

member is not also a Clearing Member), where such default is defined or declared 

under the rules of the Participating Exchange, any Participating Exchange 

Transaction registered in the name of such affected Participating Exchange 

member shall not be transferred under the applicable Link Agreement pursuant to 

this Rule 410, provided that the Clearing House may elect to enter into one or 

more Contracts with F&O Clearing Members or with the relevant Cleared 

Exchange or Participating Exchange for the purpose of facilitating the 

replacement of the Participating Exchange Transactions of the defaulting member 

of such Cleared Exchange or Participating Exchange with a new contract with a 

non-defaulting Clearing Member.
NYDOCS01/1643340.2 136

Rule 411 Swap Data Repository ("SDR") Reporting

For all swaps cleared by the Clearing House and resulting positions, the Clearing House 

will report creation and continuation data to the ICE Trade Vault swap data repository for 

purposes of complying with applicable CFTC rules governing the regulatory reporting of 

swaps. Upon the request of a counterparty to a swap cleared at the Clearing House, the 

Clearing House will provide the same creation and continuation data to a swap data 

repository selected by the counterparty as the Clearing House provided to the ICE Trade 

Vault swap data repository under the preceding sentence.

Part 5 Margin

Rule 501 Approved Financial Institutions

(a) The Clearing House will maintain a list of Approved Financial Institutions. Only 

Approved Financial Institutions shall be permitted by the Clearing House:

(i) to open and operate, on behalf of Clearing Members, accounts from which the 

Clearing House can draw amounts pursuant to a direct debit mandate, for the 

collection of amounts due to the Clearing House from time to time; and

(ii) to issue and confirm letters of credit for Clearing Members. Approved Financial 

Institutions may also act in such other capacity as the Clearing House may 

approve from time to time.

(b) All cash transfers made by Clearing Members to or to the order of the Clearing House 

must be made from an account at an Approved Financial Institution, unless the Clearing 

House gives its prior written consent to another method being used.

(c) Clearing Members are given notice that the Clearing House may suspend or terminate the 

status of an Approved Financial Institution or attach, amend or revoke conditions to the 

continued status of an Approved Financial Institution. The Clearing House may take 

such steps if an institution no longer meets all of the requirements of the Clearing House 

or if the Clearing House determines that it would be advisable for the Clearing House's 

own protection, the protection of Clearing Members or the protection of a Market to do 

so.

Rule 502 Margin

(a) Each Clearing Member shall transfer Permitted Cover to the Clearing House in respect of 

Margin in such amounts, in such forms and at such times as are required pursuant to this

Part 5 and otherwise as may be prescribed by the Clearing House and notified to Clearing 

Members, in each case in accordance with these Rules and the Finance Procedures, from 

time to time.

(b) At any time on which a requirement for Original Margin, FX Original Margin, Initial 

Margin or Margin under Rule 502(g) falls due and insufficient Permitted Cover is held, 

the Clearing Member must initially transfer cash in an Eligible Currency. Thereafter a 
NYDOCS01/1643340.2 137

Clearing Member may substitute such cash Margin with other Permitted Cover by 

delivery of the replacement Permitted Cover to the Clearing House. The amount of 

Original Margin or Margin under Rule 502(g) for any Business Day shall be calculated 

(and, if necessary, called) separately in respect of each Proprietary Account and each 

Customer Account for each Clearing Member in accordance with the Finance Procedures.

(c) Variation Margin, FX Mark-to-Market Margin and Mark-to-Market Margin payments 

may be made by the Clearing House or a Clearing Member only in cash in the Eligible 

Currency in which the Contract in question is to be or can be settled (for F&O Contracts), 

which is the settlement currency (for CDS Contracts) pursuant to the Contract Terms or 

which is specified as the FX Mark-to-Market Margin currency for the relevant Set (for 

FX Contracts) (save where the Procedures require otherwise).

(d) Details of Eligible Currencies and other Permitted Cover that may be used to satisfy 

Margin obligations will be notified to Clearing Members from time to time by a Circular. 

The Clearing House may, at its discretion, vary or alter the standard Margin 

requirements, nature or types of acceptable Eligible Currencies and Permitted Cover, 

specify proportions or maximum proportions of asset classes or modify any valuation 

procedures or haircuts set out in or established pursuant to the Finance Procedures or any 

risk policies. Any general changes to requirements for Margin or Permitted Cover will 

be notified to Clearing Members by a Circular.

(e) Certain classes of Permitted Cover may be subject to haircuts in accordance with the 

Finance Procedures (as specified from time to time by Circular) pursuant to which certain 

classes of Permitted Cover do not count for their full face or market value in the 

determination of Margin for the account of a Clearing Member. For the avoidance of 

doubt, this subparagraph (e) shall apply to any haircuts imposed pursuant to clause 2.9 of 

the Pledged Collateral Addendum.

(f) The Clearing House may require a Clearing Member or Clearing Members to transfer 

cash in other Eligible Currencies or Permitted Cover with the Clearing House in 

substitution for any Permitted Cover already transferred to the Clearing House.

(g) The Clearing House may impose, amend or withdraw additional Margin requirements in 

respect of any Clearing Member at any time and at its discretion.

(h) The Clearing House may designate by Circular or Rule that a Proprietary Margin 

Account or Customer Margin Account or any sub-account of such an account of a 

Clearing Member shall be a Pledged Collateral Account and consequently that all or any 

part of the Margin (or Permitted Cover in respect thereof) to be provided to the Clearing 

House with respect to such account may be provided by way of Pledged Collateral. In 

the absence of such express designation, a Proprietary Margin Account or Customer 

Margin Account will not be a Pledged Collateral Account. The Clearing House 

undertakes in favour of each Clearing Member that has executed a Pledged Collateral 

Addendum (which remains valid and effective and which has not been terminated or 

rescinded) that the Clearing House will not redesignate any of such Clearing Member's 

Accounts or any sub-account thereof which is a Pledged Collateral Account as not being 
NYDOCS01/1643340.2 138

a Pledged Collateral Account (without the consent of the Clearing Member) or otherwise 

in such a way as would cause the Clearing Member to breach any Applicable Law or 

would affect the characterisation of the Margin in such Account as being provided by the 

relevant Clearing Member by way of pledge (in the case of a Pledged Collateral 

Addendum governed by New York and U.S. law) or security financial collateral 

arrangement (in the case of a Pledged Collateral Addendum governed by English law) 

pursuant to the Pledged Collateral Addendum. 

(i) Any Pledged Collateral recorded in a Pledged Collateral Account is transferred to the 

Clearing House as contingent cover for Margin on the basis that it may only be applied 

by the Clearing House in accordance with the terms of the Pledged Collateral Addendum: 

(i)(A) following an Event of Default pursuant to Rule 905 and Rule 906 as cover for 

Margin against a liability of the Clearing Member relating to the relevant Account of the 

Pledged Collateral Account (provided that the value of any Pledged Collateral returned 

directly to a Clearing Member or any Person on such Clearing Member's behalf will be 

excluded from the calculation of any relevant net sum); and (B) only to the extent that 

such applied amount is required to be included in the net sum calculation to ensure that 

the net sum for the relevant Account of the Pledged Collateral Account would not 

represent an amount payable by the Defaulter to the Clearing House; or (ii) pursuant to 

the Default Portability Rules. In any such circumstances, it will be applied by virtue of 

amounts representing the proceeds of Pledged Collateral being included in amount M of 

the relevant net sum pursuant to Rule 906(a). Any Pledged Collateral not applied in 

accordance with this provision and which is not transferred to a Transferee Clearing 

Member in accordance with Part 9 of the Rules shall be returned to the relevant Clearing 

Member or other payee as permitted under Part 9 of the Rules, as a result of such 

Clearing Member's, or other payee's entitlements to such Pledged Collateral and not as 

part of the net sum process arising pursuant to Part 9 of the Rules. Any such return by 

the Clearing House of Pledged Collateral outside of the net sum calculation shall 

discharge and satisfy in full the Clearing House's obligations to return such Pledged 

Collateral to the Clearing Member by the payee and all of their Customers and no Person 

shall have any further claim against the Clearing House in respect of such Pledged 

Collateral. To the extent any Pledged Collateral is, or is required under Applicable Law 

to be, returned to a Defaulter, it shall be returned separately from any net sum certified by 

the Clearing House pursuant to Rule 906.

(j) Without limiting Rule 111, but subject to any contrary requirements of law: the Clearing 

House shall not be liable to any Clearing Member's Customer or other Person for any 

losses, liabilities, damages, costs, claims, shortfalls or expenses arising out of or relating 

to the holding of any Pledged Collateral or the assets in any Pledged Collateral Account 

("Custodial Losses"), except to the extent such Custodial Losses result from the gross 

negligence or wilful misconduct of the Clearing House. The Clearing House shall have 

no responsibility for any investment decisions made or directed by a Clearing Member 

(or any Representative thereof) with respect to assets representing Pledged Collateral or 

for the results of any such investments. The Clearing House shall be under no obligation 

to inquire into, and shall be fully protected in relying on, any requests, instructions or 

directions with respect to Pledged Collateral or the assets in any Pledged Collateral 
NYDOCS01/1643340.2 139

Account under these Rules received from a Person the Clearing House believes to be 

authorised to act on behalf of the appropriate Clearing Member.

(k) With respect to F&O Contracts, changes to the matters described in Rules 502(d) and (e) 

above, including assets eligible as Margin or Permitted Cover and the haircuts established 

with respect thereto, will be based on an analysis of appropriate factors as determined by 

the Clearing House, including historical and implied price volatility of such assets, 

current and anticipated conditions in the market for those assets, spreads and correlations 

between relevant assets, liquidity in the trading market for those assets, composition of 

the relevant market, default risk (including sovereign risk) with respect to those assets, 

relevant foreign exchange market conditions and other relevant information. 

Rule 503 Margin Calls and Return of Surplus Collateral

(a) Margin shall be and become due and payable at the times specified by the Clearing 

House pursuant to Rule 302.

(b) Regular Margin calculations will be made by the Clearing House on each Business Day. 

Any such calculation may result in a call for additional Permitted Cover pursuant to Part 

3.

(c) The Clearing House shall be entitled, at its discretion, to make an intra-day call for 

Margin or any other amount payable to it. In the event of such a call being made, the 

Clearing House will:

(i) give notice to each Clearing Member which is required to make payment to the 

Clearing House of the amount payable by such Clearing Member and time by 

which payment must be made; and

(ii) immediately after giving or making reasonable efforts to give the notice described 

in Rule 503(c)(i), instruct the relevant Approved Financial Institution to transfer 

funds equal to the amount due to the Clearing House from the account of such 

Clearing Member to an account of the Clearing House.

(d) For regular calls relating to F&O Contracts, Margin shall be calculated with reference to 

a Clearing Member's Open Contract Position in accordance with the Finance Procedures. 

For any intra-day Margin call relating to F&O Contracts, Margin shall be calculated with 

reference to a Clearing Member's Open Contract Position and gross number of Contracts 

in relation to any Contracts not included in Open Contract Positions in accordance with 

the Finance Procedures.

(e) The amount of Variation Margin for any Business Day shall be calculated (and, if 

necessary, called) separately in respect of each Proprietary Account and each Customer 

Account for each Clearing Member in accordance with the Finance Procedures. Each 

such Variation Margin call shall be:

(i) in the case of F&O Contracts reflected in a net or aggregated Open Contract 

Position, based on the Exchange Delivery Settlement Prices at which Open 
NYDOCS01/1643340.2 140

Contract Positions in F&O Contracts are recorded on the Clearing House's books; 

and

(ii) in the case of F&O Contracts not yet reflected in a net or aggregated Open 

Contract Position, represented by the difference between the Exchange Delivery 

Settlement Price and the price at which each such F&O Contract was bought or 

sold; provided, however, that in the case of any F&O Contract based on an index, 

the amount of the final Variation Margin payment shall be determined as 

specified in the rules of the Exchange on which the index is based.

(f) Regular calls for Margin in respect of CDS Contracts will be made following the close of 

business on each Business Day as follows and in accordance with the Finance 

Procedures:

(i) For Portfolio Risk Margin and Physical Settlement Margin calls, the Clearing 

House shall calculate net amounts as due to or from the Clearing House from or to 

each CDS Clearing Member separately in respect of its Proprietary Margin 

Account and relevant Customer Margin Account (if any). Such amounts shall in 

each case be calculated in accordance with the risk policies of the Clearing House 

based on the difference between the CDS Clearing Member's requirement for 

Portfolio Risk Margin and Physical Settlement Margin and the value attributed by 

the Clearing House to assets accounted for by the Clearing House as Margin of 

that category, in accordance with the Finance Procedures. Additional amounts in 

respect of Physical Settlement Margin may also be required pursuant to the CDS 

Procedures or Rule 502(g).

(ii) For Mark-to-Market Margin calls, each currency in which a CDS Contract is 

denominated is treated as a separate category (each, a "Mark-to-Market Margin 

Category"). For each Mark-to-Market Margin Category of a CDS Clearing 

Member, the Clearing House shall calculate net amounts as due to or from the 

Clearing House from or to each CDS Clearing Member separately in respect of its 

Proprietary Margin Account and Customer Margin Account (if any) based on the 

change in Mark-to-Market Price from the last time at which a Mark-to-Market 

Margin call was made, in accordance with the Finance Procedures.

(g) The "Mark-to-Market Price", for CDS Contracts of a Set at any time is the price, 

determined by the Clearing House in accordance with the Finance Procedures and 

calculated in accordance with its risk policies. To aid in the establishment of Mark-toMarket Prices, Clearing Members are required to submit end-of-day prices relating to 

Sets of CDS Contracts. In connection with the Clearing services provided by the 

Clearing House and as detailed in the CDS Procedures, the submission of end-of-day 

prices relating to CDS Contracts may, on the day of price submission only, result in a 

CDS Contract arising pursuant to Rule 401(a)(xi).

(h) For regular and intra-day Margin calls relating to FX Contracts, Margin shall be 

calculated with reference to the FX Contracts to which the Clearing Member is party, in 

accordance with the Procedures.
NYDOCS01/1643340.2 141

(i) The amount of FX Mark-to-Market Margin for any Business Day shall be calculated 

(and, if necessary, called) separately in respect of each Proprietary Account and 

Customer Account in accordance with the Procedures. Each such FX Mark-to-Market 

Margin call shall be based on changes to the mark-to-market values for FX Contracts and 

exchange rates from the last time at which a call for FX Mark-to-Market Margin was 

made in accordance with Part 17 of the Rules and the Procedures.

(j) The Clearing House shall return to a Clearing Member or Sponsored Principal the 

amount of any Surplus Collateral, provided that the Clearing House receives a request for 

such a release from such Clearing Member or Sponsored Principal prior to such time as 

may be specified by the Clearing House for the day on which such release is to be made 

or pursuant to standing instructions for the return of Surplus Collateral, as the same may 

be established or amended in accordance with the Finance Procedures, such returns to be 

made in accordance with Rule 302 and the Finance Procedures.

(k) To the extent that the Clearing House permits the usage of more than one class of 

Permitted Cover in respect of Margin-flow Co-mingled Accounts, each Non-FCM/BD 

Clearing Member with more than one Margin-flow Co-mingled Account will report to 

the Clearing House immediately on each occasion that there is a transfer of any Permitted 

Cover to or from the Clearing House in respect of Margin-flow Co-mingled Accounts

other than in connection with a call or return of cash Margin under Rule 303, in the form 

and manner required by the Clearing House from time to time. Each such Permitted 

Cover report shall specify the exact total amount of cash of each Eligible Currency and 

notional amounts of Permitted Cover in the form of securities of each ISIN transferred to 

or withdrawn from each Margin-flow Co-mingled Account. The total nominal amounts 

of assets in such Permitted Cover reports, in order to be valid, must completely reconcile 

with Clearing House records of the total nominal amounts of Permitted Cover transferred 

to or withdrawn from the Clearing House in respect of all Margin-flow Co-mingled 

Accounts of the Clearing Member, but the Clearing House shall be under no obligation to 

check or verify any such report. Valid Permitted Cover reports under this Rule 503(k) 

may be definitively relied upon by the Clearing House. If at any time the Clearing House 

is not in receipt of a valid Permitted Cover report required under this Rule 503(k), each 

Margin-flow Co-mingled Account of the Clearing Member that has failed to provide a 

valid Permitted Cover report shall be deemed to have recorded in it a pro rata share of 

each class of Permitted Cover transferred to the Clearing House, or have withdrawn from 

it a pro rata share of each class of Permitted Cover withdrawn from the Clearing House, 

with pro rata shares based upon the Margin requirements for each Margin-flow Comingled Account as determined based on the Clearing House's Position Accounts. Each 

Customer that has chosen individual segregation through usage of a Margin-flow Comingled Account shall be deemed to have appointed and authorised the Clearing Member 

to determine how the different classes of Permitted Cover should be transferred to the 

Clearing House in respect of the Margin-flow Co-mingled Account in which positions 

relating to such Customer are registered.
NYDOCS01/1643340.2 142

Rule 504 Rights relating to Margin and Representations of Clearing Members

(a) The rights and liabilities of the Clearing House and each Clearing Member in relation to 

Permitted Cover are set out in the Clearing Membership Agreement and these Rules.

(b) Each Clearing Member will act as principal and not as agent in providing Margin to the 

Clearing House. The Clearing House will take no account of any right or interest which 

any Person other than the Clearing Member may have in any Margin furnished by such 

Clearing Member to the Clearing House.

(c) Each Clearing Member will be deemed to represent and warrant to the Clearing House on 

each date on which such Clearing Member transfers Permitted Cover to the Clearing 

House that:

(i) immediately prior to any such Permitted Cover being transferred to the Clearing 

House, the Clearing Member is or was the sole legal and beneficial owner of all 

such assets (or such assets are provided with all legal and beneficial owners' 

unconditional consent for their use and application pursuant to these Rules);

(ii) the Clearing House is not subject to any obligation to perform directly to any of a 

Clearing Member's Customers, Affiliates or Representatives or any third party as 

a result of the Clearing Member granting any interest in any receivable from the 

Clearing House resulting from the Clearing House's receipt or use of such 

Permitted Cover, except as expressly provided pursuant to these Rules or any 

Pledged Collateral Addendum or as mandated pursuant to Applicable Law;

(iii) such Permitted Cover is provided on the basis that it may be used by the Clearing 

House and applied in accordance with these Rules;

(iv) the Clearing Member will not claim that any use of Permitted Cover by the 

Clearing House in accordance with the Rules or the relevant Clearing 

Membership Agreement is contrary to or in breach of any requirement of 

Applicable Law, third party right or other contractual obligation (provided that the 

Clearing House does not cause such breach by amending these Rules); 

(v) the Clearing Member is not in breach of any of its contractual obligations towards 

any third party as a result of the transfer of Permitted Cover to the Clearing House 

(provided that the Clearing House does not cause such breach by amending these 

Rules); and

(vi) if it is subject to CASS 7.18 of the FCA rules:

(A) its Segregated Customer Omnibus Accounts for CDS, Segregated 

Customer Omnibus Accounts for F&O and Segregated Customer Omnibus 

Accounts for FX only contain cash where the corresponding cash claim or 

receivable in the hands of the Clearing Member is treated by the Clearing 

Member as a client money claim or receivable and only contain non-cash 

assets (resulting from a transfer into the account by the Clearing Member) 
NYDOCS01/1643340.2 143

which the Clearing Member was entitled to treat as client assets prior to 

their transfer to the Clearing House;

(B) each of its Individually Segregated Sponsored Accounts and Margin-flow 

Co-mingled Accounts in respect of which a letter has been delivered to the 

Clearing House pursuant to Rule 102(q)(viii) only contain cash where the 

corresponding cash claim or receivable in the hands of the Clearing 

Member is treated by the Clearing Member as a client money claim or 

receivable and only contain non-cash assets (resulting from a transfer into 

the account by the Clearing Member) which the Clearing Member was 

entitled to treat as client assets prior to their transfer to the Clearing 

House; and

(C) none of its Customer Accounts or Proprietary Accounts other than such 

Accounts as are mentioned in paragraphs (A) or (B) contain any cash 

where the corresponding cash claim or receivable in the hands of the 

Clearing Member is required to be treated by the Clearing Member as a 

client money claim or receivable nor contain any non-cash assets 

(resulting from a transfer into the account by the Clearing Member) which 

the Clearing Member was required to treat as client assets prior to their 

transfer to the Clearing House.

(d) The Clearing Member shall be liable to the Clearing House for any cost or liability 

incurred by the Clearing House as a result of the Clearing House possessing, holding, 

perfecting the title (or, in the case of Pledged Collateral, perfecting its security interest) to 

or otherwise being associated with, any asset provided to it by that Clearing Member by 

way of Margin.

(e) Where a Clearing Member has appointed a Disclosed Principal Member, any obligation 

to transfer Margin (or any other amount, payment or performance) of a Clearing Member 

to the Clearing House shall be construed as an obligation of the Disclosed Principal 

Member and any right to receive Margin (or any other amount, payment or performance) 

from the Clearing House shall be construed as a right of the Disclosed Principal Member 

and all other provisions of these Rules relating to Margin, payments and performance 

shall be construed accordingly.

(f) Each Non-FCM/BD Clearing Member shall require and receive Customer-CM Collateral 

from its Customers or fund such Permitted Cover only in such a manner as is consistent 

with these Rules and the relevant Standard Terms and in a manner which allows the 

Clearing Member to transfer Permitted Cover to the Clearing House in accordance with 

its obligations under the Clearing Membership Agreement and these Rules.

(g) Any amount or asset recorded in a particular Account may be applied by the Clearing 

House to the extent permitted under Part 9 of the Rules as against the net sum for such 

Account or transferred to the extent permitted under Rule 906 regardless of the origin or 

status of such amount or assets at the time of transfer or prior to the time of transfer as 
NYDOCS01/1643340.2 144

Customer-CM Collateral, title transfer collateral, security interest collateral, Pledged 

Collateral or otherwise.

(h) The Clearing House has acknowledged in Rule 102(q), Rule 906(b), letters countersigned 

and returned by the Clearing House in accordance with Rule 102(q), Clearing 

Membership Agreements, Sponsor Agreements and Sponsored Principal Clearing 

Agreements that:

(i) no Customer Account of a Clearing Member or Individually Segregated 

Sponsored Account (or any money, asset or contract recorded in such a Customer 

Account or Individually Segregated Sponsored Account) is to be combined or comingled with a Proprietary Account of the same or same sponsoring Clearing 

Member (or any money, asset or contract recorded in such a Proprietary Account);

(ii) no Customer Account of a Clearing Member or Individually Segregated 

Sponsored Account (or any money, asset or contract recorded in such a Customer 

Account or Individually Segregated Sponsored Account) is to be combined or comingled with a different Customer Account or Individually Segregated Sponsored 

Account of the same or same sponsoring Clearing Member (or any money, asset 

or contract recorded in such a Customer Account or Individually Segregated 

Sponsored Account); and

(iii) no right of set-off shall be exercised by the Clearing House against money, asset 

or contract credited to a Customer Account in respect of any sum or obligation 

owed to the Clearing House on any other account.

(i) A Clearing Member shall take any action reasonably requested by the Clearing House 

that may be necessary or desirable to create, preserve, perfect or validate the right, title or 

interests of the Clearing House in Margin or Guaranty Fund Contributions intended to be 

created under these Rules, the relevant Clearing Membership Agreement, any Sponsor 

Agreement, any Sponsored Principal Clearing Agreement or any Pledged Collateral 

Addendum or to enable the Clearing House to exercise or enforce any of its rights with 

respect thereto.

Rule 505 Financial Collateral Regulations

Clearing Members, Sponsored Principals, Customers and the Clearing House acknowledge that 

the Financial Collateral Regulations apply in relation to all Permitted Cover, Margin and 

Guaranty Fund Contributions transferred to the Clearing House in the form of "cash" or 

"financial instruments" (in either case, as defined in the Financial Collateral Regulations). Each 

Clearing Member, Sponsored Principal, Sponsor and Customer agrees that it will not dispute the 

construction of the arrangements regarding the provision of collateral under these Rules as 

"financial collateral arrangements" within the meaning of the Directive 2002/47/EC of the 

European Parliament and of the Council of 6 June 2002 on Financial Collateral Arrangements.
NYDOCS01/1643340.2 145

Rule 506 Sponsored Principals

(a) This Part 5 applies to Sponsored Principals in the same way as it applies to Clearing 

Members except:

(i) The last two sentences of Rule 503(g) do not apply.

(ii) Rule 504(a) does not apply. The rights and liabilities of the Clearing House, 

Sponsored Principal and Sponsor in relation to Permitted Cover are set out in the 

Sponsored Principal Clearing Agreement and Sponsor Agreement and these 

Rules.

(iii) Rule 504(c)(v) does not apply. Each Sponsored Principal and Sponsor will be 

deemed to represent and warrant to the Clearing House on each date on which 

there is a transfer of Permitted Cover to the Clearing House in respect of an 

Individually Segregated Sponsored Account that neither the Sponsor nor the 

Sponsored Principal will claim that any use of Permitted Cover by the Clearing 

House in accordance with the Rules or the relevant Sponsor Agreement or 

Sponsored Principal Clearing Agreement is contrary to or in breach of any 

requirement of Applicable Law, third party right or other contractual obligation 

(provided that the Clearing House does not cause such breach by amending these 

Rules).

(iv) Rule 504(f) does not apply. Each Sponsored Principal will transfer Permitted 

Cover to the Clearing House only in such a manner as is consistent with these 

Rules and in accordance with its obligations under the Sponsored Principal 

Clearing Agreement and these Rules. If the Sponsor is operationally responsible 

for meeting calls for Permitted Cover on behalf of the Sponsored Principal, the 

Sponsor shall require and receive collateral from the Sponsored Principal or fund 

such Permitted Cover only in such a manner as is consistent with these Rules and 

in a manner which allows the Sponsored Principal to transfer Permitted Cover to 

the Clearing House in accordance with its obligations under the Sponsored 

Principal Clearing Agreement and these Rules.

(v) Rule 504(h) and (i) apply to Individually Segregated Sponsored Accounts in the 

manner expressly set out therein.

(vi) Nothing in this Part 5 requires a Sponsored Principal to transfer Guaranty Fund 

Contributions to the Clearing House.
NYDOCS01/1643340.2 146

Part 6 Position Limits

Rule 601 Establishment of Position Limits

(a) The Clearing House will be entitled at its discretion to establish, amend or revoke 

Position Limits for Clearing Members or in respect of particular Accounts. The Clearing 

House may or may not inform Clearing Members of their Position Limits.

(b) The Position Limit for each Clearing Member and Account will be determined at the 

Clearing House's discretion and may take into account the Clearing House's evaluation of 

the financial and operational capacity of the Clearing Member and such other factors as 

the Clearing House at its discretion deems appropriate.

(c) If a Clearing Member is not notified of a Position Limit for an Account, particular Set of 

Contracts or broader group of Contracts, it may assume that there is no such Position 

Limit in place (and shall not be treated as having breached any Position Limit) until such 

time as the Clearing House notifies it of the Position Limit. Any finding of breach of a 

Position Limit by the Clearing House may only be prospective and not retrospective with 

respect to the time of notification to the Clearing Member of the Position Limit.

Rule 602 Breach of Position Limit

(a) If a Clearing Member exceeds its Position Limit, the Clearing House may, at its 

discretion:

(i) require a Clearing Member to provide information to the Clearing House in 

respect of any of its positions;

(ii) require a Clearing Member to allocate, transfer or terminate such Contracts or 

close out its Open Contract Position in any affected Account to the extent 

necessary to reduce its Open Contract Position so as to meet its Position Limit 

within such time as the Clearing House may prescribe;

(iii) communicate with a Market to request that any orders on that Market may be 

withdrawn;

(iv) make an additional call for such Margin as the Clearing House in its discretion 

determines; and/or

(v) impose such additional Capital requirements on the Clearing Member as the 

Clearing House in its discretion determines.

(b) If the Clearing Member fails to comply with any requirement imposed on it pursuant to 

Rule 602(a), the Clearing Member shall be in breach of these Rules and, without 

limitation, the Clearing House may, at its discretion, in respect of the Clearing Member 

concerned:

(i) declare an Event of Default;
NYDOCS01/1643340.2 147

(ii) terminate or suspend membership of the Clearing Member;

(iii) terminate such Contracts as the Clearing House at its discretion selects on behalf 

of the Clearing Member;

(iv) instigate an investigation or disciplinary proceedings under Part 10 of the Rules; 

and/or

(v) impose such other requirements on the Clearing Member as it sees fit.

(c)

(i) A Clearing Member shall be deemed not to have exceeded a Position Limit (for 

purposes of Rules 602(a)(ii) and (v) and Rule 204(a)(ii) only) to the extent that 

such Position Limit is exceeded as a result of it being party to any Contract arising 

pursuant to any of Rule 401(a)(v), (vi), (x), (xi) or (xiii) which was entered into: 

(A) 5 or fewer Business Days prior to the date of determination by the Clearing 

House that a Position Limit has been exceeded; or (B) 5 or fewer Business Days 

prior to the relevant Set becoming ineligible for Clearing (provided that if the 

relevant Set later becomes eligible for Clearing again, this paragraph (B) shall 

cease to apply 5 Business Days after the Set has so become eligible for Clearing) 

(or, in either case (A) or (B), as a result of any Open Contract Position or Contract 

reflecting any such Contract). Consequently, where a Clearing Member is party 

to any such Contract, the existence of the Contract will be disregarded in 

calculating the position of the Clearing Member that is used for purposes of 

determining the availability of the Clearing House's powers under Rule 602(a)(ii)

or (v) or the applicability of a notification requirement under Rule 204(a)(ii) and 

instead the position of the Clearing Member excluding each disregarded Contract 

will be used for the purposes of such determinations.

(ii) A Clearing Member shall be deemed not to have breached a requirement imposed 

on it pursuant to Rule 602(a)(ii) to the extent that such a requirement is breached 

as a result of it being party to any Contract arising pursuant to any of 

Rule 401(a)(v), (vi), (x), (xi) or (xiii) which was entered into: (A) at any time 

after the requirement was imposed; (B) 5 or fewer Business Days prior to the 

requirement being imposed; or (C) 5 or fewer Business Days prior to the Set 

becoming ineligible for Clearing (provided that if the relevant Set later becomes 

eligible for Clearing again, this paragraph (C) shall cease to apply 5 Business 

Days after the Set has so become eligible for Clearing) (or, in any such case (A), 

(B), or (C), as a result of any Open Contract Position or Contract reflecting any 

such Contract). Consequently, where a Clearing Member is party to any such 

Contract, the existence of the Contract will be disregarded for purposes of 

determining any breach of a requirement under Rule 602(a)(ii) and instead the 

position of the Clearing Member excluding each disregarded Contract will be 

used for the purposes of any such determination.
NYDOCS01/1643340.2 148

(iii) Nothing in Rule 602(c) shall restrict the taking by the Clearing House of any 

action under Rule 602(a)(i) or (iv), which it may do without regard to the nature 

of Contracts making up any Open Contract Position.

Rule 603 Sponsored Principals

(a) This Part 6 applies to Sponsored Principals in the same way as it applies to Clearing 

Members.
NYDOCS01/1643340.2 149

Part 7 Settlement and Delivery of Futures

Part 7 of the Rules does not apply to CDS Contracts or FX Contracts. References to Contracts in 

this section are to F&O Contracts. References to any Account in this section are references only 

to an Account in which F&O Contracts may be recorded and the terms 'Customer Margin 

Account', 'Customer Position Account', 'Proprietary Margin Account' and 'Proprietary Position 

Account' shall be construed accordingly. References to Customers in this section are solely to 

Customers of F&O Clearing Members in relation to F&O Contracts. This Part 7 applies to 

Sponsored Principals in the same way as it applies to Clearing Members.

Rule 701 Determination of Exchange Delivery Settlement Price

(a) The Clearing House will specify the Exchange Delivery Settlement Price for any Future 

Set.

(b) The Exchange Delivery Settlement Price will generally be determined on the basis of 

data provided by the Market on which the Contract in question is traded.

(c) The Clearing House shall be entitled to determine the Exchange Delivery Settlement 

Price itself, at its discretion, if:

(i) a Market fails on any day to determine an Exchange Delivery Settlement Price;

(ii) a Market fails to provide the Clearing House with necessary data for 

determination of an Exchange Delivery Settlement Price;

(iii) there is an error in data provided by a Market; or

(iv) the Clearing House at its discretion otherwise considers it appropriate to do so.

Rule 702 Cash Settlement

(a) A Futures Contract shall be settled in cash if:

(i) pursuant to the applicable Contract Terms it can be settled only in cash; or

(ii) pursuant to the applicable Contract Terms it may be settled in cash and the 

Clearing Member opts to settle the Contract(s) in cash.

(b) Cash settlement for a Set of Futures Contracts shall occur separately, and separate 

payment obligations shall accrue, in respect of a Clearing Member's:

(i) net position in the relevant Set in respect of each of its Proprietary Accounts;

(ii) gross buy positions in the relevant Set in respect of each of its Customer Accounts 

(if applicable);

(iii) gross sell positions in the relevant Set in respect of each of its Customer Accounts 

(if applicable);
NYDOCS01/1643340.2 150

(iv) net position in the relevant Set in respect of each Individually Segregated 

Sponsored Account for which it acts as a Sponsor (if applicable).

(c) Provided that all Margin payments in respect of the Set have been paid by the Clearing 

Member to the Clearing House or repaid by the Clearing House, the amount payable for 

cash settlement of any Future shall be the net gain or loss, as the case may be, based on 

the difference between the price at which Open Contract Positions are recorded on the 

Clearing House's books and the Exchange Delivery Settlement Price (or, for Contracts 

entered into on the same day as the day of settlement, the difference between the 

Exchange Delivery Settlement Price and the price at which the relevant Contract was 

bought or sold). Each cash settlement shall occur in accordance with the Contract Terms.

(d) Neither the Delivery Procedures nor the requirements of Rule 703 shall apply to any 

Contract which is settled in cash in accordance with this Rule 702.

Rule 703 Delivery

(a) In relation only to Futures which are not settled in cash pursuant to Rule 702, the 

Delivery Procedures and the requirements of this Rule 703 shall apply.

(b) The Buyer and Seller shall each make such payments and deliveries and deliver such 

tenders, notices and invoices as are required pursuant to the Delivery Procedures and 

Market Rules.

(c) The passing on by the Clearing House of such tenders or such other documents shall not 

constitute acceptance by the Clearing House of such tenders or such documents if the 

Clearing Member to which the Clearing House passed on such tender or documents 

rejects the same where permitted to do so. In the event of such rejection, the Clearing 

House shall also be entitled to reject the tenders or other documents. Similarly, where a 

Clearing Member who is a Buyer under a Contract rejects a Deliverable delivered to it, 

the Clearing House as Buyer under the corresponding back to back Contract shall be 

entitled, if to do so would be in accordance with the applicable Contract Terms, to take 

the same action as against the Seller under that Contract and the Clearing House shall not 

be deemed to have accepted such delivery until the relevant Buyer has accepted delivery 

under the first Contract.

(d) Subject to Rule 703(c), no tender received by the Buyer may be withdrawn or substituted 

by the Seller except with the consent of the Buyer or otherwise in accordance with the 

Contract Terms and Procedures.

(e) Full compliance with the Delivery Procedures applicable to the Contract in question and, 

where applicable, Market Rules shall amount to a good discharge of the rights, liabilities 

and obligations of the parties under such Contract (but shall be without prejudice to any 

rights, liabilities or obligations of any party to a Contract in relation to breach of 

warranty, representation, damaged goods, under-delivery, over-delivery or otherwise).

(f) The Clearing House may, at its discretion, direct a Clearing Member who is a Seller 

under a Contract subject to delivery to deliver the Deliverable that is the subject matter of 
NYDOCS01/1643340.2 151

such Contract to another Clearing Member that is a Buyer. The Seller and Buyer shall 

each be bound by any such direction. Delivery in accordance with any such direction 

shall be deemed to constitute delivery by the Seller to the Clearing House and from the 

Clearing House to the Buyer for the purposes of the Contract or Contracts in question 

(but title shall not pass unless and until the time specified in the Delivery Procedures). 

All payments in relation to such Contracts shall nonetheless be made only to and from the 

Clearing House by the Clearing Members concerned.

(g) If an invoice has not been prepared or delivered when payment becomes due pursuant to 

a Contract, payment shall be made and received on account, pending the issue of that 

invoice.

(h) Where a Clearing Member that is a Buyer or Seller under a Contract subject to delivery is 

subject to grounds for declaring an Event of Default or Force Majeure Event, the rights, 

liabilities and obligations of such Clearing Member in respect of such performance may 

at the option of the Clearing House, or shall in accordance with the Delivery Procedures,

be discharged and there shall arise in place of the same an obligation to account as 

between the Clearing Member and the Clearing House for a settlement amount. The 

Clearing House shall be entitled to substitute an obligation to account for such settlement 

amount, or a proportion thereof, for the Clearing House's rights, liabilities and obligations 

in respect of performance of delivery obligations under other Contracts subject to tender 

with other Clearing Members (such Contracts and Clearing Members selected by the 

Clearing House at its discretion) of the same Set.

(i) Where a Clearing Member has appointed a Disclosed Principal Member, any delivery, 

payment or related obligation of the Clearing Member to the Clearing House shall be 

construed as an obligation of the Disclosed Principal Member and any right to take 

delivery or receive payment as a right of the Disclosed Principal Member, and terms 

'Buyer,' 'Seller' and all other provisions of these Rules relating to deliveries shall be 

construed accordingly.

Rule 704 Credit and Debit of Accounts

(a) The Clearing House shall make any necessary credits or debits to or from Clearing 

Members' Proprietary Margin Account and Customer Margin Accounts, as appropriate, 

arising as a result of each cash settlement and delivery in accordance with Part 3. 

(b) Subject to the Contract Terms and Procedures, any compensation, adjusting payment or 

other allowance payable by or to either the Buyer or the Seller under the terms of the 

Contract shall be paid by or to the Clearing House for onward payment to the Buyer or 

the Seller as the case may be.

Rule 705 Settlement and Delivery Obligations only in respect of Open Contract Position 

and Termination of other Contracts

(a) The Clearing House and each Clearing Member shall make cash settlement or delivery 

only for such number of Contracts as are reflected in the Clearing Member's Open 
NYDOCS01/1643340.2 152

Contract Position, plus any other Contracts entered into on the same day as the day of 

settlement, separately for the Clearing Member's:

(i) net position in the relevant Set in respect of each of its Proprietary Accounts;

(ii) gross buy positions in the relevant Set in respect of each of its Customer Accounts 

(if applicable);

(iii) gross sell positions in the relevant Set in respect of each of its Customer Accounts 

(if applicable);

(iv) net position in the relevant Set in respect of each Individually Segregated 

Sponsored Account for which it acts as a Sponsor (if applicable).

No such Open Contract Position (or additional Contracts) may be netted against another 

Open Contract Position on cash settlement or delivery without the prior written consent 

of the Clearing House, and subject always to Rule 102(q).

(b) Upon each of the parties to a Contract having made all necessary payments and deliveries 

in accordance with these Rules in respect of all Futures Contracts in a Set in relation to 

which a cash settlement or delivery obligation exists for any account or positions 

specified in Rule 705(a), the Clearing Member and the Clearing House shall each be 

discharged and released from all rights, liabilities and obligations to one another arising 

pursuant to Futures Contracts belonging to such Set in respect of such account or 

position.
NYDOCS01/1643340.2 153

Part 8 Options

Part 8 of the Rules does not apply to CDS Contracts or FX Contracts. References to Contracts in 

this section are to F&O Contracts. References to any Account in this section are references only 

to an Account in which F&O Contracts may be recorded and the terms 'Customer Margin 

Account', 'Customer Position Account', 'Proprietary Margin Account' and 'Proprietary Position 

Account' shall be construed accordingly. References to Customers in this section are solely to 

Customers of F&O Clearing Members in relation to F&O Contracts. This Part 8 applies to 

Sponsored Principals in the same way as it applies to Clearing Members.

Rule 801 Payment of Premium

(a) A Buying Counterparty that becomes party to an Option shall be obliged to pay to the 

Clearing House the premium for the Option at the time specified in the Contract Terms.

(b) A Selling Counterparty that becomes party to an Option will be credited by the Clearing 

House with an amount equal to the premium for the Option at the time specified in the 

Contract Terms.

Rule 802 Reference Prices

(a) The Clearing House will specify the Reference Price for any Option Set.

(b) The Reference Price will generally be determined on the basis of data provided by the 

Market on which the Contract in question is traded.

(c) The Clearing House shall be entitled to determine the Reference Price itself, at its 

discretion, if:

(i) a Market fails on any day to determine a Reference Price;

(ii) a Market fails to provide the Clearing House with necessary data for 

determination of a Reference Price;

(iii) there is an error in data provided by a Market; or

(iv) the Clearing House at its discretion otherwise considers it appropriate to do so.

Rule 803 Exercise of Options

(a) An Option Contract may be exercised only if permitted by the applicable Contract Terms. 

An Option Contract may be exercised only by a Clearing Member with a Long Open 

Contract Position or by the Clearing House in respect of a Contract in which it is Long. 

Option Contracts may only be exercised by a Clearing Member for any Option Set for 

such number of Contracts as are reflected in the Clearing Member's Open Contract 

Position, plus any other Contracts entered into on the same day as the exercise date, 

separately for each of the positions on the Clearing Member's:
NYDOCS01/1643340.2 154

(i) net position in the relevant Set in respect of each of its Proprietary Accounts;

(ii) gross buy positions in the relevant Set in respect of each of its Customer Accounts 

(if applicable);

(iii) gross sell positions in the relevant Set in respect of each of its Customer Accounts 

(if applicable);

(iv) net position in the relevant Set in respect of each Individually Segregated 

Sponsored Account for which it acts as a Sponsor (if applicable).

(b) Any exercise of an Option Contract shall be in accordance with the applicable Contract 

Terms. In particular, an Option Contract shall only be exercised:

(i) if it is an Option Contract which in accordance with the applicable Contract 

Terms is automatically exercised, in which case it will be automatically exercised 

at the time and in the manner specified in the Contract Terms; or

(ii) if it is an Option Contract not falling in Rule 803(b)(i), at such time as is 

permitted pursuant to the applicable Contract Terms (whether on the day and by 

the time prescribed by the applicable Contract Terms or in such period as is 

prescribed by the applicable Contract Terms) and in such form and manner as is 

permitted pursuant to the Contract Terms and the Clearing Procedures (including, 

where permitted, by manual exercise or the establishment of settings in the 

Clearing House's systems for the exercise of Options).

(c) An Option Contract may be abandoned by notice to the Clearing House in writing or such 

other form as is permitted pursuant to the Clearing Procedures or Contract Terms.

(d) The Clearing House shall be entitled to rely upon any form or electronic communication 

purporting to give notice of exercise or abandonment of an Option made in accordance 

with these Rules without any enquiry as to:

(i) whether such form or electronic communication complies with the Contract 

Terms or the requirements of the Clearing Procedures; or

(ii) as to the authority of any Representative purporting to exercise an Option on 

behalf of a Clearing Member or due execution of the relevant form.

(e) The Clearing House may reject any notice of exercise or abandonment of an Option if 

such notice does not, or appears not to, comply with the Contract Terms or the Clearing 

Procedures, notwithstanding any equivalent notice or other prescribed form of exercise 

that has been provided by the Clearing House to any Clearing Member in respect of the 

exercise of an Option Contract.

(f) No notice or other form of exercise or abandonment of an Option received by the 

Clearing House may be cancelled or withdrawn once the deadline for exercise has passed.
NYDOCS01/1643340.2 155

(g) Part 7 of these Rules shall not apply in relation to Options.

Rule 804 Exercise Notices

The Clearing House will assign exercise notices to Clearing Members which have or carry Short 

Open Contract Positions (and Short Contracts not in their Open Contract Position) in the Option 

Set being exercised, in accordance with the Clearing Procedures.

Rule 805 Options with Deliverables which are Futures

(a) Upon exercise of any Option with a Future as the Deliverable under the Option, one or 

more Futures Contracts at the Strike Price (or such other price as is required pursuant to 

the Contract Terms) shall arise pursuant to Rule 401 and in accordance with the Contract 

Terms for the Option and applicable Market Rules.

(b) Upon such Futures Contract or Contracts having arisen and all necessary payments 

having been made by the Clearing Member and Clearing House pursuant to the Clearing 

Procedures, the rights, obligations and liabilities of the Clearing House and the relevant 

Clearing Member in respect of the Option shall be satisfied and the Option shall be 

terminated.

Rule 806 Options with Deliverables other than Futures

(a) Upon exercise of any Option with a Deliverable which is not a Future, a Contract for the 

sale and purchase of the relevant Deliverable (a "Contract of Sale") at the Strike Price 

(or such other price as is required pursuant to the Contract Terms) shall arise pursuant to 

Rule 401 and in accordance with the Contract Terms for the Option and applicable 

Market Rules. 

(b) Upon such Contract of Sale or Contracts of Sale having arisen and all necessary 

payments having been made by the Clearing Member and Clearing House pursuant to the 

Clearing Procedures, the rights, obligations and liabilities of the Clearing House and the 

relevant Clearing Member in respect of the Option shall be satisfied and the Option shall 

be terminated.

Rule 807 Termination of other Contracts

Upon each of the parties to a Contract having made all necessary payments and becoming party 

to all resulting Futures Contracts and Contracts of Sale in accordance with these Rules in respect 

of all Option Contracts in a Set in relation to an account or position specified in Rule 803(a), the 

Clearing Member and the Clearing House shall each be discharged and released from all rights, 

liabilities and obligations to one another arising pursuant to Option Contracts belonging to such 

Set in respect of such account or position.

Rule 808 Expiry and Abandonment

(a) If an Option Contract is not automatically exercised in accordance with Rule 803(b)(i) or 

exercised by the Clearing Member by the day and time referred to in Rule 803(b)(ii), all 
NYDOCS01/1643340.2 156

the rights, liabilities and obligations of each of the Clearing House and the relevant 

Clearing Member in respect of any the Option shall lapse and the Option shall be 

terminated and be deemed to be abandoned.

(b) If notice of abandonment of an Option Contract is given pursuant to Rule 803(c), all the 

rights, liabilities and obligations of each of the Clearing House and the relevant Clearing 

Member in respect of any the Option shall lapse and the Option shall be terminated and 

be deemed to be abandoned upon the Clearing House updating its books and records in 

respect of such abandonment.

Rule 809 Deliveries under Contracts of Sale

(a) The Delivery Procedures and the requirements of this Rule 809 shall apply to Contracts 

of Sale.

(b) The Buyer and Seller under each Contract of Sale shall each make such payments and 

deliveries and deliver such tenders, notices and invoices as are required pursuant to the 

Delivery Procedures and Market Rules.

(c) Full compliance with the Delivery Procedures applicable to the Contract of Sale in 

question and, where applicable, Market Rules shall amount to a good discharge of the 

rights, liabilities and obligations of the parties under such Contract (but shall be without 

prejudice to any rights, liabilities or obligations of any party to a Contract in relation to 

breach of warranty, representation, damaged goods, under-delivery, over-delivery or 

otherwise).

(d) The Clearing House may, at its discretion, direct a Clearing Member who is a Seller 

under a Contract of Sale subject to delivery to deliver the Deliverable that is the subject 

matter of such Contract to another Clearing Member that is a Buyer. The Seller and 

Buyer shall each be bound by any such direction. Delivery in accordance with any such 

direction shall be deemed to constitute delivery by the Seller to the Clearing House and 

from the Clearing House to the Buyer for the purposes of the Contract of Sale or 

Contracts of Sale in question (but title shall not pass unless and until the time specified in 

the Delivery Procedures). All payments in relation to such Contracts shall nonetheless be 

made only to and from the Clearing House by the Clearing Members concerned.

(e) If a Buyer under a Contract of Sale rejects a Deliverable delivered to it, the Clearing 

House as Buyer under the similar (effectively, back to back) Contract shall be entitled, if 

to do so would be in accordance with the applicable Contract Terms, to take the same 

action as against the Seller under the equivalent Contract and the Clearing House shall 

not be deemed to have accepted such delivery until the relevant Buyer has accepted 

delivery under the first Contract.

(f) Where payment is subject to an invoice under the Contract Terms, if an invoice has not 

been prepared or delivered when payment becomes due pursuant to a Contract, payment 

shall be made and received on account, pending the issue of that invoice.
NYDOCS01/1643340.2 157

(g) Where a Clearing Member that is a Buyer or Seller under a Contract of Sale is subject to 

an Event of Default or Force Majeure Event, the rights, liabilities and obligations of any 

Clearing Member that is not a Defaulter in respect of such performance shall be 

discharged and there shall arise in place of the same an obligation to account as between 

the Clearing Member and the Clearing House for a settlement amount. The Clearing 

House shall be entitled to substitute an obligation to account for such settlement amount, 

or a proportion thereof, for the Clearing House's rights, liabilities and obligations in 

respect of performance of delivery obligations under other Contracts subject to tender 

with other Clearing Members (such Contracts and Clearing Members selected by the 

Clearing House at its discretion) of the same Set.

(h) Upon each of the parties to a Contract having made all necessary payments and deliveries 

in accordance with these Rules in respect of all Contracts of Sale relating to Options in a 

Set in relation to which a delivery obligation exists for any account or positions specified 

in Rule 803(a), the Clearing Member and the Clearing House shall each be discharged 

and released from all rights, liabilities and obligations to one another arising pursuant to 

such Contracts of Sale in respect of such account or position.

Rule 810 Cash Settlement

(a) Neither the Delivery Procedures nor Rules 803 to 809 apply to Option Contracts which 

are, according to their applicable Contract Terms, capable of cash-settlement only or 

which, being Contracts that may be cash-settled at the option of either party, have been 

designated for cash-settlement by either party. 

(b) An Option Contract shall be settled in cash if:

(i) pursuant to the applicable Contract Terms it can be settled only in cash; or

(ii) pursuant to the applicable Contract Terms it may be settled in cash and the 

Clearing Member opts to settle the Contract(s) in cash.

(c) Cash settlement for a Set of Option Contracts shall occur separately, and separate 

payment obligations shall accrue, in respect of a Clearing Member's:

(i) net position in the relevant Set in respect of each of its Proprietary Accounts;

(ii) gross buy positions in the relevant Set in respect of each of its Customer Accounts 

(if applicable);

(iii) gross sell positions in the relevant Set in respect of each of its Customer Accounts 

(if applicable);

(iv) net position in the relevant Set in respect of each Individually Segregated 

Sponsored Account for which it acts as a Sponsor (if applicable),.

(d) Provided that all Margin payments in respect of the Set have been paid by the Clearing 

Member to the Clearing House or repaid by the Clearing House, the amount payable for
NYDOCS01/1643340.2 158

cash settlement of any Option shall be the net gain or loss, as the case may be, based on 

the difference between the price at which Open Contract Positions are recorded on the 

Clearing House's books and the Reference Price (or, for Contracts entered into on the 

same day as the day of exercise, the difference between the Reference Price and the price 

at which the relevant Contract was bought or sold). Each cash settlement shall occur in 

accordance with the Contract Terms.

(e) Upon each of the parties to a Contract having made all necessary payments in accordance 

with these Rules in respect of all Option Contracts in a Set in relation to which a cash 

settlement obligation exists for any account or positions specified in Rule 810(c), the 

Clearing Member and the Clearing House shall each be discharged and released from all 

rights, liabilities and obligations to one another arising pursuant to Option Contracts 

belonging to such Set in respect of such account or position.

Rule 811 Credit and Debit of Accounts

The Clearing House shall make any necessary credits or debits to or from Clearing Members' 

Proprietary Margin Account and Customer Margin Accounts, as appropriate, arising as a result 

of each cash settlement and delivery in accordance with Part 3.
NYDOCS01/1643340.2 159

Part 9 Default Rules

Without prejudice to the status of any other provision of these Rules, all the provisions of this 

Part 9 are intended to constitute 'default rules' for purposes of the Companies Act 1989, include 

a "default waterfall" for purposes of article 45 of EMIR and constitute "default proceedings" for 

purposes of article 48 of EMIR, "default rules and procedures" for purposes of section 

5b(c)(2)(G) of the CEA and "default procedures" for purposes of SEC Rule 17Ad-22. These 

rules are intended to comply with provisions of the Financial Services and Markets Act 2000 

(Recognition Requirements for Investment Exchanges and Clearing Houses) Regulations 2001 

(SI 2001/995) relevant to default rules in addition to other Applicable Laws. In addition to these 

Rules, the Clearing House relies on its legal rights under Applicable Laws in handling Events of 

Default, including under EMIR, FSMA, the Companies Act 1989, the Settlement Finality 

Directive, the Settlement Finality Regulations, the Financial Collateral Directive, the Financial 

Collateral Regulations and the U.S. Bankruptcy Code, as applicable.

Rule 901 Events of Default affecting Clearing Members or Sponsored Principals

(a) If any of the following events should occur with respect to any Clearing Member 

(regardless of whether it is cured by the Clearing Member, a guarantor or other third 

party on behalf of the Clearing Member or otherwise), such event shall, if so declared by 

the Clearing House, constitute an "Event of Default":

(i) any breach by that Clearing Member of these Rules, the Procedures, the Clearing 

Membership Agreement, any Sponsor Agreement (or, in the case of a Sponsored 

Principal where this Rule is applicable pursuant to Rule 901(d), the Sponsored 

Principal Clearing Agreement) any other agreement with the Clearing House or 

Market Rules;

(ii) that Clearing Member being unable, or likely to be unable, to meet its obligations 

under these Rules or in respect of any Contract;

(iii) a Monetary Default or Delivery Default occurring with respect to that Clearing 

Member;

(iv) any Financial Indebtedness of that Clearing Member or any of its Group 

Companies: (A) not being paid when due or within any originally applicable 

grace period; or (B) being declared to be or otherwise becoming due and payable 

prior to its specified maturity as a result of an event of default (however 

described);

(v) any commitment for any Financial Indebtedness of that Clearing Member or any 

of its Group Companies being cancelled or suspended by a creditor as a result of 

an event of default (however described);

(vi) any creditor of that Clearing Member or any of its Group Companies becoming 

entitled to declare any Financial Indebtedness due and payable prior to its 

specified maturity as a result of an event of default (however described);
NYDOCS01/1643340.2 160

(vii) an Insolvency in relation to that Clearing Member or any of its Group Companies;

(viii) any material action being taken against that Clearing Member (including, without 

limitation, any declaration of default, material adverse notice or finding, material 

fine, suspension or expulsion or withdrawal of, revocation of or failure to renew 

any permission, licence or authorisation) by any Governmental Authority, 

Regulatory Authority, Exchange, Clearing Organisation or Delivery Facility;

(ix) breach by that Clearing Member of any Applicable Law relevant to its business as 

a Clearing Member;

(x) (A) failure by the Clearing Member or its Credit Support Provider to comply with 

or perform any agreement or obligation to be complied with or performed by it in 

accordance with any Credit Support Document if such failure is continuing after 

any applicable grace period has elapsed; (B) the expiration or termination of such 

Credit Support Document or the failing or ceasing of such Credit Support 

Document, or any security interest granted by such Clearing Member or its Credit 

Support Provider to the Clearing House pursuant to any such Credit Support 

Document, to be in full force and effect for the purpose of any Contract (in each 

case other than in accordance with its terms) prior to the satisfaction of all 

obligations of such party under each Contract to which such Credit Support 

Document relates in each case without the written consent of the Clearing House; 

or (C) such Clearing Member or its Credit Support Provider disaffirms, disclaims, 

repudiates or rejects, in whole or in part, or challenges the validity of, such Credit 

Support Document (or such action is taken by any person or entity appointed or 

empowered to operate it or act on its behalf); or

(xi) the Clearing Member or its Credit Support Provider consolidates or amalgamates 

with, or merges with or into, or transfers all or substantially all its assets to, or 

reorganises, reincorporates or reconstitutes into or as, another entity and, at the 

time of such consolidation, amalgamation, merger, transfer, reorganisation, 

reincorporation or reconstitution: (A) the resulting, surviving or transferee entity 

fails to assume all the obligations of such Clearing Member or its Credit Support 

Provider under any Contract or any Credit Support Document to which it or its 

predecessor was a party; or (B) the benefits of any Credit Support Document fail 

to extend (without the consent of the Clearing House) to the performance by such 

resulting, surviving or transferee entity of its obligations under any Contract.

(b) The Clearing House may assume that the occurrence of any Event of Default means that 

a Clearing Member is unable, or likely to be unable, to meet its obligations under these 

Rules or in respect of any Contract.

(c) The Clearing House may exercise rights under the power of attorney granted under 

clause 5.1 and 5.2 of the Clearing Membership Agreement, Sponsored Principal Clearing 

Agreement and/or Sponsor Agreement (including with respect to the Pledged Collateral 

Addendum) if there has been an Event of Default. If, following an Event of Default, the 

Clearing House exercises rights under the power of attorney in clause 5.1 and 5.2 of the 
NYDOCS01/1643340.2 161

Clearing Membership Agreement, Sponsored Principal Clearing Agreement or Sponsor 

Agreement for purposes of enforcement to exercise any of its rights under this Part 9 or 

under the Pledged Collateral Addendum and a Circular has not been issued in respect of 

the Event of Default, the Clearing House will notify the Clearing Member or Sponsor and 

Sponsored Principal concerned as soon as is reasonably practicable of such exercise.

(d) A Sponsored Principal may be declared a Defaulter by the Clearing House if any of the 

events or circumstances specified in Rule 901(a) occurs in relation to a Sponsored 

Principal (in place of the Clearing Member) (except, in the case of circumstances falling 

under Rule 901(a)(i) to (iii), to the extent that the Sponsor cures the Event of Default in 

question, where the same is permitted under this Rule 901(d)). A Sponsored Principal 

may further be declared a Defaulter pursuant to Rule 904(q). A Sponsor must notify the 

Clearing House in writing and without delay if it serves any notice or exercises any right 

under the Customer-Clearing Member Agreement between the Sponsored Principal and 

the Sponsor under which the Sponsored Principal is treated as a defaulter, in default or 

subject to any event of default in circumstances where the same would be grounds for the 

Clearing House declaring an Event of Default in respect of the Sponsored Principal. The 

Clearing House may declare the Sponsored Principal to be the subject of an Event of 

Default as soon as reasonably practicable following receipt of any such notice from a 

Sponsor, provided that the Clearing House is satisfied that the Sponsored Principal is

capable of being declared a Defaulter under this Part 9 (notwithstanding if the relevant 

event or circumstances have been cured by the Sponsor). The Clearing House may 

publish a copy of any such notice from a Sponsor together with the Default Notice or 

may specify in the Default Notice that the Event of Default is declared due to notice 

being received by the Clearing House from a named Sponsor. In any circumstances in 

which a Sponsored Principal is declared a Defaulter, this Part 9 will apply in full to all

Individually Segregated Sponsored Accounts of the Sponsored Principal, mutatis 

mutandis as if the Sponsored Principal were a Clearing Member and Defaulter, but the 

Sponsor shall not be treated as a Defaulter unless a separate Default Notice is issued in 

respect of the Sponsor as a result of an Event of Default affecting the Sponsor. If the 

Clearing House becomes aware of grounds for declaring a Sponsored Principal to be a 

Defaulter under Rule 901(a)(i) to (iii) but no Event of Default is declared, the Clearing 

House will notify the Sponsor of details of such grounds without delay and direct all 

liabilities on the Individually Segregated Sponsored Account to be met from the 

Nominated Proprietary Bank Account used by the Sponsor for its own Proprietary 

Account transactions, and any such Sponsor shall be liable to make such payments in full 

and on time from such Nominated Proprietary Bank Account.

(e) The Clearing House may inform any relevant Regulatory Authority of an Event of 

Default prior to declaring an Event of Default and disclose such information to such 

Regulatory Authority as it sees fit.

Rule 902 Actions to be taken following declaration of a Clearing Member Event of 

Default

(a) If an Event of Default has been declared, the Clearing House may immediately suspend 

or terminate the Defaulter's membership as a Clearing Member, status as a Sponsored 
NYDOCS01/1643340.2 162

Principal or Sponsor and any other entitlements under these Rules, take any action to 

close out the Defaulter's positions under this Part 9 and take such action as is necessary to 

control or reduce losses or liquidity pressures resulting from the Event of Default. Any 

such suspension or termination may be temporarily postponed or may not be enforced if 

the Clearing House in its discretion determines that any such suspension or termination 

would either (i) not be in the best interests of the Clearing House; or (ii) be likely 

adversely to affect the operation of any market.

(b) As soon as practicable after the Clearing House has declared that a Clearing Member is 

subject to an Event of Default, the Clearing House shall issue a Default Notice to the 

Defaulter and shall provide a copy of such Default Notice to any other party to an 

affected Contract (if any). The Clearing House will issue a Circular in respect of any 

Default Notice specifying the name of the Defaulter. The Clearing House may at its 

discretion publish a copy of the relevant Default Notice in or together with a Circular. 

The Clearing House shall, as soon as reasonably practicable after issuing a Default 

Notice, appoint a day on which any net sums certified under Rule 906 are to be paid.

(c) The Clearing House may take such steps pursuant to this Part 9 as appear in the 

circumstances to be necessary or expedient to discharge all the Defaulter's rights and 

liabilities under or in respect of Contracts to which it is party, to protect the Clearing 

House, its non-defaulting Clearing Members, Sponsored Principals or Markets or to 

complete the process described in this Part 9.

Rule 903 Treatment of Contracts following a Clearing Member Event of Default and 

Hedging

(a) The Clearing House shall be entitled to take any of the following steps at its discretion 

following the occurrence of an Event of Default with respect to a Clearing Member or 

Sponsored Principal:

(i) to arrange for Contracts to be subject to a Transfer to a Transferee Clearing 

Member in accordance with Rule 904 and effect the same;

(ii) if it determines at its discretion that the protection of the financial integrity of the 

Clearing House so requires, or because of the cessation or curtailment of trading 

on a Market where contracts may be traded, to delay a close out or termination of 

some or all Contracts of the Defaulter;

(iii) subject always to Rule 102(q), if the Defaulter acts as Buying Counterparty and 

Selling Counterparty in respect of Contracts of the same Set, to net, offset, 

mutually close out or terminate such Contracts (or any part thereof) provided that, 

following such netting, offsetting, closing out or termination, Contracts 

representing in aggregate the Open Contract Position of the Defaulter in the 

relevant Set are recognised; and the Clearing House shall be entitled to and shall 

amend the records of Contracts recorded in Deriv/SERV or any relevant 

Repository accordingly, provided that the Clearing House shall not be obliged to 

amend such Deriv/SERV or Repository records if it no longer has the necessary
NYDOCS01/1643340.2 163

authority or access to do so or is otherwise prevented or restricted from doing so 

by an Insolvency Practitioner; and

(iv) to combine and replace two or more FX Contracts of a Defaulter (or any part of 

an FX Contract) with a single FX Contract, which may occur where the Defaulter 

is Reference Currency Seller under one of the FX Contracts in respect of a 

particular currency and Reference Currency Buyer under the other FX Contract in 

respect of the same currency, and those two FX Contracts have the same FX 

Settlement Date.

(b) All Contracts to which a Defaulter is party (which are not voidable and voided by the 

Clearing House pursuant to Part 4) shall be closed out in the manner set out in Rule 905

except to the extent that Rule 903(a) applies to such Contracts.

(c) To the extent that any Contracts to which a Defaulter is party remain open from time to 

time (whether pursuant to Rule 903(a)(ii), pending Transfers, terminations or otherwise) 

or if the Clearing House is otherwise unable for any reason to liquidate Contracts in a 

prompt and orderly fashion, the Clearing House may authorise the execution from time to 

time for the account of the Clearing House, for the purpose of an orderly unwind of any 

Contracts to which a Defaulter is party or reducing the risk to the Clearing House and the 

risk to Clearing Members (in the case of Clearing Members, except to the extent that 

reducing any risk to Clearing Members creates or increases any risk for the Clearing 

House) resulting from the continued maintenance of such Contracts, of hedging 

transactions including, without limitation, the purchase, exercise, sale or grant of 

Contracts. Any such hedging transactions that are executed shall be submitted by 

Clearing Members with whom they are executed to the Clearing House for Clearing on a 

daily basis. Any costs, expenses or losses sustained by the Clearing House in connection 

with transactions effected pursuant to this Rule 903(c) shall be charged to the Defaulter 

and any gains shall be credited to the Defaulter in the relevant net sum calculation under 

Rule 906 for the Account in respect of which exposures were hedged.

(d)

(i) If a CDS Contract or F&O Contract is automatically terminated pursuant to an 

automatic early termination provision or under Applicable Law as a result of an 

Event of Default, Insolvency or related event affecting the Defaulter, this Part 9

shall apply mutatis mutandis in relation to such terminated Contract to which such 

Defaulter was party and the rights, obligations and liabilities relating thereto.

(ii) If an FX Contract is terminated pursuant to an automatic early termination 

provision or under Applicable Law as a result of any Event of Default or related 

event, or if Rule 912 applies, this Part 9 shall apply mutatis mutandis in relation to 

such terminated FX Contract and rights, obligations and liabilities relating thereto. 

For the avoidance of doubt, in any case where this Rule 903(d)(ii) applies as a 

result of Rule 912 applying, Rule 905(f) shall not apply to the extent that the same 

is disapplied by Rule 912.
NYDOCS01/1643340.2 164

(e) Upon an Event of Default being declared with respect to a Clearing Member, any accrued 

or invoiced amounts shall be immediately due and payable by the Defaulter to the 

Clearing House.

Rule 904 Transfer of Contracts and Margin on a Clearing Member Event of Default

Provisions applicable to all Defaulters and all Contracts

(a) The Clearing House may arrange for any of the following steps (any such step, a 

"Transfer" and the term "Transferred" shall be interpreted accordingly) to take place in 

respect of the Contracts of a Defaulter as part of its default proceedings:

(i) a transfer, sale, assignment or novation of Contracts (and related Customer-CM 

Transactions) of a Defaulter to a Transferee Clearing Member; or

(ii) the termination of Contracts between the Clearing House and a Defaulter (and 

related Customer-CM Transactions, where applicable) and the entry into of new 

replacement Contracts (and related Customer-CM Transactions, where applicable) 

between the Clearing House and the Transferee Clearing Member or between 

such Customer and such Transferee Clearing Member, as applicable (by way of 

novation and amendment or otherwise).

Unless the Clearing House specifies otherwise in writing, all Transfers shall occur 

pursuant to the process described in Rule 904(a)(ii).

(b) All Contracts subject to a Transfer shall be Transferred on the basis of the applicable 

Exchange Delivery Settlement Price, Reference Price, Market-to-Market Value or other 

price specified by the Clearing House. Transferee Clearing Members will be notified of 

applicable prices determined pursuant to this provision prior to the Transfer.

(c) For the avoidance of doubt, the Clearing House shall have no obligation to enter into or 

effect any Transfer if to do so (i) would result in or risk an Account being undercollateralised with respect to any remaining Contracts; (ii) would result in or risk an 

Event of Default or a Failure to Pay in respect of the Clearing House, the application of 

Guaranty Fund Contributions of non-Defaulters, a call for Assessment Contributions or 

invocation of any of the procedures in Rules 912 to 918; (iii) would result in or risk a 

breach of Applicable Laws; or (iv) lacks any Governmental Authority, Customer or other 

consent or approval that is required or desirable in the circumstances, in each case as 

determined by the Clearing House at its discretion. Any Transfers shall be fair to clients 

and indirect clients of the Defaulter.

(d) If any Contracts recorded in a Defaulter's Customer Account are subject to any Transfer 

pursuant to Rule 904(a)(i):

(i) any related Margin recorded in the relevant Customer Account may, at the 

discretion of the Clearing House also be transferred from that Customer Account 

to the Transferee Clearing Member's Customer Account (in the case of CDS 
NYDOCS01/1643340.2 165

Contracts, provided that such transfer occurs in accordance with the remainder of 

this Rule 904);

(ii) to the extent that any transfer of Margin takes place in accordance with 

Rule 904(d)(i), the Defaulter shall have no claim against the Clearing House or 

any Transferee Clearing Member for return of such Margin and the Clearing 

House shall be released from any liability or obligation to return such Margin (or 

any property in substitution thereof) to the Defaulter;

(iii) as between the Transferee Clearing Member and the Clearing House, the Clearing 

House shall have all rights in relation to any Margin transferred pursuant to 

Rule 904(d)(i) as if the same were Margin transferred to the Clearing House 

directly from the Transferee Clearing Member; 

(iv) where the Defaulter has or had a Pledged Collateral Account, the Clearing House 

shall be entitled, in addition to the rights and remedies referred to in Rule 902, to 

exercise the rights of a secured party, collateral taker, market chargee and 

collateral security chargee under Applicable Law, including rights of 

appropriation, with respect to any Pledged Collateral and the rights set forth in the 

Pledged Collateral Addendum in order to facilitate any such transfer of Margin; 

and 

(v) where: 

(A) the Clearing House has elected to exercise its rights to transfer Margin of a 

Defaulter pursuant to Rule 904(j)(iii); 

(B) such Defaulter has a Pledged Collateral Account; and 

(C) the Clearing House exercises the right of appropriation pursuant to the 

relevant Pledged Collateral Addendum as contemplated by 

Rule 904(d)(iv) so as to give effect to a transfer of Margin, 

then the Clearing Member that is the Defaulter will be obliged to pay to the 

Clearing House an amount equal to the value of Pledged Collateral so 

appropriated, such value having been calculated in accordance with 

Rule 905(b)(ix).

(e) The Clearing House may rely upon any information relating to the positions, assets or 

identities of individual Customers provided to it by an Exchange, CDS Trade 

Execution/Processing Platform, FX Trade Execution/Processing Platform or Clearing 

Member, without need for further enquiry by the Clearing House with respect thereto. 

The books and records of the Clearing House may be treated as definitive evidence of the 

positions and Customers which correspond to Contracts recorded in a Defaulter's 

Customer Account.

(f) The Clearing House shall be entitled to make partial or full transfers of available Margin 

at any time from the relevant account of a Defaulter in respect of Contracts subject to a 
NYDOCS01/1643340.2 166

Transfer, provided that in any case the total amount of Margin transferred in respect of 

any Contracts relating to a particular Customer remains commensurate to the Margin that 

was provided in respect of such transferred Contracts and held by the Clearing House 

immediately prior to the Event of Default.

(g) Nothing in these Rules shall require a Clearing Member to accept any Transfer of 

Contracts as a Transferee Clearing Member, without the prior consent of that Clearing 

Member (and for these purposes no such consent shall have been provided as a result of a 

Clearing Member being named as a potential Transferee Clearing Member in a Default 

Portability Preference). Including as a result of the consents in paragraph 6(b) of the 

Standard Terms, the Clearing House shall be entitled (but not required) to Transfer any 

Contract regardless of whether the relevant Customer has designated the Transferee 

Clearing Member as a permitted transferee or has consented to such Transfer.

(h) If the Clearing House determines that any Contracts of the Defaulter are to be Transferred 

pursuant to this Rule 904, the Clearing House may estimate the loss or gain that it would 

incur in respect of the relevant Customer Account Positions (i.e. the amount L-A in 

Rule 906 as calculated in respect of those Customer Account Positions) and the extent, if 

any, to which any Margin would be applied to any such loss and may (but shall not be 

required) to prioritise and give effect first to any Transfers on the basis of the extent of 

any potential resulting loss or gain to a Customer Account notwithstanding the time at 

which any Transfer instructions are submitted or confirmed.

(i) The Clearing House may take into consideration such factors as the Clearing House 

determines to be relevant in accepting or effecting any Transfer. Without limiting the 

foregoing, any Transfer or transfer of Margin shall be subject to any requirements or 

limitations under Applicable Law, and any approvals or consents that the Clearing House 

may determine to be required or desirable under the circumstances.

(j) The Clearing House will have regard to any Default Portability Preference in determining 

whether or not to give effect to any Transfer. Nonetheless, and without prejudice to the 

generality of Rule 904(g), the Clearing House shall be entitled to Transfer any Contract 

recorded in a Customer Account of a Clearing Member regardless of whether the relevant 

Customer has designated the Transferee Clearing Member as a permitted transferee 

pursuant to a Default Portability Preference or has made any Default Portability 

Preference, in reliance upon the consents of Customers to a Transfer of Contracts or 

Margin to any Transferee Clearing Member provided pursuant to the Standard Terms. If, 

pursuant to a Transfer, the Clearing House becomes party to a Contract with a Transferee 

Clearing Member (that is a Non-FCM/BD Clearing Member) as replacement for any 

Customer Account Contract of a Defaulter (that is or was a Non-FCM/BD Clearing 

Member), the Clearing House and (to the extent necessary) the Defaulter shall 

contemporaneously cause the Transfer of the related Customer-CM Transactions between 

each affected Customer and the Defaulter, such that Customer-CM Transactions are 

established between each relevant Customer and the Transferee Clearing Member and 

such Transferred Customer-CM Transactions between the Defaulter and each relevant 

Customer are terminated (or otherwise subject to a Transfer) as follows:
NYDOCS01/1643340.2 167

(i) If a Contract recorded in the Defaulter's Customer Account is Transferred, the 

Transferee Clearing Member shall enter into a Customer-CM Transaction with 

each affected Customer (to replace the terminated Customer-CM Transaction with 

the Defaulter) on such terms as are specified in Rule 904(j)(ii). Upon such 

Transfer, the Transferee Clearing Member shall assume and undertake in favour 

of the Customer the obligations of (or obligations similar to those of) the 

Defaulter under the Transferred Contract(s) and the Transferred Customer-CM 

Transaction(s). Any termination payments due or payable in respect of the 

termination of the Contracts and related Customer-CM Transactions to which the 

Defaulter was party and any amounts due or payable in respect of the 

establishment of the replacement Contracts or Customer-CM Transactions to 

which the Transferee Clearing Member is party shall be equal (in each case based 

on the amount determined by the Clearing House for purposes of close out of the 

Contract in accordance with these Rules, and not taking into account any clearing 

fees or similar amounts agreed to by the relevant parties or affecting any other 

amount mentioned in Rule 906) and all obligations to make such termination 

payments shall be deemed to have been paid, netted and satisfied among the 

relevant parties beneficially entitled to such payments.

(ii) If the Transferee Clearing Member and a relevant Customer have previously 

entered into a Customer-Clearing Member Agreement, any Customer-CM 

Transactions between the Transferee Clearing Member and Customer Transferred 

to the Transferee Clearing Member in accordance with this Rule 904 shall be 

subject to such Customer-Clearing Member Agreement. If the Transferee 

Clearing Member and Customer have not entered into a Customer-Clearing 

Member Agreement, the Transferred Customer-CM Transactions shall be deemed 

subject to an agreement in such form as is specified by the Transferee Clearing

Member.

(iii) Following any Transfer of Contracts and, where applicable, Customer-CM 

Transactions, pursuant to this Rule 904, the Clearing House may transfer, and if 

such transfer occurs, will record the transfer, of any available Margin recorded in 

the corresponding Customer Margin Account of the Defaulter for each affected 

Customer the Customer-CM Transactions of which are to be Transferred (to the 

extent that the same has not been subject to netting under Rule 904(j)) to the 

applicable Customer Margin Account of the Transferee Clearing Member, to be 

treated in the same way as if such assets had been transferred by the Transferee 

Clearing Member direct to the Clearing House pursuant to the Clearing 

Membership Agreement (or, for an Individually Segregated Sponsored Account 

for which a Transferee Clearing Member is the Sponsor, by the Sponsored 

Principal direct to the Clearing House pursuant to the Sponsored Principal 

Clearing Agreement) and these Rules. In relation to any such transfer, the 

Defaulter shall be deemed to agree and consent to any such transfer and shall take 

any necessary action to facilitate such transfer (and the Clearing House may take 

any action on the Defaulter's behalf in connection therewith). Notwithstanding 

the foregoing, the Transferee Clearing Member shall remain obliged to satisfy any 

Margin requirements resulting from its entry into of, or becoming party to, 
NYDOCS01/1643340.2 168

Contracts for each of its affected Customer Accounts pursuant to this Rule 904

which may be calculated without taking into account any amount that may be 

transferred by or due from the Defaulter to the Clearing House pursuant to the 

foregoing requirement but which has not been transferred.

(k) The Clearing House may recalculate the balance between Margin and Surplus Collateral 

for a Customer Account of a Defaulter to reflect any increase in the Margin requirement 

for such Customer Account as a result of the Transfer of fewer than all of the relevant 

Customer Account Contracts and related Customer Account Positions.

(l) Following any Transfer of Contracts pursuant to this Rule 904, the Clearing House may 

submit appropriate data to Deriv/SERV or a Repository to reflect such Transfer. The 

Clearing House shall be authorised and entitled to take similar action on the Defaulter's 

and any of its Customers' behalves (including in respect of records in the Tripartite 

Representation referring to any Customer and any Customer-CM CDS Transactions to 

which the Defaulter and Customer were party) which have been Transferred in 

accordance with this Rule 904.

(m) Upon an Event of Default being declared in respect of a Clearing Member, the Clearing 

House commits to triggering the procedures for the Transfer process set out in this Rule 

904 for both Margin and Open Contract Positions recorded in a Customer Account (that 

is not an Individually Segregated Sponsored Account or Individually Segregated MarginFlow Co-mingled Account) provided that the Clearing House shall not be obliged to 

effect any Transfer unless: (i) each Customer is not itself also a Defaulter or subject to 

Insolvency; (ii) the conditions precedent set out in Rule 904(c) are satisfied in respect of 

each Customer; and (iii) a single Transferee Clearing Member accepts all the Transfers 

relating to all Customers in writing. A Transferee Clearing Member shall be deemed to 

have accepted the Transfer if it has previously entered into a contractual relationship with 

a Customer by which it has committed itself to do so and the same has been notified to 

the Clearing House pursuant to a Default Portability Preference.

Provisions applicable only to default of a Sponsor of an Individually Segregated Sponsored 

Account

(n) If an Event of Default is declared in respect of a Sponsor, notwithstanding any payment 

or banking arrangement existing prior to the Event of Default, the Sponsored Principal 

must meet all Margin and other calls for payment made by the Clearing House on time 

itself from a Nominated Bank Account in the Sponsored Principal's name. The 

Sponsored Principal may be required to pay additional amounts by way of Margin 

(including an additional stress-loss Margin charge covering at least such portion of the 

defaulting Sponsor's required Guaranty Fund Contribution as is referable to the 

Sponsored Principal or otherwise as is required to ensure that the Clearing House has 

additional Margin from Sponsored Principals of the defaulting Sponsor in excess of any 

shortfall in a Guaranty Fund prior to its replenishment or re-balancing) if its Sponsor is 

declared a Defaulter.
NYDOCS01/1643340.2 169

(o) As from the time of declaration of the Event of Default in respect of the Sponsor until 

such time as the Sponsored Principal takes one of the three steps set out in this 

Rule 904(o), the Sponsored Principal shall only be entitled to submit Transactions for 

clearing or become party to Contracts which it can demonstrate have the overall effect of 

reducing Open Contract Positions in any Set of Contracts or risks to the Clearing House 

associated with Contracts, whether by hedging, novating, Transferring, terminating, 

liquidating or otherwise closing out such Contracts. Within 10 days of the Event of 

Default of the Sponsor (or such other longer time as the Clearing House at its discretion 

allows), provided that the Sponsored Principal is not itself a Defaulter and in order to 

avoid itself becoming a Defaulter, the Sponsored Principal must take one of the following 

three steps:

(i) notify the Clearing House of a new Sponsor and if such Sponsor is approved by 

the Clearing House as the new Sponsor and has executed a Sponsor Agreement 

under which the Sponsored Principal is duly nominated:

(A) the new Sponsor shall become the new Sponsor for the Sponsored 

Principal (and shall be treated as the Transferee Clearing Member) for an 

Individually Segregated Sponsored Account in which equal positions and 

Margin are recorded to those of the Sponsored Principal prior to the Event 

of Default; and

(B) the new Sponsor shall take the benefit of the right to provide operational 

services and to enjoy rights under the new Sponsor Agreement in relation 

to the Individually Segregated Sponsored Account which were previously 

enjoyed by the Sponsor that is a Defaulter; 

(C) pursuant to the Default Portability Rules, the new Sponsor will become 

liable under Contracts recorded in the Individually Segregated Sponsored 

Account in place of the Defaulter as set forth in Part 19; and

(D) the old Sponsor will become released from any further liability in respect 

of its joint and several liability under Contracts recorded in the 

Individually Segregated Sponsored Account;

(E) pursuant to the Default Portability Rules, Customer-CM Transactions (if 

any) between the Defaulter and the Sponsored Principal will be 

Transferred to the Sponsor; and

(F) all outstanding Margin and other payments due in respect of the Contracts 

and Individually Segregated Account must be paid by the Sponsored 

Principal or Sponsor;

(ii) itself become a full Clearing Member not accessing the Clearing House with a 

Sponsor, pursuant to the process set out in Part 2 and the Membership Procedures, 

in which case:

(A) it will become liable to pay Guaranty Fund Contributions itself;
NYDOCS01/1643340.2 170

(B) the positions and assets recorded in the Individually Segregated Sponsored 

Account will be Transferred to a Proprietary Account of the Sponsored 

Principal acting itself in its capacity as Transferee Clearing Member 

without a Sponsor; 

(C) in the same way as Contracts are terminated pursuant to the Default 

Portability Rules, the old Sponsor will become released from any further 

liability in respect of Contracts recorded in the Individually Segregated 

Sponsored Account;

(D) all Customer-CM Transactions between the Defaulter and the Sponsored 

Principal will be terminated at the same time and prices as liabilities under 

Contracts are so released; and

(E) all outstanding Margin and other payments due in respect of the Contracts 

and Individually Segregated Account must be paid by the Sponsored 

Principal that has become a Clearing Member; or

(iii) arrange for the Transfer of the positions and margin in the Individually 

Segregated Sponsored Account to a Customer Account (not being an Individually 

Segregated Sponsored Account) of a Transferee Clearing Member pursuant to the 

Default Portability Rules,

(p) Upon an Event of Default being declared in respect of a Sponsor, the Clearing House 

commits to triggering the procedures for the Transfer process set out in this Rule 904 for 

both Margin and Open Contract Positions recorded in an Individually Segregated 

Sponsored Account, provided that the Clearing House shall not be obliged to effect any 

Transfer unless: (i) the Sponsored Principal is not itself also a Defaulter or subject to 

Insolvency; (ii) the conditions precedent set out in Rule 904(c) are satisfied; and (iii) the 

Transferee Clearing Member accepts the Transfers in writing. A Transferee Clearing 

Member shall be deemed to have accepted the Transfer if it has previously entered into a 

contractual relationship with the Sponsored Principal by which it has committed itself to 

do so and the same has been notified to the Clearing House pursuant to a Default 

Portability Preference.

Provisions applicable only to default of a Sponsored Principal

(q) If, following an Event of Default in respect of the Sponsor, one of the steps set out in 

Rule 904(o) does not take place by the end of the 10 day or longer period as is referred to 

in Rule 904(o), then the Sponsored Principal may itself be declared a Defaulter. A 

Sponsored Principal may also be declared a Defaulter pursuant to Rule 901(d).

(r) If a Clearing House declares the Sponsored Principal a Defaulter in circumstances in 

which the Sponsor is not a Defaulter, then the Clearing House, following issuance of the 

Default Notice will inform the Sponsor of the Event of Default, which may be by 

telephone. Then:
NYDOCS01/1643340.2 171

(i) provided that the Sponsor is not itself also a Defaulter, to the extent this has not 

already occurred under Rule 901(d), the Clearing House will direct all liabilities 

on the Individually Segregated Sponsored Account to be met from the Nominated 

Proprietary Bank Account used by the Sponsor for its own Proprietary Account 

transactions; 

(ii) the Sponsor shall be liable to pay in full and on time an amount equal to any loss 

or shortfall on the Individually Segregated Sponsored Account, including: (A) in 

respect of unsatisfied Margin requirements to the extent that any open Contracts 

exist in the Individually Segregated Sponsored Account (or have been subjected 

to automatic early termination but not replaced); and (B) of such amounts as the 

Clearing House notifies the Sponsor are necessary to prevent any net sum on the 

Individually Segregated Sponsored Account representing an amount payable to 

the Clearing House;

(iii) provided that the Sponsor is not itself also a Defaulter, the Sponsor shall be 

entitled to exercise its rights under Rule 907(m) or take any other action in 

relation to Contracts recorded in the Individually Segregated Sponsored Account 

as it would have been entitled under Part 19 of the Rules to take, but for the Event 

of Default (including to Transfer Contracts recorded in the Individually 

Segregated Sponsored Account to a Proprietary Account of the Sponsor, terminate 

Contracts by contractual netting through submission of offsetting Contracts; and 

taking equivalent steps in relation to Customer-CM Transactions and Contracts 

that have been subjected to automatic early termination but not been replaced); 

and in taking any such action it may act as agent for the Clearing House, subject 

to obtaining the Clearing House's prior written consent to act in such capacity; but 

for the avoidance of doubt: (A) nothing in this Rule 904(r) shall entitle the 

Sponsor to direct the payee of any Margin or assets recorded in the Individually 

Segregated Sponsored Account, declare a net sum, run a default auction or 

exercise other powers of the Clearing House under this Part 9; (B) the Sponsor 

shall be liable to the Clearing House and its officers and employees for any loss, 

liability, damage, injury, cost or expense pursuant to Rule 111(a)(ii), for which 

purposes any actions taken by the Sponsor as agent for the Clearing House shall 

be deemed to constitute "conduct" and Rule 111(i) shall not apply; and (C) where 

the Sponsor acts as agent for the Clearing House and in such capacity determines 

a close-out value for a Customer-CM Transaction (or a close-out value for a 

Contract which automatically results in a close-out value for a Customer-CM 

Transaction being determined) that close-out value shall be determined, 

calculated, established or priced in accordance with the applicable CustomerClearing Member Agreement and Applicable Laws;

(iv) the Clearing House shall be fully entitled to manage any Event of Default 

affecting a Sponsored Principal under this Part 9, provided that to the extent that 

the Sponsor manages the Event of Default under Rule 904(r)(iii), the Clearing 

House will allow the Sponsor such time as the Clearing House considers to be 

reasonable for the Sponsor to terminate the Contracts recorded in the Individually 

Segregated Sponsored Account before itself doing so;
NYDOCS01/1643340.2 172

(v) if the Sponsor is not itself also a Defaulter, the Clearing House will (to the extent 

this is not prohibited under any Applicable Laws) transfer any Margin or balance 

on the Individually Segregated Sponsored Account to the Sponsor in the event 

that the Sponsor transfers the Contracts from the Individually Segregated 

Sponsored Account to one of its Proprietary Accounts (or establishes replacement 

positions for such Contracts in one of its Proprietary Accounts as a result of 

entering into offsetting Contracts for the Individually Segregated Sponsored

Account or otherwise) following an Event of Default affecting the Sponsored 

Principal; and

(vi) subject to paragraph (v), the Clearing House shall be entitled to discharge its 

obligations to the Sponsored Principal and the Sponsor in respect of an 

Individually Segregated Sponsored Account in full by transferring any Margin or 

balance on the Individually Segregated Sponsored Account to either the Sponsor

or Sponsored Principal.

(s) The Guaranty Fund Contributions and Surplus Collateral recorded in all Proprietary 

Accounts of the Sponsor may be applied in amount GFC or SC respectively in the net 

sum on an Individually Segregated Sponsored Account, to the extent necessary to prevent 

any net sum on the Individually Segregated Sponsored Account representing an amount 

payable to the Clearing House. To the extent that the Sponsor has made any payment 

under Rule 901(d) or 904(r)(i) or (ii) and the net sum on an Individually Segregated 

Sponsored Account would represent an amount payable by the Clearing House (but for 

this provision), the Clearing House shall pay to the Sponsor, (subject to Rules 904(c) and 

(i)), for its own account as principal, an amount equal to the difference between such 

amount otherwise payable by the Clearing House and zero, less a deduction for any of its 

related costs. Any amounts paid to a Sponsor pursuant to this Rule 904(s) shall be 

included in amount OL in Rule 906 in the calculation of the net sum on the Individually 

Segregated Sponsored Account. 

Provisions applicable only to Margin-flow Co-mingled Accounts

(t) The following principles shall apply when the Clearing House is calculating the net sum 

on Margin-flow Co-mingled Accounts of a Defaulter or determining the amounts which 

are available to be transferred to a Transferee Clearing Member in respect of such an 

Account pursuant to the Default Portability Rules:

(i) sums payable by the Defaulter or to the Defaulter in respect of Contracts falling 

under any of amounts L, A, D or C in Rule 906(a) shall be allocated for each 

Margin-flow Co-mingled Account based on the extent to which such sums arise 

from the termination or close out of Contracts recorded in the Position Account 

linked to the Margin-flow Co-mingled Account;

(ii) costs and expenses of the Clearing House falling under amount L in Rule 906(a)

and amounts falling under OL in Rule 906(a), to the extent not charged to or 

included in the net sum for a Proprietary Account of the Defaulter or another 

Customer Account, shall be allocated among Margin-flow Co-mingled Accounts 
NYDOCS01/1643340.2 173

on a pro rata basis with respect to the Margin requirement on each Margin-flow 

Co-mingled Account immediately prior to the Event of Default, provided that if 

the Clearing House incurs a particular cost or expense in respect of a particular 

Margin-flow Co-mingled Account, then that amount shall be allocated solely to 

that Margin-flow Co-mingled Account and the amounts to be allocated among 

other Margin-flow Co-mingled Accounts shall be reduced accordingly;

(iii) amounts falling under M in Rule 906(a) (which do not relate to Permitted Cover 

previously recorded in a Proprietary Account of the Defaulter) will be allocated 

among Margin-flow Co-mingled Accounts in the manner set out below and in the 

following order of precedence:

(A) based on the ICE Clear System's records of Permitted Cover provided in 

respect of each Margin-flow Co-mingled Account (if any); or

(B) based on the last valid Permitted Cover report provided by the Defaulter 

under Rule 503(k) immediately prior to the Event of Default (if any); or

(C) on a pro rata basis with respect to the Margin requirement on each 

Margin-flow Co-mingled Account of the Defaulter immediately prior to 

the Event of Default;

(iv) if Surplus Collateral may be posted on a Margin-flow Co-mingled Account, 

amounts falling under SC in Rule 906(a) (which do not relate to Permitted Cover 

previously recorded in a Proprietary Account of the Defaulter) will be allocated 

among Margin-flow Co-mingled Accounts in the manner set out below and in the 

following order of precedence:

(A) based on the ICE Clear System's records of Permitted Cover provided in 

respect of each Margin-flow Co-mingled Account (if any); or

(B) based on the last valid Permitted Cover report provided by the Defaulter 

under Rule 503(k) immediately prior to the Event of Default (if any); or

(C) if not so allocated to any Margin-flow Co-mingled Account will be 

returned separately to the Defaulter, who will be responsible for handling 

any claims of Customers in respect of such amounts;

(v) amounts falling under GFC or OA in Rule 906(a) or representing Margin or other 

assets relating to a Proprietary Account which are available to be applied to 

Margin-flow Co-mingled Accounts, to the extent that they are available to reduce 

a loss on Margin-flow Co-mingled Accounts, shall first be allocated pro rata as to 

losses among Margin-flow Co-mingled Accounts;

(vi) the effect on the net sum of any Transfer of positions or Margin to a Transferee 

Clearing Member shall be the same as for any other Customer Account of a 

Defaulter; and
NYDOCS01/1643340.2 174

(vii) any funding of any assets in, or credit line or loan to a Customer interested in, a 

Margin-flow Co-mingled Account by the Defaulter shall be disregarded.

(u) Upon an Event of Default being declared in respect of a Clearing Member, the Clearing 

House commits to triggering the procedures for the Transfer process set out in this 

Rule 904 for both Margin and Open Contract Positions recorded in Individually 

Segregated Margin-flow Co-mingled Accounts, provided that the Clearing House shall 

not be obliged to effect any Transfer unless: (i) the relevant Customer is not itself also a 

Defaulter or subject to Insolvency; (ii) the conditions precedent set out in Rule 904(c) are 

satisfied; and (iii) the Transferee Clearing Member accepts the Transfers in writing. A 

Transferee Clearing Member shall be deemed to have accepted the Transfer if it has 

previously entered into a contractual relationship with the Customer by which it has 

committed itself to do so and the same has been notified to the Clearing House pursuant 

to a Default Portability Preference.

Rule 905 Termination and close out of Contracts on a Clearing Member Event of Default

(a) The following contracts shall be terminated or closed out in such manner as the Clearing 

House in its discretion may direct for the purposes of discharging all the rights, 

obligations and liabilities of the Defaulter:

(i) Contracts to which a Defaulter is party, which are not voidable and voided by the 

Clearing House pursuant to Part 4, and which are required to be terminated or 

closed out pursuant to Rule 903(b);

(ii) contracts arising from hedging transactions made pursuant to Rule 903(c), which 

shall be treated as if they were "Contracts" for purposes of this Rule 905 and 

Rule 906;

(iii) Linked Incoming Contracts, Linked Outgoing Contracts and Contracts arising as a 

result of Linked Outgoing Contracts.

The Clearing House shall not be entitled to terminate or close out any rights or liabilities 

attributable to the Defaulter arising out of the relationship of principal and agent, where a 

Defaulter has entered into a contract as agent, but for the avoidance of doubt this 

requirement shall not restrict the Clearing House from closing out any Contract recorded 

in a Customer Account of an FCM/BD Clearing Member or an Individually Segregated 

Sponsored Account. To the extent necessary, the Clearing House may take such steps 

pursuant to such powers as are granted pursuant to the Clearing Membership Agreement 

and any applicable Sponsored Principal Clearing Agreement, Sponsor Agreement or 

Pledged Collateral Addendum.

(b) Without prejudice to the generality of Rule 905(a), at the Clearing House's discretion, any 

of the following steps may be taken in respect of contracts to which Rule 905(a) applies:

(i) The Clearing House may place, with one or more members of an Exchange, 

Clearing Organisation or over-the-counter marketplace upon which the relevant 

category of Contract is traded, orders for the purchase, grant, exercise or sale of 
NYDOCS01/1643340.2 175

Contracts. The Clearing House may designate and authorise an individual to be 

responsible for the placement of such orders or may enter into Contracts with nondefaulting Clearing Members or (providing that the relevant Clearing Member or 

Sponsor, respectively, has consented to the order) Customers or Sponsored 

Principals, by way of auction.

(ii) For purposes of liquidation of Contracts, hedging market risks of the Defaulter or 

otherwise, Contracts (or any part thereof) may be terminated or closed out by the 

Clearing House pursuant to the submission of any Transactions, Invoicing Back 

or the creation of new Contracts to which the Defaulter is party at the Clearing 

House's discretion (regardless of whether they are held for different accounts or 

different beneficial owners), but subject always to, and accounting for the closeout amounts under, Rule 906: (i) Contracts (or any part thereof) to which the 

Defaulter is party on opposite sides of the market of the same Set; (ii) F&O 

Contracts having different expiration dates or exercise dates; (iii) CDS Contracts 

having different series or version numbers or scheduled termination dates or 

Applicable Credit Derivatives Definitions; and (iv) FX Contracts on opposite 

sides of the market of the same Set or having different FX Settlement Dates. For 

the avoidance of doubt, but without prejudice to Rule 905(c), this Rule 905(b)(ii)

does not empower the Clearing House to oblige non-defaulting Clearing Members 

to become party to any Contracts.

(iii) FX Contracts of a Defaulter having different FX Settlement Dates may be 

combined, terminated and replaced by any transactions, Invoicing Back or the 

creation of new FX Contracts at the Clearing House's discretion, for purposes of 

liquidation of Contracts, hedging market risks of the Defaulter or otherwise, if the 

Defaulter is Reference Currency Buyer under one of the FX Contracts in respect 

of a particular currency and Reference Currency Seller under the other FX 

Contract in respect of the same currency.

(iv) Any Contracts (including those recorded in one of the Defaulter's Customer 

Position Accounts) which are sale and purchase Contracts in the same Set may be 

closed out and terminated (in whole or in part), together with any termination 

payments settled by way of off-set.

(v) An Option may be terminated, exercised or abandoned, at the discretion of the 

Clearing House, and in any case where an Option is exercised, the Clearing House 

may terminate or close out the Future or Contract of Sale, if any, arising as a 

result of such exercise in accordance with the provisions of this Rule 905.

(vi) Notwithstanding any other provision of this Rule 905, the Clearing House may 

pair and cancel offsetting Long and Short positions in the same Future or Option 

Set or 'Selling Counterparty' and 'Buying Counterparty' positions in any Set of 

CDS Contracts or FX Contracts; and where it is necessary or desirable for there to 

be a price (for example, in the case of a liquidation of offsetting Customer 

Account and Proprietary Account Contracts or the liquidation of offsetting 

Contracts recorded in different Customer Accounts, where in each case, the close-
NYDOCS01/1643340.2 176

out values of the offsetting Contracts are required to be taken into account for the 

calculation of different net sums pursuant to Rule 102(q) and Rule 906), the price 

for a Future or Option Contract will be equal to the Exchange Delivery Settlement 

Price, the price for a CDS Contract will be the Mark-to-Market Price or for FX 

Contracts at the FX Market Price, in either case on the day such cancellation is 

ordered (or alternatively, such other price shall apply as the Clearing House may 

establish in accordance with the Procedures and its risk policies).

(vii) The Clearing House shall be entitled (without the prior or subsequent consent or 

agreement of the Defaulter or any court order) to sell, transfer, value (subject to

Rule 905(b)(ix)) or create any interest in any Permitted Cover, Margin, Guaranty 

Fund Contributions or other assets that are credited to the Defaulter's Proprietary 

Margin Account, any of its Customer Margin Accounts (subject to Rule 502(i)) or 

any of its accounts used for Guaranty Fund Contributions or any other asset of the 

Defaulter that is otherwise in the Clearing House's possession (subject always to 

Rule 102(q)), subject to an obligation to account for the net proceeds of such 

actions after having deducted the Clearing House's reasonable and properly 

incurred expenses and costs in doing so in accordance with Part 1.

(viii) Without prejudice to Rule 905(b)(xvii) where a Pledged Collateral Account is 

held by a Clearing Member who is a Defaulter or is capable of being declared a 

Defaulter, the Clearing House shall be entitled, in addition to its other rights and 

remedies under Part 9 but subject to Rule 502(i), to exercise the rights of a 

secured party, collateral taker, market chargee and collateral security chargee 

under Applicable Law with respect to any Pledged Collateral and pursuant to the 

Pledged Collateral Addendum to appropriate, exercise rights of use and 

appropriation over and liquidate such Pledged Collateral, and, once such exercise 

of rights of use, appropriation or liquidation results in a realised value for such 

Pledged Collateral that is to be taken account of in a relevant net sum calculated 

under Rule 906, shall thereupon apply the proceeds thereof to the applicable 

obligations of such Clearing Member in respect of the relevant Customer Account 

or Proprietary Account and in determining the net sum under Rule 906 if the 

Clearing Member has then been declared a Defaulter. For the avoidance of doubt, 

rights of use or appropriation shall not be exercised in respect of a Pledged 

Collateral Account of a Clearing Member or Sponsored Principal that is not a 

Defaulter or capable of being declared a Defaulter.

(ix) When either: 

(A) following the exercise of a right of use in respect of Pledged Collateral of 

a Defaulter, the Clearing House exercises its right to set-off the value of 

the relevant Pledged Collateral in discharge of the obligations of the 

Defaulter due to the Clearing House; or

(B) appropriating Pledged Collateral, 
NYDOCS01/1643340.2 177

the Clearing House shall value such Pledged Collateral in the case of (A) at the 

time that the obligation to redeliver equivalent Pledged Collateral would arise but 

for such set-off or, in the case of (B), at the time of such appropriation. For this 

purpose, the value of such Pledged Collateral shall be the market price of the 

relevant Permitted Cover determined by the Clearing House by reference to a 

published pricing information source or by such other process as the Clearing 

House may at its discretion select. The Clearing House shall be entitled (without 

the prior or subsequent consent or agreement of the Defaulter or any court order) 

to sell, transfer, value or create any interest in any Permitted Cover, Margin, 

Guaranty Fund Contributions or other assets that are credited to the Defaulter's 

Proprietary Margin Account, any of its Customer Margin Accounts (subject to 

Rule 502(i)) or any of its accounts used for Guaranty Fund Contributions or any 

other asset of the Defaulter that is otherwise in the Clearing House's possession 

(subject always to Rule 102(q)), subject to an obligation to account for the net 

proceeds of such actions after having deducted the Clearing House's reasonable 

and properly incurred expenses and costs in doing so in accordance with this 

Part 9.

(x) The Clearing House shall be entitled to take such actions, take or make delivery 

and give such notices on behalf of the Defaulter in respect of a Contract under 

delivery as it determines; or to make or receive a tender in the Defaulter's name.

(xi) The Clearing House shall be entitled to determine an amount due from the 

Defaulter in substitution for delivery obligations.

(xii) The Clearing House shall be entitled to take any other action with respect to the 

Event of Default or the Defaulter as it deems to be necessary or prudent.

(xiii) The Clearing House's powers to convert currency under Rule 107 may be applied.

(xiv) The Clearing House shall be entitled to Transfer Contracts to which a Defaulter is 

party to one or more other Transferee Clearing Members at a price agreed 

between the Clearing House and the Transferee Clearing Member pursuant to this 

Part 9.

(xv) Subject to Rule 904(g), the Clearing House shall be entitled to effect the Transfer 

of the Defaulter's rights, title and interest to Contracts, any related Margin or other 

assets of the Defaulter and any related Customer-CM Transaction(s) or other 

transactions between a Customer and a Defaulter to a Transferee Clearing 

Member, without any further action being required on the part of any Person. 

This may be done through the Clearing House's exercise of rights pursuant to its 

power of attorney in the relevant Clearing Membership Agreement, Sponsored 

Principal Clearing Agreement or Sponsor Agreement with the Defaulter or on the 

basis of this default rule, as opposed to pursuant to the process and legal 

entitlements described further in Rule 904.
NYDOCS01/1643340.2 178

(xvi) The Clearing House may take action so as to terminate or replace Customer-CM 

Transactions or other transactions between a Customer and a Defaulter which are 

consequential on it taking actions in relation to Contracts in accordance with 

Rule 904.

(xvii) The Clearing House shall be entitled to take any other action with respect to the 

Defaulter, the Contracts to which the Defaulter is party or any Margin, Guaranty 

Fund Contribution or Surplus Collateral provided by the Defaulter as the Clearing 

House at its discretion considers to be necessary or prudent in the circumstances.

(xviii) The Clearing House may make appropriate entries on the records of the Clearing 

House and submit appropriate data to Deriv/SERV, Repositories and Delivery 

Facilities to give effect to any action taken in accordance with this Part 9.

(xix) Without prejudice to the generality of the foregoing, the Clearing House may, at 

the expense of a Defaulter, enter into replacement or offsetting Contracts with 

non-defaulting Clearing Members in respect of Participating Exchange 

Transactions or Linked Outgoing Contracts of a Defaulter to facilitate the transfer 

under Rule 410 of Participating Exchange Transactions or Linked Outgoing 

Contracts to which a non-defaulting Clearing Member is or was a party. The 

Clearing House may take such other actions and steps as are necessary in order to 

facilitate transfers of Participating Exchange Transactions or Linked Outgoing 

Contracts to which non-defaulting Clearing Members are party, including with 

Participating Exchanges and Cleared Exchanges.

(c) To the extent that the Clearing House does not terminate, transfer or close out all of the 

CDS Contracts of a Defaulter, the Clearing House may at its discretion require the entry 

into of new CDS Contracts between the Clearing House and CDS Clearing Members that 

are not Defaulters (which CDS Contracts replace any remaining CDS Contracts of the 

Defaulter) at a price determined by the Clearing House, taking into account the minimum 

target price determined in accordance with the CDS Procedures, on a pro rata basis (or as 

near as practicable, with odd lots determined by the Clearing House and assigned 

randomly) in proportion to the size of each CDS Clearing Member's required CDS 

Guaranty Fund Contribution relative to the aggregate of all required CDS Guaranty Fund 

Contributions. In any such circumstances, the provisions of Part 4 of the Rules 

(including without limitation Rule 401(a)(x)) shall apply to the formation of any new 

CDS Contracts resulting from such action, as part of the Clearing House's default rules. 

To the extent that any new CDS Contracts arise pursuant to the procedure set out in this 

Rule 905(c), an equal notional amount of CDS Contracts of each relevant Set to which 

the Defaulter was party shall be treated as having been closed out and terminated at the 

same price.

(d) If, as a result of the rules of an Exchange which limit fluctuations in price or other 

circumstances, it is not possible to close out or terminate all Contracts to which the 

Defaulter is party pursuant to Rule 905(b) or Rule 905(c), the Clearing House may close 

out or terminate such Contracts by taking opposite positions for F&O Contracts in 

Contracts in the current expiration period, for CDS Contracts in Contracts of a different 
NYDOCS01/1643340.2 179

series or version number or scheduled termination date or, for FX Contracts in Contracts 

of a different FX Settlement Date, and terminating the resultant terminated positions.

(e) All terminations and closing out of Contracts pursuant to this Rule 905 shall be for the 

account and cost of the Defaulter.

(f) Without prejudice to the generality of the indemnities in Rule 111 and 301, but without 

duplication of any other obligation under these Rules, the Defaulter, acting for its own 

account as principal, shall indemnify, hold harmless and be liable to the Clearing House 

in respect of all the losses, unpaid fees, liabilities, damages, injuries, taxes, costs, claims, 

shortfalls and expenses (including, without limitation, legal, accountancy or other 

professional services expenses and disbursements, the costs of close-out, termination or 

Transfer of Contracts or Margin, amounts payable by the Clearing House to Approved 

Financial Institutions or custodians and any amount payable by the Clearing House to any 

Person in respect of tax in connection with the Defaulter or its Contracts, Margin, 

obligations or the Event of Default), in the case of any such item whether relating to a 

Proprietary Account or Customer Account of the Defaulter or an Individually Segregated 

Sponsored Account for which it is the Sponsor, incurred or suffered by any of the 

Clearing House, any Market or any of their officers or employees or those of their 

Affiliates arising out of the Defaulter's conduct (whether such conduct took place prior to 

or after declaration of the Event of Default) or in connection with the Event of Default. 

Rule 111(b) shall apply in respect of this Rule 905(f) in the same way as it applies to 

Rule 111(a).

Rule 906 Net Sums Payable

(a) Following discharge of a Defaulter's rights, obligations and liabilities under Contracts 

pursuant to this Part 9, the Clearing House shall carry out the following calculation 

separately in respect of each different Proprietary Account and each different Customer 

Account of the Defaulter. Upon termination of all Contracts following an Event of 

Default, the only obligation of the Clearing House or Defaulter, except for any obligation 

which had already fallen due for performance but at the time had not been performed 

(which obligations would be taken into account in the calculation of the net sum, save to 

the extent that any party has become subject to an irrevocable Transfer Order under the 

Settlement Finality Regulations) shall be limited to calculation and payment of the net 

sum and such other obligations as are expressed to apply in Rule 209 or this Part 9. 

Following an Event of Default, there shall be no requirement for future payments or 

deliveries to be made in respect of any terminated Contracts (including in each case no 

requirement to pay or deliver any related Margin that has not at the time fallen due for 

payment, except as part of the net sum). The calculation set out below follows the 

requirements relating to default rules of recognised clearing houses set out in the 

Financial Services and Markets Act 2000 (Recognition Requirements for Investment 

Exchanges and Clearing Houses) Regulations 2001 (SI 2001/995), the requirements for a 

'Default waterfall' in EMIR, and other requirements of Applicable Law. The 

methodology involves aggregating or setting off various amounts (as applicable) so as to 

produce separate net sums for each different Proprietary Account and each different 
NYDOCS01/1643340.2 180

Customer Account of the Defaulter (each such net sum, N) in each case defined by the 

formula:

N = L - A - D - C - M - GFC - SC - OA + OL

where such letters have the meanings set out below in this Rule 906(a):

L = the aggregate amount, expressed as a positive number, of all sums payable by the 

Defaulter in respect of Contracts recorded in the relevant Account (which are not 

voidable and voided by the Clearing House pursuant to Part 4) taking into account any of

the following actions under Rule 903, 904 or 905:

(i) the effecting by the Clearing House of corresponding contracts (as defined in 

section 25(3) of the Financial Services and Markets Act 2000 (Recognition 

Requirements for Investment Exchanges and Clearing Houses) Regulations 2001, 

SI 2001/995) in relation to Contracts to which the Defaulter is party;

(ii) the Transfer of any of the Defaulter's Contracts to a Transferee Clearing Member 

(not being the Defaulter) or acceptance or entry into by a Clearing Member of any 

of the Defaulter's Contracts or contracts similar to any of the Defaulter's 

Contracts; and

(iii) the exercise by the Clearing House of any Option,

plus all amounts that were payable but remain unpaid by the Defaulter under the terms of 

Contracts, plus any costs and expenses of the Clearing House in any way relating to any 

Contract to which the Defaulter was party, including, without limitation, legal, 

accountancy or other professional services expenses and disbursements, the costs of 

close-out, termination or Transfer of Contracts and any amount payable by the Clearing 

House to any Person in respect of tax in connection with the Defaulter or its Contracts, 

Margin, obligations or the Event of Default; but excluding, in respect of a Contract where 

the Defaulter acts as agent (if any), any liabilities attributable to the Defaulter arising out 

of the relationship of principal and agent; and the Clearing House may assess any one or 

more elements of such amount L in its discretion, provided that any costs, expenses, taxes 

or other amounts falling within the scope of the indemnity in Rule 905(f) (not being 

amounts payable in respect of Contracts falling under L(i) to (iii) above) shall be 

allocated to the Proprietary Account regardless of the Contracts or Account to which they 

relate.

A = the aggregate amount, expressed as a positive number, of all sums payable to the 

Defaulter in respect of Contracts recorded in the relevant Account (which are not 

voidable and voided by the Clearing House pursuant to Part 4), taking into account any of 

the actions referred to under L (i), (ii) or (iii) above, plus all amounts that were payable 

but remain unpaid by the Clearing House under the terms of Contracts, excluding, in 

respect of a Contract where the Defaulter acts as agent (if any), any rights attributable to 

the Defaulter arising out of the relationship of principal and agent and further excluding 

any amount included under D, C, M, GFC or SC; and the Clearing House may assess any 

one or more elements of such amount A in its discretion.
NYDOCS01/1643340.2 181

Note on calculation of the amounts L and A: For the purposes of calculating 

amounts L and A, the amount payable by or to the Defaulter in respect of any 

Contract or Open Contract Position is the difference between:

(x) the price of the Contract or Open Contract Position recorded in the Clearing 

House's books for the later of: (A) the last date on which a payment in respect of 

Variation Margin, FX Mark-to-Market Margin or Mark-to-Market Margin was 

successfully and fully made by the Clearing Member to or to the account of the 

Clearing House; or (B) the last date on which a return of amounts following a 

Variation Margin, FX Mark-to-Market Margin or Mark-to-Market Margin call 

was successfully and fully made by the Clearing House to the Clearing Member 

or to the account of the Clearing Member; and

(y) the price at which the Contract or Open Contract Position was Transferred, 

terminated or closed out pursuant to Rules 903 to 905.

D = if the Clearing House so determines at its discretion, the aggregate amount of any 

sums in respect of a Deliverable delivered, physically settled, to be delivered or to be 

physically settled under a Contract with the Defaulter or in respect of which cash 

settlement is to be made as calculated by the Clearing House at its discretion relating to 

the relevant Account (if payable to the Clearing Member being a positive number and 

hence set off in the calculation under this Rule 906(a) against any amount L-A if that 

amount is also a positive number or if payable to the Clearing House being a negative 

number and aggregated in the calculation under this Rule 906(a) with any amount L-A if 

that amount is a positive number), in any case excluding any amount included under C, 

M, GFC or SC.

C = if relevant, any sum owed by or to the Clearing House to or from a recognised 

investment exchange or another recognised clearing house of which the Defaulter is or 

was a member, under an indemnity given or reimbursement or similar obligation in 

respect of a margin set off agreement in which the Defaulter chose to participate (if 

payable to the Clearing Member being a positive number and set off in the calculation 

under this Rule 906(a) against any amount L-A-D if that amount is also a positive number 

or if payable to the Clearing House being a negative number and aggregated in the 

calculation under this Rule 906(a) with any amount L-A-D if that amount is a positive 

number).

M = means the following, expressed as a positive number:

(i) in relation to a net sum calculation for the Proprietary Account of the Defaulter, 

the value of any property provided by or on behalf of the Defaulter in respect of 

its Proprietary Account as margin under Rule 502(g), Original Margin, FX 

Original Margin, Initial Margin, buyer's security or seller's security (without any 

double counting) or in satisfaction of such Margin requirements and recorded in 

the Proprietary Margin Account of the Defaulter; 
NYDOCS01/1643340.2 182

(ii) in relation to a net sum calculation for any Customer Account of the Defaulter 

(other than a Swap Customer Account of an FCM/BD Clearing Member), the 

value of any property provided by or on behalf of the Defaulter as margin under 

Rule 502(g), Original Margin, FX Original Margin, Initial Margin, buyer's 

security or seller's security (without any double counting) in respect of such 

Customer Account or in satisfaction of such Margin requirements and that is 

recorded in the related Customer Margin Account of the Defaulter, excluding any 

Margin that would otherwise fall under amount M but that is transferred to a 

Transferee Clearing Member pursuant to this Part 9; or

(iii) in relation to a net sum calculation for a Swap Customer Account of an FCM/BD

Clearing Member, the value of any property provided by or on behalf of the 

Defaulter in respect of such Swap Customer Account as margin under 

Rule 502(g) (other than as Mark-to-Market Margin), Original Margin, Initial 

Margin, buyer's security or seller's security (without any double counting) 

(collectively, "FCM Swap Customer IM") or in satisfaction of such Margin 

requirements and that is recorded in the related Customer Margin Account of the 

Defaulter, excluding any Margin that would otherwise fall under amount M but 

that is transferred to a Transferee Clearing Member pursuant to this Part 9 and 

further excluding, for the avoidance of doubt, any Surplus Collateral, provided 

that such assets allocated to a particular Customer Swap Portfolio and proceeds 

thereof shall only be included in M to the extent of obligations to the Clearing 

House in respect of Open Contract Positions in such Customer Swap Portfolio in 

accordance with CFTC Rule 22.15, and provided, further, that where an amount 

payable by the Defaulter as determined in L(i)-(iii) includes a net obligation (after 

taking into account Variation Margin or Mark-to-Market Margin in accordance 

with the 'Note on calculation of the amounts in L and A') in respect of Open 

Contract Positions of the Defaulter in relation to multiple Customer Swap 

Portfolios, M shall include the FCM Swap Customer IM allocated to each 

Customer Swap Portfolio to which a corresponding payment or margin obligation 

to the Clearing House is referable up to the amount of such payment or obligation, 

excluding Surplus Collateral but including in any such case under M(i), (ii) or (iii) 

any such Margin transferred to the Clearing House by the Defaulter relating to the 

relevant Account and any amounts received by the Clearing House pursuant to a 

letter of credit or Controller Guarantee entered into in favour of the Clearing 

House in satisfaction of such applicable Margin requirements on the relevant 

Account that would, if the Margin was funded, fall under M.

GFC = the value, expressed as a positive number, of any property provided by or on 

behalf of the Defaulter as Guaranty Fund Contributions, which may be applied in 

connection with the net sum for any Customer Account or the Proprietary Account of the 

Defaulter at the discretion of the Clearing House regardless of the basis under which any 

Guaranty Fund Contribution was calculated under Rule 1101(e), provided that the total 

applied to the Customer Accounts and Proprietary Account of a Defaulter under GFC

shall not exceed the total Guaranty Fund Contributions of the Defaulter.
NYDOCS01/1643340.2 183

SC = the value, expressed as a positive number, of any property provided by or on behalf 

of the Defaulter in respect of the relevant Account that constitutes Surplus Collateral, 

including, where applicable, any such amounts received by the Clearing House pursuant 

to a letter of credit or Controller Guarantee in favour of the Clearing House not falling 

under M, but excluding any Pledged Collateral returned to a Clearing Member or any of 

its Customers pursuant to Rule 502(i) or amounts not needed that are returned to the letter 

of credit issuer.

OA = the aggregate of any amounts, expressed as a positive number, not falling under A, 

D, C, M, GFC or SC standing to the credit of the Defaulter or payable to the Defaulter or 

any right or claim of the Defaulter against the Clearing House relating to the relevant 

Account, in any case whether pursuant to these Rules, any Contract or otherwise, 

including without limitation:

(i) any available assets that would be recorded in the Proprietary Account but for 

Rule 906(c); and

(ii) any amount due from the Clearing House to the Defaulter following the exercise 

of rights of use and/or appropriation in respect of Pledged Collateral pursuant to 

Rule 905(b) and the relevant Pledged Collateral Addendum, 

but excluding in any case: (A) any Pledged Collateral returned to a Clearing Member or 

any of its Customers pursuant to Rule 502(i); and (B) any Surplus Collateral.

OL = the aggregate of any other amounts, expressed as a positive number, not falling 

under L payable by the Defaulter to the Clearing House or any right or claim of the 

Clearing House against the Defaulter relating to the relevant Account, in any case 

whether pursuant to these Rules, any Contract or otherwise (including without limitation 

any fines payable pursuant to Part 10 and any other amounts payable in respect of any 

breach by the Defaulter of these Rules in either case not falling under L), in any case at 

the discretion of the Clearing House, including without limitation the Defaulter's 

obligation to pay any amount in respect of a transfer in relation to all or any of the 

Pledged Collateral pursuant to Rule 904(d)(v), provided that any amounts falling within 

the scope of the indemnity in Rule 905(f) but not falling under L shall be allocated to the 

Proprietary Account regardless of the Contracts or Account to which they relate.

All such amounts specified above must be aggregated, set off and applied in the order set 

out in the calculation above and in such order as is further required, restricted or limited 

by Rules 102(q), 906(b) and 908 and provided further that any amount is only included in 

respect of the relevant net sum to the extent allowed pursuant to Rule 906(b).

(b) Where the Defaulter has one or more Customer Accounts or was Sponsor in respect of 

one or more Individually Segregated Sponsored Accounts, the process set out in 

Rule 906(a) shall be completed separately, and separate net sums shall be determined, in 

respect of:
NYDOCS01/1643340.2 184

(i) each of the Defaulter's Non-DCM/Swap Customer Accounts, including, in respect 

of each such Account, the Contracts, rights, obligations and liabilities relating to 

each such Account;

(ii) each of the Defaulter's Swap Customer Accounts, including, in respect of each 

such Account, the Contracts, rights, obligations and liabilities relating to each 

such Account;

(iii) each of the Defaulter's DCM Customer Accounts, including, in respect of each 

such Account, the Contracts, rights, obligations and liabilities relating to each 

such Account;

(iv) each of the Defaulter's SBS Customer Accounts, including, in respect of each 

such Account, the Contracts, rights, obligations and liabilities relating to each 

such Account;

(v) each of the Defaulter's General Customer Accounts, including, in respect of each 

such Account, the Contracts, rights, obligations and liabilities relating to each 

such Account in respect of F&O Contracts;

(vi) each of the Defaulter's Segregated Customer Omnibus Accounts For F&O, 

including, in respect of each such Account, the Contracts, rights, obligations and 

liabilities relating to each such Account;

(vii) each of the Defaulter's Segregated TTFCA Customer Omnibus Accounts For 

F&O, including, in respect of each such Account, the Contracts, rights, 

obligations and liabilities relating to each such Account;

(viii) each of the Defaulter's Segregated Customer Omnibus Accounts For CDS,

including, in respect of each such Account, the Contracts, rights, obligations and 

liabilities relating to each such Account;

(ix) each of the Defaulter's Segregated TTFCA Customer Omnibus Accounts For 

CDS, including, in respect of each such Account, the Contracts, rights, obligations 

and liabilities relating to each such Account;

(x) each of the Defaulter's Segregated Customer Omnibus Account For FX, including

in respect of each such Account, the Contracts, rights, obligations and liabilities 

relating to each such Account;

(xi) each of the Defaulter's Segregated TTFCA Customer Omnibus Accounts For FX, 

including, in respect of each such Account, the Contracts, rights, obligations and 

liabilities relating to each such Account;

(xii) each of the Defaulter's Margin-flow Co-mingled Accounts, including, in respect 

of each such Account, the Contracts, rights, obligations and liabilities relating to 

each such Account (if applicable); and
NYDOCS01/1643340.2 185

(xiii) each Individually Segregated Sponsored Account of the Defaulter or for which the 

Defaulter acted as Sponsor, including, and in respect of each such Account, the 

Contracts, rights, obligations and liabilities relating to each such Account (if 

applicable);

(xiv) each of the Defaulter's Proprietary Accounts, including, in respect of each such 

Account, the Contracts, rights, obligations and liabilities relating to each such 

Account not falling under Rule 906(b)(i) to (xiii).

The Defaulter's Guaranty Fund Contributions and amounts received by the Clearing 

House under a Controller Guarantee or standby letter of credit of a Defaulter may be used 

for the purpose of calculating any net sum on any Account relating to that Defaulter 

(provided that any such amounts are not double counted), in accordance with Rule 906(a)

and subject to the restrictions in Rule 908, Rule 102(q) and this Rule 906(b) as 

determined by the Clearing House. The aggregate sums finally payable shall be 

separately certified under Rule 906(e). Where and to the extent that the Clearing House 

determines to apply Guaranty Fund Contributions or amounts received by the Clearing 

House under a Controller Guarantee or standby letter of credit to any Customer Account, 

such amounts must first be applied to reduce any losses on Customer Accounts, on a pro 

rata basis among Customer Accounts which would otherwise have a net sum 

representing a shortfall or loss.

(c) The Clearing House may aggregate, set off or apply any Margin, Surplus Collateral or 

other surplus assets available to it in relation to a Defaulter's Proprietary Account to meet 

a shortfall on any one or more of that Defaulter's Customer Accounts or Individually 

Segregated Sponsored Accounts for which the Defaulter acted as Sponsor (and, if it does 

so, shall include any such amounts within the net sum to be calculated in relation to such 

Customer Account), provided that if any amounts are so aggregated, set off or applied, 

the amount A, D, C, M, SC or OA (as applicable) and consequently the net sum payable 

by the Clearing House in relation to the Defaulter's Proprietary Account shall be reduced 

by the same amount as is so included within the net sum for the relevant Customer 

Account. The Clearing House may not aggregate, set off or apply any Margin, Surplus 

Collateral or other surplus available to it in relation to one of the Defaulter's Customer 

Accounts (or any Individually Segregated Sponsored Account of the Defaulter or for 

which the Defaulter acted as Sponsor) to meet a shortfall on another of that Defaulter's 

Customer Accounts (or an Individually Segregated Sponsored Account of the Defaulter 

or for which the Defaulter acted as Sponsor). The Clearing House may not aggregate, set 

off or apply any Margin, Surplus Collateral or other surplus available to it in relation to 

one of the Defaulter's Customer Accounts or any Individually Segregated Sponsored 

Account to meet a shortfall on the Defaulter's Proprietary Account. Where and to the 

extent that the Clearing House determines to apply Proprietary Account assets of a 

Defaulter to any Customer Account, such amounts must first be applied to reduce any 

losses on Customer Accounts, on a pro rata basis among Customer Accounts which 

would otherwise have a net sum representing a shortfall or loss.
NYDOCS01/1643340.2 186

(d) Where N is a positive number, the net sum equal to N shall be payable by the Defaulter to 

the Clearing House. Where N is a negative number, the net sum equal to the absolute 

value of N shall be payable by the Clearing House:

(i) in the case of an FCM/BD Clearing Member, to the Defaulter; or

(ii) in the case of a Non-FCM/BD Clearing Member, to the Defaulter or as required 

pursuant to article 48(7) of EMIR, or otherwise at the Clearing House's election 

and discretion (as permitted by Applicable Law):

(A) in respect of a Customer Account, directly to a Customer; 

(B) in respect of a Customer Account used for indirect clearing under EMIR, 

directly to an indirect client of a Customer; or

(C) in respect of an Individually Segregated Sponsored Account of a 

Sponsored Principal, to the Sponsored Principal or Sponsor as permitted 

pursuant to Rule 904(r)(vi), 

in the case of (A) or (B) above only if the Clearing House is aware of the identity 

of the Customer or indirect client in question, and in all cases where the Clearing 

House is aware of an appropriate account to receive transfer of such net sum.

If the Clearing House makes payment in respect of amounts which would have otherwise 

been included any net sum to or to the account of a Person other than the Defaulter in 

accordance with these Rules or any Pledged Collateral Addendum, the Defaulter's claim 

against the Clearing House shall be accordingly reduced by the amount paid to such 

Person and the amount of any net sum N payable to the Defaulter shall be accordingly 

reduced. Where N is equal to zero, no amount shall be payable as between the Clearing 

House and the Defaulter pursuant to this Rule 906. Where there is more than one 

separately certified amount N certified under Rule 906(e) as a result of Rule 906(b), each 

amount so certified shall be treated as a separate obligation which cannot be netted off 

against another certified amount N in respect of a different account of the Defaulter.

(e) Each amount N shall be certified by the Clearing House promptly upon its determination. 

Such determination may be delayed or withheld until such time as all relevant sums and 

components have been evaluated, all Transfers have been completed and the value or sale 

proceeds of any non-cash Margin, Surplus Collateral, Guaranty Fund Contributions or 

other assets are determined, received or available. A certificate of the Clearing House 

made pursuant to this Rule 906(e) shall be conclusive as to the amount required to be 

paid by or to any Defaulter or other Person in discharge of rights and liabilities in respect 

of the Contracts, property and Account to which such certificate relates.

(f) If a Disclosed Principal Member and the Clearing Member that appointed the Disclosed 

Principal Member are both Defaulters, the Clearing House shall be entitled to set-off any 

amount or asset to the credit of either Defaulter against any liability or obligation of the 

other Defaulter for the purposes of calculating any net sum under this Rule 906 and may 

exercise any of its powers under this Part 9 accordingly.
NYDOCS01/1643340.2 187

(g) The Clearing House and each Clearing Member or Sponsored Principal with a Pledged 

Collateral Account acknowledge and agree that Pledged Collateral: (i) is provided 

pursuant to a charge over property provided as margin in respect of market contracts 

entered into by the Clearing House; and (ii) is provided to secure the obligation to pay the 

Clearing House any sum due to the Clearing House in respect of unsettled market 

contracts to which the Clearing Member or Sponsored Principal is party as set forth in 

these Rules, in respect of the account that is or relates to a Pledged Collateral Account. 

Accordingly, the Clearing House and each such Clearing Member intend and agree that 

all Pledged Collateral provided to the Clearing House is provided pursuant to a "market 

charge" for purposes of the Companies Act 1989.

(h) Any amounts received from a letter of credit issuer in respect of Margin, Surplus 

Collateral or Guaranty Fund Contributions may at the discretion of the Clearing House be 

returned to the letter of credit issuer and not included in any net sum calculation relating 

to an Account of a Defaulter, to the extent that such amounts are not needed to cover a 

loss or shortfall, to the extent that the same is permitted pursuant to the terms of the letter 

of credit in question.

Rule 907 Administrative matters concerning an Event of Default

(a) The Clearing House may co-operate, by the sharing of information and otherwise, with 

any Governmental Authority, Clearing Organisation, Exchange or Insolvency Practitioner 

having responsibility for any matter arising out of, or connected with, an Event of Default 

or the default of a recognised investment exchange or another recognised clearing house.

(b) The Clearing House will report to the Defaulter or any relevant Insolvency Practitioner, 

on steps taken pursuant to this Part 9.

(c) For the avoidance doubt, nothing in these Rules shall oblige the Clearing House to take 

any step to recover any asset or amount in the possession of a Defaulter or one of its 

Customers in connection with an Event of Default.

(d) Without prejudice to the Clearing House relying on any other information provided to it 

by a Clearing Member or any other Person, the Clearing House shall be entitled to rely on 

the most recent information provided to it in relation to Default Portability Preferences 

and Non-Transfer Positions and Margin provided to the Clearing House by a Defaulter 

prior to declaration of an Event of Default, notwithstanding any notice or purported 

notice to the contrary from a Defaulter, its Insolvency Practitioner or any other Person 

received by the Clearing House after declaration of an Event of Default. The Clearing 

House shall have no obligation to enquire of any Customer, Sponsored Principal or other 

Person as to any Default Portability Preference or Non-Transfer Positions. The rights of 

the Clearing House to deal with Margin and other Permitted Cover under the default rules 

shall not be restricted as a consequence of a Defaulter having either entered into any 

indebtedness with a Customer or having provided different forms of collateral to the 

Clearing House from that which it had received from its Customer, in either case in order 

to facilitate the provision of Permitted Cover to the Clearing House.
NYDOCS01/1643340.2 188

(e) A Defaulter shall immediately disclose the names, addresses and contact details of each 

of its Customers or any Customer upon receiving notice to do so from the Clearing 

House.

(f) Rule 202(a)(xii) shall apply in respect of the Defaulter for the benefit of the Clearing 

House and any Transferee Clearing Member in respect of each Transfer of Contracts (and 

any related Customer-CM Transactions) and any related transfer of Margin or other 

assets taking place pursuant to this Part 9.

(g) The Clearing House (including any Insolvency Practitioner with powers over the 

Clearing House or other Representative) and all Clearing Members, Sponsored Principals 

and Customers and their Representatives (including any Insolvency Practitioner with 

powers over any Clearing Member, Sponsored Principal, Customer or other 

Representative) shall, to the extent permitted by Applicable Laws:

(i) refrain from taking any action or seeking any order of any Governmental 

Authority that would result in or facilitate any asset or liability being applied 

contrary to the requirements of this Part 9; and

(ii) take all reasonable steps possible including, without limitation, the application for 

and procurement of such orders from such Governmental Authorities as are 

necessary, to ensure that assets of the Clearing House are applied only pursuant to 

this Part 9.

(h) Notwithstanding any other provision of these Rules or the Finance Procedures concerning 

the use of Nominated Bank Accounts or Approved Financial Institutions, any amount 

payable to or from the Clearing House following the declaration of a net sum in 

accordance with this Part 9 may be paid to or from an account other than a Nominated 

Bank Account and/or to or from an account other than with an Approved Financial 

Institution that has previously been designated as such by the Clearing House, provided 

that:

(i) the account is an account of the Defaulter or an account operated by an 

Insolvency Practitioner on behalf of the Defaulter;

(ii) in the case of payments to the Defaulter, details of the account to be used and such 

other information relating to the account as is reasonably requested by the 

Clearing House are provided in writing to the Clearing House by the Defaulter or 

its Insolvency Practitioner; and

(iii) the bank of the account to which such payment is made shall be treated as if it 

were an Approved Financial Institution for purposes of any payments referred to 

in this Rule 907(h) and Part 12 without the need for any further action on the part 

of the Clearing House.

(i) If an Event of Default occurs affecting a CDS Clearing Member or Sponsored Principal 

with open CDS Contracts, the Clearing House shall convene the CDS Default 
NYDOCS01/1643340.2 189

Committee. The CDS Default Committee shall have the competences specified in the 

CDS Procedures.

(j) Without prejudice to the status of any other provision of the Rules that is potentially 

applicable following an Event of Default as a default rule for purposes of the Companies 

Act 1989:

(i) the provisions of the CDS Procedures relevant to a default shall apply if the 

Defaulter is or was a CDS Clearing Member and shall amount to default rules for 

the purposes of these Rules and Applicable Laws;

(ii) Part 12 and Rule 1604 contain additional default rules; and

(iii) where any defined term is used in a default rule or any general interpretative 

provision of these Rules is relevant to the interpretation of a default rule, the 

definition of that term or that interpretative provision is itself also a default rule.

(k) If an FX Clearing Member or Sponsored Principal with open FX Contracts is declared to 

be a Defaulter, the Clearing House shall convene the FX Default Committee. The FX 

Default Committee shall have the competences specified in the Procedures.

(l) The provisions of the FX Procedures relevant to a default shall apply if the Defaulter is or 

was an FX Clearing Member and shall amount to default rules for the purposes of the 

Rules and Applicable Laws.

(m) The Clearing House will, if so requested by a Clearing Member that is not a Defaulter, 

Transfer (to the extent this is not prohibited under any Applicable Laws) any Contracts, 

Margin or other Permitted Cover recorded in a Customer Account of that Clearing 

Member to a Proprietary Account of the same Clearing Member, in order to facilitate the 

management by the Clearing Member of a breach by a Customer of, or default of a 

Customer under, a Customer-Clearing Member Agreement. For the avoidance of doubt, 

this Rule 907(m) applies equally to a request by a Sponsor following an Event of Default 

(whether or not declared) in respect of a Sponsored Principal or a breach by a Sponsored 

Principal of, or a default of a Sponsored Principal under, a Customer-Clearing Member 

Agreement.

Rule 908 Application of Assets upon an Event of Default

(a) Notwithstanding any other provision of these Rules:

(i) if a Defaulter was only liable to make a Guaranty Fund Contribution relating to a 

single Membership Category, no Guaranty Fund Contributions, Assessment 

Contributions, or Clearing House Contributions relating to a different 

Membership Category shall be applied by the Clearing House to meet any 

obligations or liabilities of the Defaulter or any shortfall, loss or liability to the 

Clearing House arising from the Event of Default;
NYDOCS01/1643340.2 190

(ii) if a Defaulter was only liable to make Guaranty Fund Contributions relating to 

two Membership Categories, no Guaranty Fund Contributions, Assessment 

Contributions or Clearing House Contributions relating to a different Membership 

Category shall be applied by the Clearing House to meet any obligations or 

liabilities of the Defaulter or any shortfall, loss or liability to the Clearing House 

arising from the Event of Default;

(iii) any Guaranty Fund Contributions (including additional Guaranty Fund 

Contributions) invoiced to or transferred by Clearing Members that are not 

Defaulters or accrued in each case after the declaration of an Event of Default but 

prior to the completion of the relevant default proceedings for the Event of 

Default shall not be applied to meet any obligations or liabilities of the Defaulter 

or any shortfall, loss or liability to the Clearing House arising in connection with 

that prior Event of Default;

(iv) if a Defaulter was a CDS Clearing Member and had one or more other 

Membership Categories and any CDS Guaranty Fund Contribution of the 

Defaulter is applied other than as described in Rule 908(g)(ii)(B), no nondefaulting CDS Clearing Member shall be required to make any payment to 

replenish the CDS Guaranty Fund under Rule 1102(i) or (j) in respect of the 

resulting incremental shortfall to the CDS Guaranty Fund caused by such 

application of assets prior to the date which is the first day of the next following 

Guaranty Fund Period for the CDS Guaranty Fund (other than pursuant to Rule 

903(e), if the non-defaulting CDS Clearing Member becomes a Defaulter;

(v) without limitation to the generality of Rule 102(q), this Rule 908 is subject to 

Rule 102(q);

(vi) where the loss or shortfall relates to Energy Contracts: (A) the Clearing House 

F&O Initial (Energy) Contribution shall be applied and exhausted prior to 

applying the Clearing House F&O Initial (Financials & Softs) Contribution; (B) 

the F&O Guaranty Fund Contributions relating to Energy Contracts shall be 

applied and exhausted prior to applying the F&O Guaranty Fund Contributions 

relating to Financials & Softs Contracts; (C) the Clearing House F&O GF 

(Energy) Contribution shall be applied and exhausted prior to applying the 

Clearing House F&O GF (Financials & Softs) Contribution; and (D) F&O 

Assessment Contributions relating to Energy Contracts shall be applied and 

exhausted prior to applying F&O Assessment Contributions relating to Financials 

& Softs Contracts; 

(vii) where the loss or shortfall relates to Financials & Softs Contracts: (A) the 

Clearing House F&O Initial (Financials & Softs) Contribution shall be applied 

and exhausted prior to applying the Clearing House F&O Initial (Energy) 

Contribution; (B) the F&O Guaranty Fund Contributions relating to Financials & 

Softs Contracts shall be applied and exhausted prior to applying the F&O 

Guaranty Fund Contributions relating to Energy Contracts; (C) the Clearing 

House F&O GF (Financials & Softs) Contribution shall be applied and exhausted 
NYDOCS01/1643340.2 191

prior to applying the Clearing House F&O GF (Energy) Contribution; and (D) 

F&O Assessment Contributions relating to Financials & Softs Contracts shall be 

applied and exhausted prior to applying F&O Assessment Contributions relating 

to Energy Contracts;

(viii) in determining whether a loss or shortfall relates to Energy Contracts or to 

Financials & Softs Contracts for the purposes of Rule 908(a)(vi) or (vii), the 

principles set out in Rule 908(e) for the attribution of liabilities to particular 

Contract Categories shall be applied as if Energy Contracts and Financials & 

Softs Contracts were two separate Contract Categories, mutatis mutandis; and

(ix) in relation to an Event of Default declared in respect of a Sponsored Principal, the 

Clearing House will not apply any Guaranty Fund Contributions, Assessment 

Contributions or other assets of Clearing Members other than the Sponsor to meet 

any loss or shortfall, unless the Sponsor has itself also been declared subject to an 

Event of Default.

(b) In the case of a Defaulter that was an F&O Clearing Member or a Sponsored Principal 

that was authorised to clear F&O (but neither a CDS Clearing Member nor an FX 

Clearing Member, nor authorised to clear CDS or FX), the Clearing House shall be 

entitled to apply assets to meet the obligations and liabilities of the Defaulter and any 

shortfall, loss or liability to the Clearing House upon or following any Event of Default of 

that Defaulter (including in connection with any net sum calculated under Rule 906), in 

the following order of recourse:

(i) first, any amounts falling under N in Rule 906(a) in the order and in respect of the 

Accounts specified in Rule 906(a) (provided that the Clearing House shall not be 

required to assert or pursue any such claim or bring any such action as a 

precondition to applying assets referred to in Rule 908(b)(ii) to (v) but shall be 

required to account for any subsequent proceeds not included in the amount 

determined, less the costs of realising any such claim or action or obtaining such 

amount or asset);

(ii) second, the Clearing House F&O Initial Contribution;

(iii) third:

(A) F&O Guaranty Fund Contributions of Clearing Members other than the 

Defaulter in question (including, where relevant, any surplus F&O

Guaranty Fund Contributions of other Defaulters, if two or more Default 

proceedings take place concurrently and any such surplus is available); 

and

(B) the Clearing House F&O GF Contribution,

on a basis pro rata (subject to Rule 908(i)) to the sum of the total of all F&O

Guaranty Fund Contributions (excluding F&O Guaranty Fund Contributions of 

the Defaulter and F&O Guaranty Fund Contributions of other Defaulters that have 
NYDOCS01/1643340.2 192

been or are to be applied in connection with separate Default proceedings) and the 

Clearing House F&O GF Contribution at the time of the Event of Default;

(iv) fourth, subject to Rule 908(d), any claims under default insurance policies 

(including the proceeds of any claim) of which the Clearing House is the 

beneficiary that are available to the Clearing House as a result of the Event of 

Default; and

(v) fifth, F&O Assessment Contributions received by the Clearing House pursuant to 

Rule 909.

(c) In the case of a Defaulter that was a CDS Clearing Member or a Sponsored Principal that 

was authorised to clear CDS (but neither an F&O Clearing Member nor an FX Clearing 

Member nor authorised to clear F&O or FX), the Clearing House shall be entitled to 

apply assets to meet the obligations and liabilities of the Defaulter and any shortfall, loss 

or liability to the Clearing House upon or following any Event of Default of that 

Defaulter (including in connection with any net sum calculated under Rule 906), in the 

following order of recourse:

(i) first, any amounts falling under N in Rule 906(a) in the order and in respect of the 

Accounts specified in Rule 906(a) (provided that the Clearing House shall not be 

required to assert or pursue any such claim or bring any such action as a 

precondition to applying assets referred to in Rule 908(c)(ii) to (iv) but shall be 

required to account for any subsequent proceeds not included in the amount 

determined, less the costs of realising any such claim or action or obtaining such 

amount or asset);

(ii) second, the Clearing House CDS Initial Contribution;

(iii) third:

(A) CDS Guaranty Fund Contributions of Clearing Members other than the 

Defaulter in question (including, where relevant, any surplus CDS 

Guaranty Fund Contributions of other Defaulters, if two or more Default 

proceedings take place concurrently and any such surplus is available); 

and

(B) the Clearing House CDS GF Contribution,

on a basis pro rata to the sum of the total of all CDS Guaranty Fund 

Contributions (excluding CDS Guaranty Fund Contributions of the Defaulter and 

CDS Guaranty Fund Contributions of other Defaulters that have been or are to be 

applied in connection with separate Default proceedings) and the Clearing House 

CDS GF Contribution at the time of the Event of Default; and

(iv) fourth, CDS Assessment Contributions received by the Clearing House pursuant 

to Rule 910.
NYDOCS01/1643340.2 193

(d) In the case of a Defaulter that was an FX Clearing Member or a Sponsored Principal that 

was authorised to clear FX (but neither an F&O Clearing Member nor a CDS Clearing 

Member nor authorised to clear F&O or CDS), the Clearing House shall be entitled to 

apply assets to meet the obligations and liabilities of the Defaulter and any shortfall, loss 

or liability to the Clearing House upon or following any Event of Default of that 

Defaulter (including in connection with any net sum calculated under Rule 906), in the 

following order of recourse:

(i) first, any amounts falling under N in Rule 906(a), in the order and in respect of the 

Accounts specified in Rule 906(a) (provided that the Clearing House shall not be 

required to assert or pursue any such claim or bring any such action as a 

precondition to applying assets referred to in paragraphs Rule 908(d)(ii) to (iv)

below but shall be required to account for any subsequent proceeds not included 

in the amount determined, less the costs of realising any such claim or action or 

obtaining such amount or asset);

(ii) second, the Clearing House FX Initial Contribution;

(iii) third: 

(A) FX Guaranty Fund Contributions of Clearing Members other than the 

Defaulter in question (including, where relevant, any surplus FX Guaranty 

Fund Contributions of other Defaulters, if two or more Default 

proceedings take place concurrently and any such surplus is available); 

and

(B) the Clearing House FX GF Contribution,

on a basis pro rata to the sum of the total of all FX Guaranty Fund Contributions 

(excluding FX Guaranty Fund Contributions of the Defaulter and FX Guaranty 

Fund Contributions of other Defaulters that have been or are to be applied in 

connection with separate Default proceedings) and the Clearing House FX GF 

Contribution at the time of the Event of Default; and

(iv) fourth, FX Assessment Contributions received by the Clearing House pursuant to 

Rule 911.

(e) In the case of a Defaulter which held multiple Membership Categories, separate amounts 

shall be calculated in accordance with Rule 906(a) to (c) as if they were "net sums", 

mutatis mutandis in respect of assets and liabilities relating to the Clearing of F&O

Contracts ("F&O Default Amount"), the Clearing of CDS Contracts ("CDS Default 

Amount") and the Clearing of FX Contracts ("FX Default Amount"), as follows:

(i) if an Account in respect of which a positive net sum was produced was used 

solely for the Clearing of F&O Contracts, then the net sum declared in respect of 

such account shall be the sole element of the F&O Default Amount in respect of 

such Account;
NYDOCS01/1643340.2 194

(ii) if an Account in respect of which a positive net sum was produced was used 

solely for the Clearing of CDS Contracts, then the net sum declared in respect of 

such account shall be the sole element of the CDS Default Amount in respect of 

such Account;

(iii) if an Account in respect of which a positive net sum was produced was used 

solely for the Clearing of FX Contracts, then the net sum declared in respect of 

such account shall be the sole element of the FX Default Amount in respect of 

such Account;

(iv) if an Account in respect of which a positive net sum was produced was used for 

the Clearing of Contracts consisting of more than one Contract Category then:

(A) the CDS Default Amount shall include an amount in respect of such 

Account calculated by taking into account: any amounts, assets or 

liabilities included or to be included within the calculation of the amount 

N in Rule 906(a) in respect of CDS Contracts, Margin or Surplus 

Collateral in respect of positions in CDS Contracts and any other amounts, 

assets or liabilities relating in any case exclusively to CDS Contracts of 

the Defaulter, together with such Guaranty Fund Contributions, NonExclusive Assets and Non-Exclusive Liabilities as are included as set out 

below;

(B) the F&O Default Amount shall include an amount in respect of such 

Account calculated by taking into account: any amounts, assets or 

liabilities included or to be included within the calculation of the amount 

N in Rule 906(a) in respect of F&O Contracts, Margin or Surplus

Collateral in respect of F&O Contracts and any other amounts, assets or 

liabilities relating in any case exclusively to F&O Contracts of the 

Defaulter, together with such Guaranty Fund Contributions, NonExclusive Assets and Non-Exclusive Liabilities as are included as set out 

below;

(C) the FX Default Amount shall include an amount in respect of such 

Account calculated by taking into account: any amounts, assets or 

liabilities included or to be included within the calculation of the amount 

N in Rule 906(a) in respect of FX Contracts, Margin or Surplus Collateral 

in respect of positions in FX Contracts and any other amounts, assets or 

liabilities relating in any case exclusively to FX Contracts of the Defaulter, 

together with such Guaranty Fund Contributions, Non-Exclusive Assets 

and Non-Exclusive Liabilities as are included as set out below; and

(v) notwithstanding Rule 908(e)(i), (ii), (iii) or (iv), Guaranty Fund Contributions of 

any kind shall be applied as follows as between Default Amounts:
NYDOCS01/1643340.2 195

(A) in the case of F&O Guaranty Fund Contributions, first to meeting any loss, 

shortfall or liability that would otherwise be represented in the F&O

Default Amount;

(B) in the case of CDS Guaranty Fund Contributions, first to meeting any loss, 

shortfall or liability that would otherwise be represented in the CDS 

Default Amount;

(C) in the case of FX Guaranty Fund Contributions, first to meeting any loss, 

shortfall or liability that would otherwise be represented in the FX Default 

Amount;

(D) in the case of any remaining Guaranty Fund Contributions, next towards 

eliminating any loss, shortfall or liability that would otherwise be 

represented in any Default Amount;

(E) to the extent that there is no further loss, shortfall or liability reflected in 

any Default Amount following application of Guaranty Fund 

Contributions under (A) to (D), F&O Guaranty Fund Contributions shall 

be included in the F&O Default Amount, CDS Guaranty Fund 

Contributions shall be included in the CDS Default Amount and FX 

Guaranty Fund Contributions shall be included in the FX Default Amount.

(vi) "Non-Exclusive Assets" constitute any amounts or assets included or to be 

included within the calculation of the amount N in Rule 906(a) not relating 

exclusively to any one Contract Category, but excluding Guaranty Fund 

Contributions. Non-Exclusive Assets may be included in the calculation of any of 

the Default Amounts in question or split between such calculations at the Clearing

House's discretion, provided that:

(A) to the extent that two or more of the Default Amounts represent or would 

(but for this provision) represent a shortfall, loss or liability ("Shortfall 

Default Amounts"), the Non-Exclusive Assets must be included in the 

calculation of the Shortfall Default Amounts in proportion to the Margin 

requirements of the Defaulter for each Contract Category corresponding to 

each Shortfall Default Amount immediately prior to the Event of Default 

until one of the Shortfall Default Amounts would represent zero; and

(B) subject to the process in paragraph (A) above first being completed if 

applicable, to the extent that one or two of the Default Amounts in 

question represent(s) or would (but for this provision) represent a surplus 

to the Clearing House and the other or others represent or would (but for 

this provision) represent a shortfall, loss or liability to the Clearing House, 

the Non-Exclusive Assets must be included in the relevant calculation so 

as to eliminate or reduce the shortfall, loss or liability pro rata as to the 

losses.
NYDOCS01/1643340.2 196

(vii) "Non-Exclusive Liabilities" constitute any liabilities included or to be included 

within the calculation of the amount N in Rule 906(a) not relating exclusively to 

any one Contract Category. Non-Exclusive Liabilities may be included in the 

calculation of any of the Default Amounts in question or split between such 

calculations at the Clearing House's discretion, provided that:

(A) to the extent that two or more of the Default Amounts represent or would 

(but for this provision) represent a surplus ("Surplus Default Amounts"), 

the Non-Exclusive Liabilities must be included in the calculation of the 

Surplus Default Amounts in proportion to the Margin requirements of the 

Defaulter for each Contract Category corresponding to each Surplus 

Default Amount immediately prior to the Event of Default until one of the 

Surplus Default Amounts would represent zero; and

(B) subject to the process in paragraph (A) above first being completed if 

applicable, to the extent that one or two of the Default Amounts in 

question represent(s) or would (but for this provision) represent a surplus 

to the Clearing House and the other or others represent or would (but for 

this provision) represent a shortfall, loss or liability to the Clearing House,

Non-Exclusive Liabilities must first be included in the relevant calculation 

against the surplus pro rata as to the surpluses.

(f) In any instance in which assets are to be applied pursuant to Rule 908(g)(ii)(A) to (C), the 

Clearing House shall publish the amount of any F&O Default Amount, CDS Default 

Amount and/or FX Default Amount that is required to be calculated under Rule 908(e) in 

a Circular. For the avoidance of doubt, any F&O Default Amount, CDS Default Amount 

and/or FX Default Amount so published shall not constitute a "net sum" for purposes of 

Rule 906, the Companies Act 1989 or the Settlement Finality Regulations.

(g) In the case of a Defaulter which held multiple Membership Categories, the Clearing 

House shall be entitled to apply assets to meet the obligations and liabilities of the 

Defaulter and any shortfall, loss or liability to the Clearing House upon or following any 

Event of Default of that Defaulter (including in connection with any net sum calculated 

under Rule 906), in the following order of recourse:

(i) first, any amounts falling under N in Rule 906(a), in the order and in respect of the 

Accounts specified in Rule 906(a) provided that:

(A) if a Defaulter was an F&O Clearing Member or a Sponsored Principal that 

was authorised to clear F&O, F&O Guaranty Fund Contributions of the 

Defaulter or its Sponsor must first be applied by the Clearing House 

against any shortfall, loss or liability relevant to the F&O Default Amount;

(B) if a Defaulter was a CDS Clearing Member or a Sponsored Principal that 

was authorised to clear CDS, CDS Guaranty Fund Contributions of the 

Defaulter or its Sponsor must first be applied by the Clearing House 

against any shortfall, loss or liability relevant to the CDS Default Amount;
NYDOCS01/1643340.2 197

(C) if a Defaulter was an FX Clearing Member or a Sponsored Principal that 

was authorised to clear FX, FX Guaranty Fund Contributions of the 

Defaulter or its Sponsor must first be applied by the Clearing House 

against any liabilities relevant to the FX Default Amount;

(D) if a Defaulter was an F&O Clearing Member or a Sponsored Principal that 

was authorised to clear F&O, subject to paragraphs (A), (B) and (C)

above, any F&O Guaranty Fund Contributions of the Defaulter or its 

Sponsor may be applied against any other shortfall, loss or liability but 

only to the extent that such assets have not been applied in respect of any 

subsequent Event of Default affecting an F&O Clearing Member or a 

Sponsored Principal that was authorised to clear F&O;

(E) if a Defaulter was a CDS Clearing Member or a Sponsored Principal that 

was authorised to clear CDS, subject to paragraphs (A), (B) and (C)

above, any CDS Guaranty Fund Contributions of the Defaulter or its 

Sponsor may be applied against any other shortfall, loss or liability but 

only after the earliest date on which non-defaulting CDS Clearing 

Members are required to replenish the CDS Guaranty Fund pursuant to 

Rule 908(a)(iv) and only to the extent that such assets have not been 

applied in respect of any subsequent Event of Default affecting a CDS 

Clearing Member or a Sponsored Principal that was authorised to clear 

CDS; and

(F) if a Defaulter was an FX Clearing Member or a Sponsored Principal that 

was authorised to clear FX, subject to paragraphs (A), (B) and (C) above, 

any FX Guaranty Fund Contributions of the Defaulter or its Sponsor may 

be applied against any other shortfall, loss or liability but only to the 

extent that such assets have not been applied in respect of any subsequent 

Event of Default affecting an FX Clearing Member or a Sponsored 

Principal that was authorised to clear FX;

(G) the Clearing House shall not be required to assert or pursue any such claim 

or bring any such action as a precondition to applying assets referred to in 

Rule 908(g)(ii) to (v) but shall be required to account for any subsequent 

proceeds not included in the amount determined, less the costs of realising 

any such claim or action or obtaining such amount or asset);

(ii) second:

(A) if a Defaulter was an F&O Clearing Member or a Sponsored Principal that 

was authorised to clear F&O, the Clearing House F&O Initial 

Contribution, provided that it shall only be applied up to the extent of any 

F&O Default Amount notified to Clearing Members in accordance with 

Rule 908(f) and in circumstances in which the F&O Default Amount 

represents a shortfall, loss or liability;
NYDOCS01/1643340.2 198

(B) if a Defaulter was a CDS Clearing Member or a Sponsored Principal that 

was authorised to clear CDS, the Clearing House CDS Initial 

Contribution, provided that it shall only be applied up to the extent of any 

CDS Default Amount notified to Clearing Members in accordance with 

Rule 908(f) and in circumstances in which the CDS Default Amount 

represents a shortfall, loss or liability; and

(C) if a Defaulter was an FX Clearing Member or a Sponsored Principal that 

was authorised to clear FX, the Clearing House FX Initial Contribution, 

provided that it shall only be applied up to the extent of any FX Default 

Amount notified to Clearing Members in accordance with Rule 908(f) and 

in circumstances in which the FX Default Amount represents a shortfall, 

loss or liability;

(iii) third:

(A) Guaranty Fund Contributions of Clearing Members other than the 

Defaulter in question or its Sponsor (including, where relevant, any 

surplus Guaranty Fund Contributions of other Defaulters and proceeds of 

the realisation thereof, if two or more Default proceedings take place 

concurrently and any such surplus is available);

(B) if a Defaulter was an F&O Clearing Member or a Sponsored Principal that 

was authorised to clear F&O, the Clearing House F&O GF Contribution;

(C) if a Defaulter was a CDS Clearing Member or a Sponsored Principal that 

was authorised to clear CDS, the Clearing House CDS GF Contribution; 

and

(D) if a Defaulter was an FX Clearing Member or a Sponsored Principal that 

was authorised to clear FX, the Clearing House FX GF Contribution;

provided that:

(1) if a Defaulter was an F&O Clearing Member or a Sponsored Principal that 

was authorised to clear F&O, F&O Guaranty Fund Contributions of 

Clearing Members other than the Defaulter in question or its Sponsor and 

the Clearing House F&O GF Contribution shall only be applied towards 

and up to the extent of any F&O Default Amount notified to Clearing 

Members in accordance with Rule 908(f) and in circumstances in which 

the F&O Default Amount less any Clearing House F&O Initial 

Contribution applied in accordance with Rule 908(g)(ii)(A) represents a 

shortfall, loss or liability;

(2) if a Defaulter was a CDS Clearing Member or a Sponsored Principal 

authorised to clear CDS, CDS Guaranty Fund Contributions of Clearing 

Members other than the Defaulter in question or its Sponsor and the 

Clearing House CDS GF Contribution shall only be applied towards and 
NYDOCS01/1643340.2 199

up to the extent of any CDS Default Amount notified to Clearing 

Members in accordance with Rule 908(f) and in circumstances in which 

the CDS Default Amount less any Clearing House CDS Initial 

Contribution applied in accordance with Rule 908(g)(ii)(B) represents a 

shortfall, loss or liability; and

(3) if a Defaulter was an FX Clearing Member or a Sponsored Principal that 

was authorised to clear FX, FX Guaranty Fund Contributions of Clearing 

Members other than the Defaulter in question or its Sponsor and the 

Clearing House FX GF Contribution shall only be applied towards and up 

to the extent of any FX Default Amount notified to Clearing Members in 

accordance with Rule 908(f) and in circumstances in which the FX 

Default Amount less any Clearing House FX Initial Contribution applied 

in accordance with Rule 908(g)(ii)(C) represents a shortfall, loss or 

liability;

and provided further that:

(X) in the case of a Defaulter who was an F&O Clearing Member or a 

Sponsored Principal that was authorised to clear F&O, F&O Guaranty 

Fund Contributions and the Clearing House F&O GF Contribution are 

applied on a basis pro rata (subject to Rule 908(i)) to the sum of the total 

of all F&O Guaranty Fund Contributions (excluding F&O Guaranty Fund 

Contributions of the Defaulter in question or its Sponsor and F&O

Guaranty Fund Contributions of other Defaulters that have been or are to 

be applied in connection with separate Default proceedings) and the 

Clearing House F&O GF Contribution at the time of the Event of Default;

(Y) in the case of a Defaulter who was a CDS Clearing Member or a 

Sponsored Principal that was authorised to clear CDS, CDS Guaranty 

Fund Contributions and the Clearing House CDS GF Contribution are 

applied on a basis pro rata to the sum of the total of all CDS Guaranty 

Fund Contributions (excluding CDS Guaranty Fund Contributions of the 

Defaulter in question or its Sponsor and CDS Guaranty Fund 

Contributions of other Defaulters that have been or are to be applied in 

connection with separate Default proceedings) and the Clearing House 

CDS GF Contribution at the time of the Event of Default; and

(Z) in the case of a Defaulter who was an FX Clearing Member or a 

Sponsored Principal that was authorised to clear FX, FX Guaranty Fund 

Contributions and the Clearing House FX GF Contribution are applied on 

a basis pro rata (subject to Rule 908(i)) to the sum of the total of all FX 

Guaranty Fund Contributions (excluding FX Guaranty Fund Contributions 

of the Defaulter in question or its Sponsor and FX Guaranty Fund 

Contributions of other Defaulters that have been or are to be applied in 

connection with separate Default proceedings) and the Clearing House FX 

GF Contribution at the time of the Event of Default;
NYDOCS01/1643340.2 200

(iv) fourth, if a Defaulter was an F&O Clearing Member or a Sponsored Principal that

was authorised to clear F&O, subject to Rule 1103(e), any claims under default 

insurance policies (including the proceeds of any claim) of which the Clearing 

House is the beneficiary that are available to the Clearing House as a result of the 

Event of Default, provided that the Clearing House, acting reasonably, must 

specify in a Circular the extent to which any such claims are applied in respect of 

any shortfall, loss or liability relating to the F&O Default Amount and any 

shortfall, loss or liability relating to any other Default Amount(s); and

(v) fifth, if a Defaulter was an F&O Clearing Member or a Sponsored Principal that 

was authorised to clear F&O, F&O Assessment Contributions received by the 

Clearing House pursuant to Rule 909, if a Defaulter was a CDS Clearing Member

or a Sponsored Principal that was authorised to clear CDS, CDS Assessment 

Contributions received by the Clearing Member pursuant to Rule 910, and, if a 

Defaulter was an FX Clearing Member or a Sponsored Principal that was 

authorised to clear FX, FX Assessment Contributions received by the Clearing 

House pursuant to Rule 911, provided that:

(1) if a Defaulter was an F&O Clearing Member or a Sponsored Principal that 

was authorised to clear F&O, F&O Assessment Contributions of Clearing 

Members other than the Defaulter shall only be applied towards and up to 

the extent of any F&O Default Amount notified to Clearing Members in 

accordance with Rule 908(f) and in circumstances in which the F&O 

Default Amount less any Clearing House F&O Initial Contribution applied 

in accordance with Rule 908(g)(ii)(A), F&O Guaranty Fund Contributions 

applied in accordance with Rule 908(g)(iii)(A) and Clearing House F&O

GF Contribution applied in accordance with Rule 908(g)(iii)(B) represents 

a shortfall, loss or liability;

(2) if a Defaulter was a CDS Clearing Member or a Sponsored Principal that 

was authorised to clear CDS, CDS Assessment Contributions of Clearing 

Members other than the Defaulter in question shall only be applied 

towards and up to the extent of any CDS Default Amount notified to 

Clearing Members in accordance with Rule 908(f) and in circumstances in 

which the CDS Default Amount less any Clearing House CDS Initial 

Contribution applied in accordance with Rule 908(g)(ii)(B), CDS 

Guaranty Fund Contributions applied in accordance with 

Rule 908(g)(iii)(A) and Clearing House CDS GF Contribution applied in 

accordance with Rule 908(g)(iii)(C) represents a shortfall, loss or liability; 

and

(3) if a Defaulter was an FX Clearing Member or a Sponsored Principal that 

was authorised to clear FX, FX Assessment Contributions of Clearing 

Members other than the Defaulter in question shall only be applied 

towards and up to the extent of any FX Default Amount notified to 

Clearing Members in accordance with Rule 908(f) and in circumstances in 

which the FX Default Amount less any Clearing House FX Initial 
NYDOCS01/1643340.2 201

Contribution applied in accordance with Rule 908(g)(ii)(C), FX Guaranty 

Fund Contributions applied in accordance with Rule 908(g)(iii)(A) and 

Clearing House FX GF Contribution applied in accordance with 

Rule 908(g)(iii)(D) represents a shortfall, loss or liability;

and provided further that:

(X) in the case of a Defaulter who was an F&O Clearing Member or a 

Sponsored Principal that was authorised to clear F&O, F&O Assessment 

Contributions are applied on a basis pro rata (subject to Rule 908(i)) to 

the sum of the total of all F&O Assessment Contributions received by the 

Clearing House;

(Y) in the case of a Defaulter who was a CDS Clearing Member or a 

Sponsored Principal that was authorised to clear CDS, CDS Assessment 

Contributions are applied on a basis pro rata to the sum of the total of all 

CDS Assessment Contributions received by the Clearing House; and

(Z) in the case of a Defaulter who was an FX Clearing Member or a 

Sponsored Principal that was authorised to clear FX, FX Assessment 

Contributions are applied on a basis pro rata (subject to Rule 908(i)) to 

the sum of the total of all FX Assessment Contributions received by the 

Clearing House.

(h) The requirements of this Rule 908 shall apply and be binding upon the Clearing House 

and all Clearing Members and Sponsored Principals including upon the event of any 

Insolvency affecting the Clearing House or any Clearing Member or Sponsored Principal. 

The Clearing House (including any Insolvency Practitioner with powers over the 

Clearing House or other Representative) and all Clearing Members and Sponsored 

Principals (including any Insolvency Practitioner with powers over any Clearing Member 

or Sponsored Principal or their Representatives) shall, to the extent permitted by 

Applicable Laws:

(i) refrain from taking any action or seeking any order of any Governmental 

Authority that would result in or facilitate any asset or liability being applied 

contrary to the requirements of this Part 9; and

(ii) take all reasonable steps possible including, without limitation, the application for 

and procurement of such orders from such Governmental Authorities as are 

necessary, to ensure that assets of the Clearing House are applied only pursuant to 

this Part 9.

(i) Notwithstanding Rule 908(b)(iii), (c)(iii), (d)(iii) and (g)(iii) and Rules 909-911, if an 

auction is held following an Event of Default, the Guaranty Fund Contributions of 

particular non-defaulting Clearing Members (or other funds transferred to the Clearing 

House by other auction participants) may be applied in different orders or sequences, and 

Assessment Contributions may be called in different orders or sequences, rather than 

being applied or called pro rata for all Clearing Members, with reference to the bids 
NYDOCS01/1643340.2 202

made or other behaviours in the default auction, in accordance with the applicable 

provisions of the Default Auction Procedures.

4

Rule 909 Powers of Assessment: F&O

(a) Powers of assessment under this Rule 909 may be exercised by the Clearing House 

following an Event of Default occurring in respect of an F&O Clearing Member if a 

shortfall, loss or liability to the Clearing House has arisen, or is considered by the 

Clearing House to be likely to arise, as a result of a shortfall, loss or liability relating to 

any Proprietary Account or Customer Account of a Defaulter that is or was an F&O

Clearing Member or a Sponsored Principal authorised to clear F&O where such shortfall, 

loss or liability is not met pursuant to:

(i) Rule 908(b)(i) to (iv); or

(ii) Rule 908(g)(i) to (v), only to the extent that the F&O Default Amount, less any 

assets applied in accordance with Rules 908(g)(ii)(A), 908(g)(iii)(B) and 

908(g)(iv) (in the latter case, only to the extent certified by the Clearing House as 

applying in relation to the F&O Default Amount), represents, or is considered by 

the Clearing House at is discretion likely to represent, a shortfall, loss or a 

liability.

Immediately upon the Clearing House certifying the F&O Assessment Amount in a 

Circular, all F&O Clearing Members (other than Defaulters) shall indemnify the Clearing 

House and become liable to pay F&O Assessment Contributions to the Clearing House in 

accordance with Rule 909(b). The exercise of any right to call Assessment 

Contributions under this Rule 909 is subject to any contrary requirement arising pursuant 

to Rule 917 or Rule 918(a)(ii).

(b) The F&O Assessment Contribution payable by each F&O Clearing Member shall be the 

amount:

FOAA x FOGF(CM)

FOGF(all)

where:

FOAA is the F&O Assessment Amount certified by the Clearing House in a Circular, 

provided that the total F&O Assessment Amount shall be no greater than the amount 

equal to twice the total required F&O Guaranty Fund Contributions of all F&O Clearing 

Members immediately prior to the relevant Event of Default (less F&O Guaranty Fund 

Contributions of Defaulters);

 4 Rule 908(i) does not apply to the CDS Contract Category.
NYDOCS01/1643340.2 203

FOGF(CM) is the required F&O Guaranty Fund Contribution of the relevant F&O

Clearing Member immediately preceding the relevant Event of Default; and

FOGF(all) is the total required F&O Guaranty Fund Contributions of all F&O Clearing 

Members immediately preceding the relevant Event of Default (less F&O Guaranty Fund 

Contributions of Defaulters and excluding the Clearing House F&O Contributions).

F&O Assessment Contributions will be designated as relating primarily to Energy 

Contracts or Financials & Softs Contracts based on the designation of Guaranty Fund 

Contributions to Energy Contracts or Financials & Softs Contracts under Rule 1101(a).

(c) No F&O Clearing Member shall be liable for more than an amount equal to twice their 

required Guaranty Fund Contributions immediately preceding the relevant Event of 

Default in total F&O Assessment Contributions in respect of a single Event of Default. A 

Person that is or was an F&O Clearing Member and that has served a Termination Notice 

shall be subject to obligations to pay F&O Assessment Contributions only in respect of 

Events of Default declared in relation to Clearing Members that are F&O Clearing 

Members occurring prior to the Termination Date.

(d) If the F&O Assessment Amount is not met by F&O Assessment Contribution receipts 

from F&O Clearing Members due to non-payment by an F&O Clearing Member or F&O

Clearing Members, Default of an F&O Clearing Member or F&O Clearing Members or 

otherwise, the Clearing House shall at its discretion determine what, if any, further action 

to take. Unless, or unless to the extent that, the Clearing House directs otherwise in a 

Circular, any shortfall in F&O Assessment Contribution receipts shall be re-assessed 

against all F&O Clearing Members (other than Defaulters and Persons that have 

defaulted in making an F&O Assessment Contribution) in accordance with Rule 909(a), 

as if such shortfall were the F&O Assessment Amount, provided that no F&O Clearing 

Member shall be liable to pay F&O Assessment Contributions in respect of a single 

Default for an amount greater than twice its F&O Guaranty Fund Contribution 

immediately prior to the relevant Default. Subject to Rule 909(c), further F&O

Assessment Contributions may be levied and repeated in this manner at the discretion of 

the Clearing House until the entire F&O Assessment Amount has been met in full by 

F&O Assessment Contributions.

(e) All F&O Assessment Contributions shall become due and payable at such time as the 

Clearing House notifies to F&O Clearing Members (which may be by Circular) and may 

be collected by the Clearing House pursuant to Part 3.

(f) If, after any F&O Assessment Contribution has been paid in relation to an Event of 

Default, the Clearing House collects amounts in respect of a defaulted obligation or 

unpaid F&O Assessment Contribution in whole or in part from the Defaulter in question 

or a Person liable to pay an unpaid F&O Assessment Contribution, the Clearing House 

shall refund the amount so collected (less any expenses of the Clearing House, including 

without limitation any legal fees and expenses incurred in connection therewith) to other 

F&O Clearing Members (excluding any Defaulter) pro rata in respect of paid F&O

Assessment Contributions relating to the Event of Default in question, subject to the 
NYDOCS01/1643340.2 204

Clearing House first retaining or repaying amounts up to the amount of any assets of the 

Clearing House or other third parties applied to meet any shortfall, loss or liability 

following exhaustion of the assets specified in Rule 908 or in substitution of any such 

assets.

(g) Amounts transferred to the Clearing House by F&O Clearing Members in respect of 

Guaranty Fund Contributions, including without limitation amounts transferred to restore 

a deficiency in any Guaranty Fund following an Event of Default, do not constitute F&O

Assessment Contributions. Neither the exercise of powers of assessment by the Clearing 

House nor the payment of F&O Assessment Contributions shall reduce or otherwise 

affect the liability of a Clearing Member to make Guaranty Fund Contributions pursuant 

to Rule 1101 et seq. or to replenish any Guaranty Fund Contribution pursuant to 

Rule 1102(i). F&O Assessment Contributions do not constitute Guaranty Fund 

Contributions.

(h) Where the Clearing House calls F&O Assessment Contributions in excess of that 

required or actually applied against a loss, shortfall or liability, it shall treat any such 

excess provided by a particular Clearing Member as special Surplus Collateral on the 

relevant Proprietary Account of such Clearing Member. Such special Surplus Collateral 

shall be available to be applied at any time as an F&O Assessment Contribution but 

unavailable for withdrawal under Part 3 or the Finance Procedures, until such time as any 

such amount of F&O Assessment Contributions are determined by the Clearing House 

not to be required, at which point the Surplus Collateral shall become available for 

withdrawal in the same way as other Surplus Collateral.

Rule 910 Powers of Assessment: CDS

(a) Powers of assessment under this Rule 910 may be exercised by the Clearing House 

following an Event of Default occurring in respect of a CDS Clearing Member if a 

shortfall, loss or liability to the Clearing House arising as a result of the liabilities of a 

Defaulter that is or was a CDS Clearing Member or a Sponsored Principal authorised to 

clear CDS where such shortfall, loss or liability is not met pursuant to:

(i) Rule 908(c)(i) to (iii); or

(ii) Rule 908(g)(i) to (v), only to the extent that the CDS Default Amount, less any 

assets applied in accordance with Rules 908(g)(ii)(B) and 908(g)(iii)(C)

represents a shortfall, loss or a liability.

Immediately upon the Clearing House certifying the CDS Assessment Amount in a 

Circular, all CDS Clearing Members (other than Defaulters) shall indemnify the Clearing 

House and become liable to pay CDS Assessment Contributions to the Clearing House in 

accordance with Rule 910(b). 

(b) The CDS Assessment Contribution payable by each CDS Clearing Member shall be the 

amount:
NYDOCS01/1643340.2 205

CAA x CGF(CM)

CGF(all)

where:

CAA is the CDS Assessment Amount certified by the Clearing House in a Circular, 

provided that the total CDS Assessment Amount shall be no greater than the amount 

equal to the total required CDS Guaranty Fund Contributions of all CDS Clearing 

Members immediately prior to the relevant Event of Default (less CDS Guaranty Fund 

Contributions of Defaulters);

CGF(CM) is the required CDS Guaranty Fund Contribution of the relevant CDS Clearing 

Member immediately preceding the relevant Event of Default; and

CGF(all) is the total required CDS Guaranty Fund Contributions of all CDS Clearing 

Members immediately preceding the relevant Event of Default (less CDS Guaranty Fund 

Contributions of Defaulters and excluding the Clearing House CDS Contributions).

(c) A Person that ceases to be a CDS Clearing Member shall be subject to obligations to pay 

CDS Assessment Contributions only in respect of:

(i) Events of Default declared in relation to Clearing Members that are CDS Clearing 

Members occurring prior to the Termination Date (whether or not declared prior 

to the Termination Date); and

(ii) any Events of Default declared in relation to Clearing Members that are CDS 

Clearing Members occurring after the Termination Date but whilst it still has a 

CDS Guaranty Fund Contribution with the Clearing House,

provided that:

(A) the aggregate amount of all CDS Assessment Contributions in respect of 

all Events of Default for any such Person shall be capped at: (I) in the 

case of a Person terminating its membership of the Clearing House 

following an Event of Default or Events of Default where CDS Guaranty 

Fund Contributions have been applied, an amount equal to that Person's 

CDS Guaranty Fund Contribution immediately prior to the first Event of 

Default being declared which led to the relevant application of CDS 

Guaranty Fund Contributions; or (II) in the case of a Person otherwise 

terminating its membership of the Clearing House, an amount equal to that 

Person's CDS Guaranty Fund Contribution on the date of service of the 

relevant notice of termination; and

(B) CDS Assessment Contributions made by a Person terminating its 

membership of the Clearing House pursuant to Rule 910(h) shall be 

included for the purpose of calculating such a cap.
NYDOCS01/1643340.2 206

(d) If the CDS Assessment Amount is not met by CDS Assessment Contribution receipts 

from CDS Clearing Members due to non-payment by a CDS Clearing Member or CDS 

Clearing Members, Default of a CDS Clearing Member or CDS Clearing Members or 

otherwise, the Clearing House shall at its discretion determine what, if any, further action 

to take. Unless, or unless to the extent that, the Clearing House directs otherwise in a 

Circular, any shortfall in CDS Assessment Contribution receipts shall be re-assessed 

against all CDS Clearing Members (other than Defaulters and Persons that have defaulted 

in making a CDS Assessment Contribution) in accordance with Rule 910(a), as if such 

shortfall were the CDS Assessment Amount, provided that no CDS Clearing Member 

shall be liable to pay CDS Assessment Contributions in respect of a single Default for an 

amount greater than its CDS Guaranty Fund Contribution immediately prior to the 

relevant Default. Subject to Rule 910(c), further CDS Assessment Contributions may be 

levied and repeated in this manner at the discretion of the Clearing House until the entire 

CDS Assessment Amount has been met in full by CDS Assessment Contributions.

(e) All CDS Assessment Contributions shall become due and payable at such time as the 

Clearing House notifies to CDS Clearing Members (which may be by Circular) and may 

be collected by the Clearing House pursuant to Part 3.

(f) If, after any CDS Assessment Contribution has been paid in relation to an Event of 

Default, the Clearing House collects amounts in respect of a defaulted obligation or 

unpaid CDS Assessment Contribution in whole or in part from the Defaulter in question 

or a Person liable to pay an unpaid CDS Assessment Contribution, the Clearing House 

shall refund the amount so collected (less any expenses of the Clearing House, including 

without limitation any legal fees and expenses incurred in connection therewith) to other 

CDS Clearing Members (excluding any Defaulter) pro rata in respect of paid CDS 

Assessment Contributions relating to the Event of Default in question, subject to the 

Clearing House first retaining or repaying amounts up to the amount of any assets of the 

Clearing House or other third parties applied to meet any liability following exhaustion of 

the assets specified in Rule 908 or in substitution of any such assets.

(g) Amounts transferred to the Clearing House by CDS Clearing Members in respect of 

Guaranty Fund Contributions, including without limitation amounts transferred to restore 

a deficiency in any Guaranty Fund following an Event of Default, do not constitute CDS 

Assessment Contributions. Neither the exercise of powers of assessment by the Clearing 

House nor the payment of CDS Assessment Contributions shall reduce or otherwise 

affect the liability of a Clearing Member to make Guaranty Fund Contributions pursuant 

to Rule 1101 et seq. or to replenish any Guaranty Fund Contribution pursuant to 

Rule 1102(i). CDS Assessment Contributions do not constitute Guaranty Fund 

Contributions.

(h) Upon an Event of Default or Events of Default occurring and CDS Assessment 

Contributions becoming due, a Clearing Member liable to pay a CDS Assessment 

Contribution shall be entitled to terminate its membership of the Clearing House with 

effect from the moment immediately prior to the time at which CDS Guaranty Fund 

Contributions are required to be made pursuant to Rule 1102(i). Notwithstanding Rule 

209(d), a CDS Clearing Member that terminates its membership in such circumstances 
NYDOCS01/1643340.2 207

shall have no further obligation to replenish the CDS Guaranty Fund pursuant to 

Rule 1102(i). Such a Clearing Member shall nonetheless remain liable for further CDS 

Assessment Contribution payments pursuant to 910(c) and 910(d). Rule 209(c)(iii), Rule 

209(c)(iii)(D), Rule 209(d) (subject as aforesaid), Rule 209(e)(i) and Rule 209(e)(ii) shall 

apply in relation to any such termination.5 Any Clearing Member terminating its 

membership pursuant to this Rule 910(h) shall give notice of the same to the Clearing 

House as soon as practicable and in any event on or prior to the date falling 10 days after 

the date on which a first call for CDS Assessment Contributions was made.

(i) Upon an Event of Default or Events of Default occurring and CDS Assessment 

Contributions becoming due, a Clearing Member that is both an F&O Clearing

Member and a CDS Clearing Member and which is liable to pay a CDS Assessment 

Contribution shall be entitled to terminate its status with the Clearing House as a CDS 

Clearing Member (maintaining its status as an F&O Clearing Member) with effect from 

the moment immediately prior to the time at which CDS Guaranty Fund Contributions 

are required to be made pursuant to Rule 1102(i). Notwithstanding Rule 209(f),6 a 

Clearing Member that terminates its status as a CDS Clearing Member in such 

circumstances shall have no further obligation to replenish the CDS Guaranty Fund 

pursuant to Rule 1102(i). Such a Clearing Member shall nonetheless remain liable for 

further CDS Assessment Contribution payments pursuant to Rules 910(c) and 910(d). 

Rule 209(f) shall apply in relation to any such termination. Any Clearing Member 

terminating its status as a CDS Clearing Member pursuant to this Rule 910(i) shall give 

notice of the same to the Clearing House as soon as practicable and in any event on or 

prior to the date falling 10 days after the date on which a first call for CDS Assessment 

Contributions was made.

Rule 911 Powers of Assessment: FX

(a) Powers of assessment under this Rule 911 may be exercised by the Clearing House 

following an Event of Default occurring in respect of an FX Clearing Member if a 

shortfall, loss or liability to the Clearing House has arisen, or is considered by the 

Clearing House to be likely to arise, as a result of a shortfall, loss or liability relating to 

any Proprietary Account or Customer Account of a Defaulter that is or was an FX 

Clearing Member or a Sponsored Principal authorised to clear FX where such shortfall, 

loss or liability is not met pursuant to:

(i) Rule 908(d)(i) to Rule 908(d)(iii); or

(ii) Rule 908(g)(i) to (v), only to the extent that the FX Default Amount, less any 

assets applied in accordance with Rules 908(g)(ii)(C) and 908(g)(iii)(D)

represents, or is considered by the Clearing House at is discretion likely to 

represent, a shortfall, loss or a liability.

 5 References in this Rule 910(h) to Rule 209 shall be to the Continuing CDS Rule Provisions. 

6 References in this Rule 910(i) to Rule 209 shall be to the Continuing CDS Rule Provisions. 
NYDOCS01/1643340.2 208

Immediately upon the Clearing House certifying the FX Assessment Amount in a 

Circular, all FX Clearing Members (other than Defaulters) shall indemnify the Clearing 

House and become liable to pay FX Assessment Contributions to the Clearing House in 

accordance with Rule 911(b). The exercise of any right to call Assessment 

Contributions under this Rule 911 is subject to any contrary requirement arising pursuant 

to Rule 917 or Rule 918(a)(ii).

(b) The FX Assessment Contribution payable by each FX Clearing Member shall be the 

amount:

FAA x FGF(CM)

FGF(all)

where:

FAA is the FX Assessment Amount certified by the Clearing House in a Circular, 

provided that the total FX Assessment Amount shall be no greater than the amount equal 

to twice the total required FX Guaranty Fund Contributions of all FX Clearing Members 

immediately prior to the relevant Event of Default (less FX Guaranty Fund Contributions 

of Defaulters);

FGF(CM) is the required FX Guaranty Fund Contribution of the relevant FX Clearing 

Member immediately preceding the relevant Event of Default; and

FGF(all) is the total required FX Guaranty Fund Contributions of all FX Clearing 

Members immediately preceding the relevant Event of Default (less FX Guaranty Fund 

Contributions of Defaulters). 

(c) No FX Clearing Member shall be liable for more than an amount equal to twice their 

required Guaranty Fund Contributions immediately preceding the relevant Event of 

Default in total FX Assessment Contributions in respect of a single Event of Default. A 

Person that is or was an FX Clearing Member and that has served a Termination Notice 

shall be subject to obligations to pay FX Assessment Contributions only in respect of 

Events of Default declared in relation to Clearing Members that are FX Clearing 

Members occurring prior to the Termination Date.

(d) If the FX Assessment Amount is not met by FX Assessment Contribution receipts from 

FX Clearing Members due to non-payment by an FX Clearing Member or FX Clearing 

Members, Default of an FX Clearing Member or FX Clearing Members or otherwise, the 

Clearing House shall at its discretion determine what, if any, further action to take. 

Unless, or unless to the extent that, the Clearing House directs otherwise in a Circular, 

any shortfall in FX Assessment Contribution receipts shall be re-assessed against all FX 

Clearing Members (other than Defaulters and Persons that have defaulted in making an 

FX Assessment Contribution) in accordance with Rule 911(a), as if the shortfall were the 

FX Assessment Amount, provided that no FX Clearing Member shall be liable to pay FX 

Assessment Contributions in respect of a single Default for an amount greater than twice 

its FX Guaranty Fund Contribution immediately prior to the relevant Default. Subject to 

Rule 911(c), further FX Assessment Contributions may be levied and repeated in this 
NYDOCS01/1643340.2 209

manner at the discretion of the Clearing House until the entire FX Assessment Amount 

has been met in full by FX Assessment Contributions.

(e) All FX Assessment Contributions shall become due and payable at such time as the 

Clearing House notifies to FX Clearing Members (which may be by Circular) and may be 

collected by the Clearing House pursuant to Part 3.

(f) If, after any FX Assessment Contribution has been paid in relation to an Event of Default, 

the Clearing House collects amounts in respect of a defaulted obligation or unpaid FX 

Assessment Contribution in whole or in part from the Defaulter in question or a Person 

liable to pay an unpaid FX Assessment Contribution, the Clearing House shall refund the 

amount so collected (less any expenses of the Clearing House, including without 

limitation any legal fees and expenses incurred in connection therewith) to other FX 

Clearing Members (excluding any Defaulter) pro rata in respect of paid FX Assessment 

Contributions relating to the Event of Default in question, subject to the Clearing House 

first retaining or repaying amounts up to the amount of any assets of the Clearing House 

or other third parties applied to meet any shortfall, loss or liability following exhaustion 

of the assets specified in Rule 908 or in substitution of any such assets. 

(g) Amounts transferred to the Clearing House by FX Clearing Members in respect of 

Guaranty Fund Contributions, including without limitation amounts transferred to restore 

a deficiency in any Guaranty Fund following an Event of Default, do not constitute FX 

Assessment Contributions. Neither the exercise of powers of assessment by the Clearing 

House nor the payment of FX Assessment Contributions shall reduce or otherwise affect 

the liability of a Clearing Member to make Guaranty Fund Contributions pursuant to 

Rule 1101 et seq. or to replenish any Guaranty Fund Contribution pursuant to 

Rule 1102(i). FX Assessment Contributions do not constitute Guaranty Fund 

Contributions.

(h) Where the Clearing House calls FX Assessment Contributions in excess of that required 

or actually applied against a shortfall, loss or liability, it shall treat any such excess 

provided by a particular Clearing Member as special Surplus Collateral on the relevant 

Proprietary Account of such Clearing Member. Such special Surplus Collateral shall be 

available to be applied at any time as an FX Assessment Contribution but unavailable for 

withdrawal under Part 3 or the Finance Procedures, until such time as any such amount of 

FX Assessment Contributions are determined by the Clearing House not to be required, at 

which point the Surplus Collateral shall become available for withdrawal in the same way 

as other Surplus Collateral.

Rule 912 Default procedure for certain termination events7

(a) In the event of any termination pursuant to Rule 209(c)(ii)-(iii), the rights and liabilities 

of each Clearing Member and Sponsored Principal under all Contracts will be deemed to 

 7 Rule 912 does not apply to the CDS Contract Category. Rule 912 under the Continuing CDS Rule Provisions 

remains in effect with respect to CDS Clearing Members. 
NYDOCS01/1643340.2 210

be terminated without need for any further step on the part of any party and discharged 

for the purposes of Rule 906 and a net sum or net sums payable by or to the Clearing 

Member or Sponsored Principal to or from the Clearing House shall be determined as if 

each Clearing Member or Sponsored Principal were a Defaulter, in accordance with 

Rule 906 mutatis mutandis and without need for the prior occurrence or declaration of an 

Event of Default in relation to such Clearing Member or Sponsored Principal.

(b) In circumstances in which this Rule 912 applies:

(i) Rules 909, 910 and 911 shall only apply where necessary to meet a shortfall 

resulting from an Event of Default or Events of Default actually declared by the 

Clearing House pursuant to Rule 901 (rather than any Event of Default effectively 

deemed to occur pursuant to this Rule 912);

(ii) Rules 901, 902, 903, 904 and Rule 905 shall apply only to Clearing Members or 

Sponsored Principals that are actually declared subject to an Event of Default 

(rather than effectively deemed subject to an Event of Default pursuant to this 

Rule 912);

(iii) in the case of this Rule 912 applying solely due to a Failure to Pay which does not 

affect all Contract Categories, the net sum or net sums required to be determined 

in these circumstances pursuant to Rule 906 in respect of a Clearing Member or 

Sponsored Principal that has multiple Membership Categories will be made 

separately in relation to the rights and liabilities of that Clearing Member or 

Sponsored Principal for each applicable Membership Category to which the 

Failure to Pay relates, and Rule 906 shall be interpreted accordingly; 

(iv) in relation to an Individually Segregated Sponsored Account:

(A) both the Sponsor and Sponsored Principal will remain jointly entitled to 

bring any claim against the Clearing House and jointly liable in respect of 

any liability on an Individually Segregated Sponsored Account, pursuant 

to Part 19; 

(B) in discharge of its obligations in respect of an Individually Segregated 

Sponsored Account, the Clearing House may pay any net sum due from it 

in respect of the Account to or to the account of either the Sponsor or 

Sponsored Principal; 

(C) in the event of any conflict between any instructions from the Sponsor and 

Sponsored Principal in relation to the payment of any net sum due to or 

from the Clearing House on the Individually Segregated Sponsored 

Account, the Clearing House shall make or first demand payment (as 

applicable) to or from the Person who, immediately prior to the Insolvency 

or Failure To Pay, was operationally responsible for meeting and receiving 

Margin in respect of the Account pursuant to Rule 1902 or 1905, without 

prejudice to the Clearing House's right to pursue either the Sponsor or 

Sponsored Principal for any amounts due to the Clearing House; and
NYDOCS01/1643340.2 211

(D) the identity of the payee or payer of any net sum from or to the Clearing 

House in respect of an Individually Segregated Sponsored Account shall 

not affect any obligation to account between a Sponsor and Sponsored 

Principal in respect of such amounts pursuant to the applicable CustomerClearing Member Agreement or Standard Terms; and

(v) otherwise, this Part 9 shall apply mutatis mutandis in relation to terminated 

Contracts and rights, obligations and liabilities relating thereto.

(c) If the Clearing House becomes aware of there being or occurring an Insolvency or Failure

To Pay in respect of the Clearing House, the Clearing House will promptly issue a 

Circular specifying that the same has occurred.

Rule 913 Definitions used in the remainder of this Part 98

(a) The following additional definitions apply to the following sections of this Part 9:

(i) The term "Adjustment Amount" means, in respect of all the Margin Account(s) 

of any Contributor and any Loss Distribution Day, an amount equal to the sum of 

the Cumulative Unadjusted Gains, Losses and Realised Cash Flows in respect of 

such Margin Account(s) of such Contributor less the sum of the Cumulative 

Actual Gains, Losses and Realised Cash Flows in respect of such Margin 

Account(s) of such Contributor, in each case in respect of the Loss Distribution 

Period in which such Loss Distribution Day falls.

(ii) The term "Aggregate Cash Gains" or "ACG" means, in respect of any Business 

Day, the sum of the Cash Gain in respect of all Cash Gainers on such Business 

Day.

(iii) The term "Available Defaulter Resources" means, following a particular Event 

of Default, all the quantifiable and certain resources on any particular date to the 

extent that the same: (A) are available to the Clearing House to meet losses and 

liabilities resulting from the Event of Default; (B) were posted as collateral in 

respect of an Account referred to in Rule 914(a)(ii)(B) or are otherwise available 

to be applied by the Clearing House in accordance with the Rules against losses or 

liabilities resulting from the Event of Default on such an Account; and (C) 

represent the cash proceeds or equivalent cash value (as calculated by the 

Clearing House) of Permitted Cover provided to the Clearing House by the 

Defaulter or other amounts, credits or assets that would otherwise be due to the 

Defaulter in the calculation of a net sum under Rule 906 and which have been 

evaluated as cash obligations (as calculated by the Clearing House). Available 

Defaulter Resources exclude for the avoidance of doubt all Available NonDefaulter Resources, the Clearing House's own assets and capital, Clearing House 

Contributions and any assets or rights representing the proceeds of Permitted 

 8 Rule 913 does not apply to the CDS Contract Category.
NYDOCS01/1643340.2 212

Cover, Margin, cover for Margin or Guaranty Fund Contributions provided by 

Clearing Members, Sponsors or Sponsored Principals that are not Defaulters. The 

principles in Rule 908 used for the calculation of relevant Default Amounts shall 

be applied in considering whether any particular amount relates to any particular 

Contract Category for purposes of determining the Available Defaulter Resources.

(iv) The term "Available Non-Defaulter Resources" means, following a particular 

Event of Default, the cash proceeds or equivalent cash value (as calculated by the 

Clearing House) of those Guaranty Fund Contributions, Clearing House 

Contributions and Assessment Contributions which are available to be applied 

pursuant to Rule 908, provided that Assessment Contributions shall only count as 

Available Non-Defaulter Resources if they have been received by the Clearing 

House in cleared funds at the time the Clearing House performs a calculation of 

Available Non-Defaulter Resources. The principles in Rule 908 shall be applied 

in considering whether any particular amount relates to any particular Contract 

Category for purposes of determining the Available Non-Defaulter Resources.

(v) The term "Available Product Funds" means the amount of resources available to 

the Clearing House in respect of a Relevant Contract Category, as calculated in 

accordance with Rule 916(f).

(vi) The term "Available Resources" or "AR" means the Available Defaulter 

Resources plus the Available Non-Defaulter Resources.

(vii) The term "Cash Gain" means, in respect of any Cash Gainer and any Loss 

Distribution Day, the amount of Cumulative Unadjusted Gains, Losses and 

Realised Cash Flows in respect of such Cash Gainer in respect of such Loss 

Distribution Day, if positive.

(viii) The term "Cash Gainer" means, in respect of each Contributor and any Loss 

Distribution Date, each Margin Account in respect of which the Cumulative 

Unadjusted Gains, Losses and Realised Cash Flows in respect of such Loss 

Distribution Day is greater than zero.

(ix) The term "Cash Gainer Adjustment" has the meaning set out in Rule 914(c).

(x) The term "Cash Loser" means, in respect of each Contributor and any Loss 

Distribution Date, each Margin Account in respect of which the Cumulative 

Unadjusted Gains, Losses and Realised Cash Flows in respect of such Loss 

Distribution Day is equal to or less than zero.

(xi) The term "Cash Loser Adjustment" has the meaning set out in Rule 914(d).

(xii) The term "Clearing House Event" means a Failure To Pay or Insolvency 

occurring in respect of the Clearing House.
NYDOCS01/1643340.2 213

(xiii) The term "Contract Category" means any of the three categories of Contract 

cleared by the Clearing House, namely F&O Contracts, CDS Contracts and FX 

Contracts. 

(xiv) The term "Contractual Payments" means, in respect of each Margin Account 

and any Business Day, any of the following connected to such Margin Account on 

such Business Day: for CDS Contracts: any Fixed Amounts, Initial Payment, 

Physical Settlement Amount, Auction Settlement Amount or any Cash Settlement 

Amount; and for F&O Contracts any Exchange Delivery Settlement Price, Option 

premium or other settlement amount, strike price, exercise price, settlement price 

or delivery price, exercise price or any other payment pursuant to the terms of a 

Contract. Where physical delivery or physical settlement of any Deliverable is 

due to be made by way of final settlement under a Contract of a Relevant Contract 

Category from the Clearing House to any Clearing Member or Sponsored 

Principal, and the Clearing House (including any non-defaulting Clearing 

Member or Sponsored Principal or its Transferee acting as agent for the Clearing 

House) has not received delivery of an equivalent Deliverable from the Defaulter, 

the Clearing House may attribute a reasonable value to its delivery obligations 

and treat such amount as a Contractual Payment for purposes of this definition. 

(xv) The term "Contributor" means a Clearing Member or Sponsored Principal that is 

not a Defaulter in respect of a Contract Category for which Rule 914 applies. 

(xvi) The term "Cooling-off Period" means the period commencing on the date of the 

Cooling-off Period Trigger Event and terminating 30 Business Days thereafter. A 

Cooling-off Period shall be automatically extended if a subsequent Cooling-off 

Period Trigger Event occurs 30 or fewer Business Days after the previous 

Cooling-off Period Trigger Event, in which case the Cooling-off Period will be 

extended until the date falling 30 Business Days after the second such Cooling-off 

Period Trigger Event.

(xvii) The term "Cooling-off Period Trigger Event" in respect of a particular Contract 

Category, means: (i) any call for Assessment Contributions being made; (ii) the 

occurrence of a Sequential Guaranty Fund Depletion. 

(xviii) The term "Cooling-off Termination Period" means the period commencing on 

the date of each Cooling-off Period Trigger Event and terminating 10 Business 

Days thereafter. A Cooling-off Termination Period shall be automatically 

extended if a subsequent Cooling-off Period Trigger Event occurs 10 or fewer 

Business Days since the previous Cooling-off Period Trigger Event, until the date 

falling 10 Business Days after the second such Cooling-off Period Trigger Event. 

(xix) The term "Cumulative Actual Gains, Losses and Realised Cash Flows" means, 

in respect of each Margin Account of each Contributor and any Business Day, the 

aggregate amount, if any, actually paid by the Clearing House to such Contributor

(expressed as a positive number) or by such Contributor to the Clearing House 

(expressed as a negative number) (including, in respect of an Individually 
NYDOCS01/1643340.2 214

Segregated Sponsored Account, amounts paid by or to a Sponsor) in respect of 

such Margin Account by way of Contractual Payments and MTM/VM, taking into 

account each Margin Account Adjustment from but excluding the relevant Last

Call Prior To Default to and including such Business Day such that, to the extent 

that any payment of MTM/VM or Contractual Payment is netted or offset against 

any Margin Account Adjustment on any Loss Distribution Day, the amount 

actually paid for the purposes of this definition shall be used in calculating such 

aggregated amount.

(xx) The term "Cumulative Transfer Cost" means, on any Business Day during any 

Loss Distribution Period, the sum of any Transfer Cost for each Business Day 

from but excluding the relevant Last Call Prior To Default to and including such 

Business Day.

(xxi) The term "Cumulative Unadjusted Gains, Losses and Realised Cash Flows" 

means, in respect of each Margin Account of each Contributor and any Business 

Day, the sum of the Pre-Haircut Gains, Losses and Realised Cash Flows for such 

Margin Account for each Business Day from but excluding the relevant Last Call 

Prior To Default to and including such Business Day.

(xxii) The term "Default Auction" means an auction which takes place in accordance 

with the Default Auction Procedures.

(xxiii) The term "Default Auction Procedures" means the F&O Default Auction 

Procedures, CDS Default Auction Procedures or FX Default Auction Procedures, 

as applicable to the Relevant Contract Category in question.

(xxiv) The term "Distribution Haircut" or "DH" means, on each Loss Distribution Day, 

the fraction determined by the Clearing House in accordance with the following 

formula:

DH(t) = UL(t) / ACG(t)

where:

UL means the Uncovered Loss; and

ACG means the Aggregate Cash Gains,

(xxv) The term "Estimated Payable Net Sum" means, following a particular Event of 

Default, an estimate by the Clearing House of the total of those net sums 

calculated using the methodology set out in Rule 906 which represent an amount 

payable by a Defaulter in respect of a particular Account, based on the cash or 

estimated value of items considered by the Clearing House to be sufficiently 

certain to be estimated as at the date of the estimation (including, in respect of 

Contracts, latest available MTM/VM Prices), without any netting or offsetting in 

respect of any other Estimated Payable Net Sum or actual net sum payable to a 

Defaulter in respect of a different Account of a Defaulter.
NYDOCS01/1643340.2 215

(xxvi) The term "Haircutting Determination" has the meaning set out in Rule 914(a).

(xxvii) The term "Last Call Prior To Default" means the most recent Business Day on 

which payments of MTM/VM required to be made by Clearing Members and 

Sponsored Principals were paid in full.

(xxviii)The term "Loss Distribution Day" means a Business Day in the Loss 

Distribution Period. 

(xxix) The term "Loss Distribution Period" means, in relation to a Relevant Contract 

Category, the period commencing from and including the date specified by the 

Clearing House in a Circular following a Haircutting Determination and ending 

on a date specified by the Clearing House in the same or any subsequent Circular, 

as the same may be extended under Rule 914. A Loss Distribution Period shall 

end with immediate effect and without the need for any action on the part of any 

Clearing Member, Sponsor, Sponsored Principal or the Clearing House upon any 

Clearing House Event.

(xxx) The term "Margin Account" means each Proprietary Margin Account and 

Customer Margin Account of a Contributor (including any Individually 

Segregated Sponsored Account), related to the Proprietary Position Account or 

Customer Position Account in which Contracts of a Relevant Contract Category 

are recorded. 

(xxxi) The term "Margin Account Adjustment" means, in respect of each Margin 

Account and any Business Day, any Cash Gainer Adjustment or Cash Loser 

Adjustment as the case may be payable in connection with such Margin Account 

on such Business Day.

(xxxii) The term "MTM/VM" stands for mark-to-market/variation margin and means: 

(i) in relation to F&O Contracts, Variation Margin; (ii) in relation to CDS 

Contracts, Mark-to-Market Margin; and (iii) in relation to FX Contracts, FX 

Mark-to-Market Margin. References to the payment of MTM/VM shall be 

construed as including obligations to transfer cash or other Permitted Cover as a 

result of changes to MTM/VM Prices (as the difference between MTM/VM 

Prices on different Business Days) following a recalculation of MTM/VM Price 

and not to the total amount of MTM/VM held by any Clearing Member or 

Sponsored Principal or the Clearing House at any time.

(xxxiii)The term "MTM/VM Price" means: (i) in relation to F&O Contracts, Exchange 

Delivery Settlement Price; (ii) in relation to CDS Contracts, Mark-to-Market 

Price; and (iii) in relation to FX Contracts, FX Mark-to-Market Price.

(xxxiv)The term "Negative Product Repayment Amounts" means the negative single 

net sum determined in respect of a Clearing Member's or Sponsored Principal's 

Margin Account in respect of a Relevant Contract Category that is subject to a 

termination in accordance with Rule 916(e).
NYDOCS01/1643340.2 216

(xxxv) The term "Original/Initial Margin" means: (i) in relation to F&O Contracts, 

Original Margin (including buyer's security and seller's security); (ii) in relation to 

CDS Contracts, Initial Margin; and (iii) in relation to FX Contracts, FX Original 

Margin and, in any case (i), (ii) or (iii) includes Margin under Rule 502(g). 

(xxxvi)The term "Outward MTM/VM Payments", on any Business Day, means 

amounts in respect of MTM/VM that the Clearing House has calculated which 

would, but for Rule 914, be paid in full by the Clearing House to Contributors 

(whether relating to any Proprietary Account or any Customer Account) in respect 

of a particular Relevant Contract Category following the determination of 

MTM/VM Prices for Contracts of that Contract Category.

(xxxvii) The term "Positive Product Repayment Amounts" means the positive single net 

sum determined in respect of a Clearing Member's or Sponsored Principal's

Margin Account in respect of a Relevant Contract Category that is subject to a 

termination accordance with Rule 916(e).

(xxxviii) The term "Pre-Haircut Gains, Losses and Realised Cash Flows" means, in 

respect of each Margin Account of each Contributor and any Business Day, the 

amount which would be paid by the Clearing House to such Contributor

(expressed as a positive number) or by such Contributor to the Clearing House 

(expressed as a negative number) by way of Contractual Payments or MTM/VM 

in respect of such Margin Account on such Business Day in the absence of the 

application of the Distribution Haircut. In connection with CDS Contracts and 

any other Contract which is not re-priced daily in connection with the 

establishment of a Mark-to-Market Price (or any other similar price, however 

described or defined), for the avoidance of doubt, the Pre-Haircut Gains, Losses 

and Realised Cash Flows are calculated taking into account MTM/VM that is paid 

by the Clearing House to the Contributor (or would have been payable to the 

Contributor but for Rule 914) and Mark-to-Market Margin payable and paid by 

the Contributor to the Clearing House (without taking into account any reductions 

to such payments made pursuant to this Rule 914).

(xxxix) The term "Product Termination Amount" means the Negative CDS Repayment 

Amounts and the Positive CDS Repayment Amounts in respect of Contracts of a 

Set subject to termination under Rule 916.

(xl) The term "Received MTM/VM", on a particular Business Day following an 

Event of Default, means the amount that the Clearing House has actually received 

in cleared funds from Clearing Members and Sponsored Principals (other than 

Defaulters) who were party to Contracts in a Relevant Contract Category in 

respect of MTM/VM.

(xli) The term "Relevant Assessment Contributions" means those Assessment 

Contributions (being F&O Assessment Contributions, CDS Assessment 

Contributions or FX Assessment Contributions) which may be applied to losses 

relating to a Relevant Contract Category. 
NYDOCS01/1643340.2 217

(xlii) The term "Relevant Contract Category" subject to Rule 914(h), means one of 

the three categories of Contract (F&O, CDS or FX) to which a Haircutting 

Determination or Termination Circular relates (as applicable in Rules 914 or 916 

respectively), as designated by the Clearing House in the relevant Circular. 

(xliii) The term "Relevant Guaranty Fund" means a Guaranty Fund (being the F&O

Guaranty Fund, the CDS Guaranty Fund or the FX Guaranty Fund) in respect of 

which Guaranty Fund Contributions may be applied to losses relating to a 

Relevant Contract Category. 

(xliv) The term "Relevant Guaranty Fund Contributions" means those Guaranty 

Fund Contributions (being F&O Guaranty Fund Contributions, CDS Guaranty 

Fund Contributions or FX Guaranty Fund Contributions) which may be applied to 

losses relating to a Relevant Contract Category. 

(xlv) The term "Relevant Membership Category" means one of the three categories 

of membership (F&O, CDS or FX) to which a Haircutting Determination or 

Termination Circular relates (as applicable in Rules 914 or 916 respectively), as 

designated by the Clearing House in the relevant Circular.

(xlvi) The term "Relevant Post Default Period" means the period starting at the time of 

declaration of an Event of Default of a Clearing Member or Sponsored Principal 

which is party to Contracts of a particular Contract Category and ending at the 

time of declaration of net sums in respect of any Proprietary Account and each 

Customer Account of the Defaulter.

(xlvii) The term "Sequential CDS Guaranty Fund Depletion" in respect of a particular 

CDS Clearing Member that is not a Defaulter, means circumstances in which: (i) 

there have been two or more Events of Default relating to different CDS Clearing 

Members (or Sponsored Principals which clear CDS) within a period of 30 or 

fewer Business Days; (ii) CDS Guaranty Fund Contributions have been applied in 

respect of at least two such Events of Default; and (iii) the total amount that the 

CDS Clearing Member has as a result paid to the Clearing House to replenish its 

CDS Guaranty Fund Contributions exceeds the total amount of CDS Guaranty 

Fund Contributions standing to the credit of that CDS Clearing Member in the 

Clearing House's accounts prior to the first Event of Default.

(xlviii) The term "Sequential F&O Guaranty Fund Depletion" in respect of a particular 

F&O Clearing Member that is not a Defaulter, means circumstances in which: (i) 

there have been two or more Events of Default relating to different F&O Clearing 

Members (or Sponsored Principals which clear F&O) within a period of 30 or 

fewer Business Days; (ii) F&O Guaranty Fund Contributions have been applied in 

respect of at least two such Events of Default; and (iii) the total amount that the 

F&O Clearing Member has as a result paid to the Clearing House to replenish its 

F&O Guaranty Fund Contributions exceeds the total amount of F&O Guaranty 

Fund Contributions standing to the credit of that F&O Clearing Member in the 

Clearing House's accounts prior to the first Event of Default.
NYDOCS01/1643340.2 218

(xlix) The term "Sequential FX Guaranty Fund Depletion" in respect of a particular 

FX Clearing Member that is not a Defaulter, means circumstances in which: (i) 

there have been two or more Events of Default relating to different FX Clearing 

Members (or Sponsored Principals which clear FX) within a period of 30 or fewer 

Business Days; (ii) FX Guaranty Fund Contributions have been applied in respect 

of at least two such Events of Default; and (iii) the total amount that the FX 

Clearing Member has as a result paid to the Clearing House to replenish its FX 

Guaranty Fund Contributions exceeds the total amount of FX Guaranty Fund 

Contributions standing to the credit of that FX Clearing Member in the Clearing 

House's accounts prior to the first Event of Default.

(l) The term "Sequential Guaranty Fund Depletion" means a Sequential CDS 

Guaranty Fund Depletion, a Sequential F&O Guaranty Fund Depletion, or a 

Sequential FX Guaranty Fund Depletion. 

(li) [Not used.]

(lii) [Not used.]

(liii) [Not used.]

(liv) [Not used.]

(lv) The term "t" means, in respect of any determination made in relation to a 

Business Day, such Business Day.

(lvi) The term "t-1" means, in respect of any determination made in relation to a 

Business Day, the Business Day immediately prior to such Business Day.

(lvii) The term "Termination" in respect of a Contract means termination, close-out, 

exercise, abandonment, or expiry pursuant to its terms and under the Rules.

(lviii) The term "Termination Circular" has the meaning set out in Rule 916(a).

(lix) The term "Termination Price" in respect of a Contract means the price 

determined by the Clearing House, which shall be applicable upon the 

termination, close-out, exercise, abandonment, or expiry of the Contract upon any 

termination pursuant to Rule 916.

(lx) The term "Total Cumulative Pre-Haircut Amount" means, in respect of any 

Business Day, the sum of the Total Pre-Haircut Amount for each Business Day 

from but excluding the relevant Last Call Prior To Default to and including such 

Business Day.

(lxi) The term "Total Pre-Haircut Amount" or "TPHA" means, in respect of any 

Business Day, the sum of the Pre-Haircut Gains, Losses and Realised Cash Flows 

in respect of all Margin Accounts of all Contributors on such Business Day.
NYDOCS01/1643340.2 219

(lxii) The term "Transfer Cost", on any Business Day, means the total amount payable 

by the Clearing House to Clearing Members or Sponsored Principals that are not 

Defaulters as consideration for the entry into of replacement Contracts in a 

Relevant Contract Category to those to which a Defaulter was party (or otherwise 

Transferred Contracts), whether as a result of an auction, sale or otherwise 

pursuant to Part 9 plus any associated costs or expenses of the Clearing House. 

(lxiii) The term "Uncovered Loss" or "UL" means in respect of the Clearing House on 

any Loss Distribution Day:

(A) where Rule 914(a)(ii)(A) applies, an amount calculated in accordance with 

the following formula:

Uncovered Loss(t) = TPHA(t) + CTC(t) - AR

where:

TPHA means the Total Pre-Haircut Amount;

CTC means the Cumulative Transfer Cost;

AR means the Available Resources; and

the Uncovered Loss as at the Last Call prior to Default shall be zero,

provided that if the Uncovered Loss would be greater than zero, it shall be 

deemed to be equal to be zero.

(B) where Rule 914(a)(ii)(B)(1) applies, the Estimated Payable Net Sum 

minus Available Non-Defaulter Resources; or

(C) where Rule 914(a)(ii)(B)(2) applies, the total of relevant net sums payable 

by but not received from the Defaulter minus Available Non-Defaulter 

Resources;

provided that, where there is more than one Event of Default with overlapping 

Relevant Post Default Periods, the Uncovered Loss may be calculated with regard 

to Cumulative Transfer Cost and Available Resources for all relevant Defaulters 

and Events of Default at that time.

(lxiv) The term "Under-priced Auction" means a situation in which such number of 

Default Auctions as are provided for in the Default Auction Procedures have 

taken place but a full allocation of the auctioned Contracts has not occurred or the 

auction price determined in such Default Auctions falls below any minimum or 

reserve price or above any maximum or reserve price set by the Clearing House.
NYDOCS01/1643340.2 220

Rule 914 Margin haircutting9

(a) This Rule 914 shall only apply if the Clearing House has published its determination (any 

such determination, a "Haircutting Determination") that the following five conditions 

are all satisfied:

(i) an Event of Default has been declared but the Clearing House has not yet declared 

(and either paid or submitted a claim in respect of) all net sums due to or from the 

Defaulter in respect of all of its different Proprietary Accounts and all of its 

different Customer Accounts; 

(ii) the Clearing House determines that one or more of the following circumstances 

has arisen:

(A) the sum of Outward MTM/VM Payments and Transfer Cost (if any) in 

respect of a particular Contract Category would, in its view, exceed 

Available Resources plus Received MTM/VM for the same Contract 

Category;

(B) Available Resources are insufficient to meet the shortfalls, losses or 

liabilities of the Clearing House on relevant Accounts of the Defaulter, 

which may be determined if, in its view:

(1) any Estimated Payable Net Sum would exceed the Available NonDefaulter Resources which, pursuant to Rule 908, would be 

available to meet the losses of the Clearing House represented by 

any net sum payable by the Defaulter were such net sum to be of 

an amount equal to the Estimated Payable Net Sum; or

(2) any net sums payable by the Defaulter that are calculated and 

declared by the Clearing House under Rule 906 (to the extent that 

the same have not been received by the Clearing House in cleared 

funds from the Defaulter) in total would exceed the Available NonDefaulter Resources which, pursuant to Rule 908, are to be applied 

to meet the losses of the Clearing House represented by such net 

sums;

provided that, where there is more than one Event of Default with overlapping 

Relevant Post Default Periods, such determinations may be made with regard to 

the Available Resources, Transfer Cost, Estimated Payable Net Sums and net 

sums relating to all relevant Defaulters and Events of Default at that time;

(iii) [Not used.]

 9 Rule 914 does not apply to the CDS Contract Category.
NYDOCS01/1643340.2 221

(iv) no Termination Circular has been issued in respect of the Relevant Contract 

Category; and

(v) there has been no Clearing House Event.

The Clearing House may make such currency conversions at its discretion and as it seems 

fit for purposes of making any of such determinations listed in paragraphs (A) or (B), 

based on the rates of exchange that would be applicable in respect of amounts due to or 

from a Defaulter.

(b) If there is a Haircutting Determination, the Clearing House shall issue a Circular to that 

effect specifying:

(i) the Relevant Contract Category or Relevant Contract Categories that is or are 

affected (or, if Rule 914(h) applies, the affected Contract Set or Sets); 

(ii) the date of commencement of any Loss Distribution Period; and

(iii) such other matters as the Clearing House considers are relevant, which may (but 

are not required to) include a date on which the Loss Distribution Period is 

expected to end. 

If any expected end date for the Loss Distribution Period is specified in the Circular, the 

Loss Distribution Period may nonetheless be extended by the publication of a further 

Circular and any expiry of a Loss Distribution Period arising as a result of a particular 

Event of Default shall not preclude there being any additional Loss Distribution Period at 

a later stage arising as a result of the same Event of Default. 

(c) Adjustment of MTM/VM payments for Cash Gainers. On each Loss Distribution Day for 

each Margin Account of each Contributor that is deemed to be a Cash Gainer, the 

relevant Contributor shall be required to pay the Clearing House an amount equal to any 

positive amount determined in accordance with the following formula separately for each 

of its Accounts or, as applicable, the Clearing House shall be required to pay the relevant 

Contributor the absolute value of any negative amount determined in accordance with the 

following formula (in each case, such amount the "Cash Gainer Adjustment"):

Cash Gainer Adjustment(t) = PHG(t) – ((CUG(t) x (1 - DH(t))) – CAG(t-1))

where:

PHG means the Pre-Haircut Gains, Losses and Realised Cash Flows;

CUG means the Cumulative Unadjusted Gains, Losses and Realised Cash Flows;

DH means the Distribution Haircut, expressed as a decimal provided that it shall be no 

greater than 1; and
NYDOCS01/1643340.2 222

CAG means the Cumulative Actual Gains, Losses and Realised Cash Flows and where 

CAG as at the Last Call prior to Default shall be zero.

Any Transfer Cost due to any Contributor that has won a Default Auction shall be paid in 

full and not be subject to any Cash Gainer Adjustment nor included in amounts PHG, 

CUG or CAG.

(d) Adjustment of MTM/VM Payments for Cash Losers. On each Loss Distribution Day for 

each Margin Account of each Contributor that is deemed to be a Cash Loser, the Clearing 

House shall be required to pay the absolute value of an amount (the "Cash Loser 

Adjustment") determined in accordance with the following formula separately for each 

of its Accounts:

Cash Loser Adjustment(t) = PHG(t) – (CHG(t) – CAG(t-1))

where:

PHG means the Pre-Haircut Gains, Losses and Realised Cash Flows;

CHG means the Cumulative Unadjusted Gains, Losses and Realised Cash Flows; and

CAG means the Cumulative Actual Gains, Losses and Realised Cash Flows and where 

CAG as at the Last Call prior to Default shall be zero. 

(e) On each Loss Distribution Day, the Clearing House shall apply the payment or receipt of 

any Margin Account Adjustment as an offset against any payments from or receivable by 

the relevant Contributor or aggregate it with any required payment to the Clearing House, 

in accordance with Part 3 or the Finance Procedures. MTM/VM obligations and related 

adjustments pursuant to this Rule 914 of Contributors that are not Defaulters shall then be 

paid and collected following such netting with other payment obligations as are provided 

for in Part 3 and the Finance Procedures.

(f) Where Physical Settlement is applicable to any CDS Contract or obligations relating to 

physical delivery in respect of any F&O Contract are to be performed following expiry or 

the end of trading in the relevant Set, on any Business Day during a Loss Distribution 

Period, the Clearing House may make such adjustments as are necessary to the 

calculation of Cash Gainer Adjustment or Cash Loser Adjustment to reflect the payment 

flows arising from such Physical Settlement or delivery, based on the principle that the 

calculation of Cash Gainer Adjustment and Cash Loser Adjustment is designed to capture 

all profits and/or losses on Open Contract Positions during the relevant Loss Distribution 

Period.

(g) Notwithstanding the effects of this Rule 914 during a Loss Distribution Period:

(i) Clearing Members and Sponsored Principals shall remain liable to pay, and shall 

continue to make timely payment of, all amounts falling due to, and shall remain 

liable to deliver, and shall continue to make timely delivery of, all property falling 

due for delivery to, the Clearing House in accordance with the Rules and 
NYDOCS01/1643340.2 223

Procedures, including obligations to pay Original/Initial Margin, Guaranty Fund 

Contributions and Assessment Contributions (in the latter case, subject always to 

the relevant caps set out in Rules 909, 910 and 911); and

(ii) the Clearing House will remain liable to pay or release Margin and Permitted 

Cover to Clearing Members and Sponsored Principals in the usual way, subject to 

netting to take account of any Cash Loser Adjustment.

(h) All such payments shall be made without regard to whether any payment which would 

have fallen due (were it not for the Haircutting Determination) has been made and 

without any offsetting or withholding of amounts under any other right of or to netting, 

set-off, lien, recouping, property, combination of accounts or other basis. 

(i) Any rebate, incentive scheme or fee discount arrangements that would otherwise result in 

amounts being payable by the Clearing House (whether for itself or on behalf of any 

Market) in respect of Contracts affected by the arrangements during the Loss Distribution 

Period shall not be applicable during any Loss Distribution Period. Action by the 

Clearing House under this Rule 914 shall not constitute any kind of Clearing House 

Event.

(j) Where the Clearing House determines that none of the situations under which a 

Haircutting Determination could be made persists or is likely to persist or otherwise 

wishes to end any Loss Distribution Period, it shall issue a Circular specifying the final 

date of the Loss Distribution Period. After the end of the Loss Distribution Period, the 

adjustments, modifications and limited recourse provisions specified in this Rule 914

shall no longer apply and the Clearing House shall resume calculating, collecting and 

paying MTM/VM payments in the ordinary course. The end of the Loss Distribution 

Period shall not preclude the Clearing House from making a further Haircutting 

Determination in respect of the same Event of Default to the extent that any open 

Contracts of the Defaulter have not been closed out, sold or liquidated and the other 

conditions of the Haircutting Determination are satisfied.

(k) Notwithstanding Rule 1102(k), this Rule 914(k) shall apply where the Clearing House (1) 

receives amounts from a Defaulter or another Clearing Member or Sponsored Principal

that would, had it been paid on time, have increased the Clearing House's Available 

Resources or Received MTM/VM on a Business Day on which any Margin Account 

Adjustment was made pursuant to this Rule 914 during a Loss Distribution Period; (2) 

recalculates any Estimated Payable Net Sum in circumstances in which the previously 

Estimated Payable Net Sum was higher; or (3) declares an actual net sum under Rule 906

in circumstances in which an Estimated Payable Net Sum had previously been used as a 

basis for invoking its rights under this Rule 914 where the actual net sum is greater than 

the last Estimated Payable Net Sum. Where this Rule 914(k) applies, the Clearing House 

shall distribute such amounts as it has received or estimates are now available (as 

applicable) (after deducting any administration and other costs of the Clearing House, 

including, without limitation, the costs of recovering or recalculating any such amounts):
NYDOCS01/1643340.2 224

(i) first to Contributors who are not then Defaulters (irrespective of whether they 

remain Clearing Members or Sponsored Principals at the time of the recovery) 

who became liable to pay Cash Gainer Adjustments during the Loss Distribution 

Period for the Contract Category to which the receipts relate, with the payments 

determined on a pro rata basis based on each Contributor's Adjustment Amount

in respect of the relevant Contract Category;

(ii) secondly, in accordance with Rule 1102(k).

(l) Payments of Cash Gainer Adjustments and Cash Loser Adjustments may be made 

pursuant to Part 3 of the Rules and the Finance Procedures. This Rule 914 is without 

prejudice to the Clearing House's rights to set off or net any sum owed by a Clearing 

Member, Sponsor or Sponsored Principal to the Clearing House against any sum payable 

by the Clearing House to a Clearing Member, Sponsor or Sponsored Principal or to any 

other powers of the Clearing House under Parts 3, 9 or 11 or the Procedures, but the 

Clearing House may not take any action under those provisions to the extent inconsistent 

with the provisions of this Rule 914. 

(m) Nothing in this Rule 914 shall require the Clearing House to pursue any litigation, claim 

or other action against a Clearing Member, Sponsored Principal, Sponsor or Defaulter in 

respect of any amount, obligation or asset (not being Available Resources or Available 

Defaulter Resources) which is owed or due but unpaid or unsatisfied by such Clearing 

Member, Sponsored Principal, Sponsor or Defaulter. 

(n) In carrying out any calculations or making any determinations pursuant to this Rule 914, 

the Clearing House may convert any amounts denominated in one currency into another 

currency chosen by the Clearing House in its discretion and at a rate of exchange chosen 

by the Clearing House in its discretion, provided the Clearing House shall act in a 

commercially reasonable manner when choosing a currency or a rate of exchange for the 

aforesaid purposes. 

(o) The Clearing House shall apply all Received MTM/VM and Available Resources solely 

to meet Outward MTM/VM Payments and Transfer Costs, as envisaged under Parts 9 and 

11 of the Rules and the Default Auction Procedures, to make reimbursement to Clearing 

Members and Sponsored Principals under Rule 914(k) and to fund its obligations to meet 

any shortfall, loss or liability incurred by it under Contracts or these Rules as permitted 

under the Rules.

Rule 915 [Not used.]

Rule 916 Contract Termination following Certain Conditions or Under-priced Auction10

(a) If:

 10 Rule 916 does not apply to the CDS Contract Category.
NYDOCS01/1643340.2 225

(i) [Not used.]

(ii) the following conditions are satisfied:

(A) an Event of Default has been declared but the Clearing House has not yet 

declared (and either paid or submitted a claim in respect of) all net sums 

due to or from the Defaulter in respect of its Proprietary Account and all 

of its different Customer Accounts;

(B) the Clearing House determines that one or more of the following 

circumstances has arisen: 

(1) its obligations to meet Outward MTM/VM Payments or the 

Transfer Cost, in its view, may not to be satisfied by applying 

Available Resources and the provisions set out in Rule 914;

(2) following either the declaration of all net sums in respect of a 

particular Event of Default or, where any net sum has not been 

declared, based on the calculation of an Estimated Payable Net 

Sum, the Clearing House, in its view, may either:

(a) become unable to pay its debts as they fall due; or

(b) have total liabilities which exceed its total assets,

in either case if it does not invoke the provisions set out in this Rule 

916; or

(3) there has been a Under-priced Auction in respect of the Relevant 

Contract Category; 

The Clearing House may make such currency conversions at its 

discretion and as it seems fit for purposes of making any of such 

determinations listed in paragraphs (1) or (2), based on the rates of 

exchange that would be applicable in respect of amounts due to or 

from a Defaulter; 

(C) either (x) all of the Contracts of the Defaulter have been terminated; or (y) 

there has been a Default Auction or attempted Default Auction; and

(D) there has been no Clearing House Event; or 

(iii) following the service of notices by Clearing Members and Sponsored Principals

under Rule 917, the Clearing House determines that there are insufficient Clearing 

Members and Sponsored Principals interested in continuing to clear Contracts of a 

Relevant Contract Category for clearing of such Relevant Contract Category to 

remain viable,
NYDOCS01/1643340.2 226

and there has been no Clearing House Event, then the Clearing House may issue a 

Termination Circular.

(b) If the Clearing House is to terminate Contracts under this Rule 916, it must issue a 

Circular (a "Termination Circular") stating: 

(i) the Relevant Contract Category or Relevant Contract Categories in respect of 

which Contracts are to be terminated;

(ii) the Clearing House's intention to rely upon and apply Rule 916; 

(iii) the applicable Termination Price for each Contract Set of the Relevant Contract 

Category or Relevant Contract Categories that are to be terminated; 

(iv) the date and time on which termination will take place "Termination Time"); and

(v) such other matters as the Clearing House considers are relevant. 

(c) Upon and with effect immediately as from the Termination Time, every open Contract in 

the Relevant Contract Category shall be automatically terminated at the Termination 

Price, without the need for any further step by any party to such Contract. Neither the 

Clearing House nor any Clearing Member or Sponsored Principal that is not a Defaulter 

shall be obliged to make any further payments, physical settlement or deliveries under 

any Contract which would, but for this Rule 916(c), have fallen due for performance on 

or after the Termination Time, and any obligations to make further payments or deliveries 

which would otherwise have fallen due shall be satisfied by settlement (whether by 

payment, set off or otherwise) of the Termination Amount and other payment and 

delivery obligations in relation to any Contracts and any other obligations pursuant to the 

Rules (including the repayment or redelivery of any Original/Initial Margin or Guaranty 

Fund Contribution) that is relevant solely to the Relevant Contract Category that is 

subject to a termination shall be payable or deliverable on the Business Day after the 

Termination Time and in accordance with the provisions of this Rule 916 in full 

discharge of the Clearing House's obligations in respect of Contracts of the Relevant 

Contract Category.

(d) The Termination Price for Contracts in the same Set shall be the equal for all such 

Contracts and shall be the same for all Clearing Members and Sponsored Principals that 

are party to Contracts of the same Set. Termination Prices shall be based upon the value 

of Contracts as at the Termination Time in accordance with the principles set out in this 

Rule 916(d) but without reference to the Loss Distribution Process in Rule 914. Such 

Termination Prices shall be calculated as the relevant loss or gain that would be 

calculated for purposes of items L and A in Rule 905(a) were a net sum to be required to 

be calculated, but based on:

(i) for a Set:

(A) of F&O Contracts, the Market Delivery Settlement Price (excluding any 

such price determined or over-ridden by the Clearing House) or any other 
NYDOCS01/1643340.2 227

exchange delivery settlement price or other settlement price or market 

quotation established or published by a Market for which the Clearing 

House provided Clearing services for the relevant Contract Set prior to the 

Termination Date (or, if the Termination Date is not a business day for the 

relevant Market, the business day for the relevant Market immediately 

preceding the Termination Date);

(B) of CDS Contracts, the latest established Mark-to-Market Price for each 

relevant Set as at the Termination Time, determined using the 

methodology standardly applicable for determining Mark-to-Market 

Prices; or

(C) of FX Contracts, the latest established FX Market Price for each relevant 

Set as at the Termination Time, determined using the methodology 

standardly applicable for determining FX Market Prices;

provided that, prior to or around the time of giving effect to the termination, the 

Clearing House may, following consultation with the Risk Committee, determine 

that it should conduct a final price submission and price determination process to 

determine a Mark-to-Market Price or FX Market Price for purposes of termination 

in which it shall use its standard processes and procedures to determine the price 

and which Clearing Members shall participate in fully, in good faith, using their

standard processes and procedures and in accordance with Applicable Laws.

(ii) if no price described in Rule 916(d)(i) exists or is determined, the last market 

quotation or settlement price established or published by another Exchange or 

Clearing Organisation (that is not subject to an Insolvency) selected by the 

Clearing House for an economically similar contract to the Set immediately prior 

to the Termination Time; or

(iii) if no price described in Rule 916(d)(i) or (ii) exists or is determined, at a 

commercially reasonable price as reasonably determined by the Clearing House 

by reference to objective and observable market prices at the relevant Termination 

Time, the mean settlement price for the Termination Time based on a survey of 

market participants active in Contracts similar to the Set or otherwise on such 

basis as the Clearing House determines with a view to obtaining a fair valuation.

(e) The maximum amount that may be paid or repaid in respect of the Relevant Contract 

Category and related liabilities and rights shall be calculated separately in respect of each 

Margin Account for each Clearing Member and Sponsored Principal with a Relevant 

Membership Category that is not a Defaulter, by way of a net sum calculation using the 

calculation under Rule 906 mutatis mutandis, as if the Clearing Member or Sponsored 

Principal were a Defaulter, bringing into account the Termination Price for purposes of 

calculating amounts L and A and all net Cash Gainer Adjustments relating to the Relevant 

Contract Category but otherwise solely bringing into account any amount for purposes of 

such calculation inasmuch as it relates to the Relevant Contract Category ("Product 

Termination Amount"). To the extent that any Original/Initial Margin, Surplus 
NYDOCS01/1643340.2 228

Collateral or other assets are held by the Clearing House for the account of a Clearing 

Member or Sponsored Principal in respect of any Contract of a Relevant Contract 

Category (or any such asset becomes Surplus Collateral as a result of Termination), the 

amount of such Original/Initial Margin, assets or Surplus Collateral shall be included in 

the Product Termination Amount.

(f) Following its determination of the Product Termination Amount in relation to each 

Margin Account for each Clearing Member or Sponsored Principal that is not a Defaulter, 

the Clearing House shall calculate the Available Product Funds as the sum equal to the 

aggregate of the Negative Product Repayment Amounts in respect of each affected 

Clearing Member and Sponsored Principal. Where the Available Product Funds are less 

than the aggregate amount of Positive Product Repayment Amounts, the Clearing House 

shall calculate the Discounted Product Repayment Amount for each Positive Product 

Repayment Amount payable to the Clearing Member or Sponsored Principal by 

multiplying each such Positive Product Repayment Amount by the fraction determined 

by dividing A by B, where A is the Available Product Funds and B is the aggregate 

amount of Positive Product Repayment Amounts.

(g) Prior to any amount being paid or collected pursuant to Rule 916(h), the Clearing House 

shall notify each Clearing Member and Sponsored Principal that is due to receive a 

Positive Product Repayment Amount of such amount and any Discounted Product 

Repayment Amount and the extent to which this differs from the Product Termination 

Amount. This notification shall show in reasonable detail how any Discounted Product 

Repayment Amount has been calculated by the Clearing House. Where a Discounted 

Product Repayment Amount is notified to a Clearing Member or Sponsored Principal, 

such amount shall be payable by the Clearing House and the Clearing House shall have 

no obligation (other than pursuant to Rule 916(i)) to pay either the Product Termination 

Amount or the Termination Price or any difference between any such amount or price 

and the Discounted Product Repayment Amount.

(h) The Clearing House will issue payment instructions to collect (and each Clearing 

Member and Sponsored Principal shall, immediately upon receipt of any such 

instructions, pay) each Negative Product Repayment Amount in respect of the Relevant 

Contract Category, prior to the Clearing House making payment to Clearing Members 

and Sponsored Principals of Positive Product Repayment Amounts or Discounted 

Product Repayment Amounts. All payments in respect of Negative Product Repayment 

Amounts shall be made by Clearing Members and Sponsored Principals without any 

offsetting or withholding of amounts under any other right of or to netting, set-off, lien, 

recouping, property, combination of accounts or other basis. If any Clearing Member or 

Sponsored Principal fails to pay any Negative Product Repayment Amount due to the 

Clearing House, the Discounted Product Repayment Amount may be recalculated for 

each Margin Account and Contributing Clearing Member and, if so recalculated, will be 

notified to affected Contributing Clearing Members. Payment of any Discounted Product 

Repayment Amount shall constitute full satisfaction of the Clearing House's obligations 

and liabilities relating to the Relevant Contract Category.
NYDOCS01/1643340.2 229

(i) Notwithstanding the termination process under this Rule 916, Clearing Members and 

Sponsored Principals, (including each Defaulter) and the Clearing House, shall each 

remain liable to pay, and shall continue to make timely payment of, all amounts falling 

due, and shall remain liable to deliver, and shall continue to make timely delivery of, all 

property falling due for delivery, in accordance with the Rules and Procedures, including: 

(A) pursuant to Contracts which are not terminated; (B) Original/Initial Margin in 

relation to Contracts that are not terminated; (C) replenishments of and returns in respect 

of Guaranty Fund Contributions in respect of any Guaranty Fund that is not a Relevant 

Guaranty Fund; and (D) Assessment Contributions subject always to the relevant caps set 

out in Rules 909, 910 and 911.

(j) Any rebate, incentive scheme or fee discount arrangements that would otherwise result in 

amounts being payable by the Clearing House (whether for itself or on behalf of any 

Market) in respect of Contracts to be terminated under this Rule 916 shall not be 

applicable in respect of such Contracts. 

(k) No action or omission by the Clearing House pursuant to this Rule 916 shall constitute 

any kind of Clearing House Event.

(l) If the Clearing House terminates Contracts of a particular Set, this shall not preclude it 

from terminating Contracts of a different Set of the same Relevant Contract Category in 

respect of the same Event of Default.

(m) In carrying out any calculations or making any determinations pursuant to this Rule 916, 

the Clearing House may convert any amounts denominated in one currency into another 

currency chosen by the Clearing House in its discretion and at a rate of exchange chosen 

by the Clearing House in its discretion, provided the Clearing House shall act in a 

commercially reasonable manner when choosing a currency or a rate of exchange for the 

aforesaid purposes. 

(n) Notwithstanding Rule 1102(k) and Rule 914(k), this Rule 916(n) shall apply where the 

Clearing House (1) receives amounts from a Defaulter or another Clearing Member or 

Sponsored Principal that would, had it been paid on time, have meant that a Negative 

Product Termination Amount being lower or eliminated or a Positive Product 

Termination Amount being higher; (2) recalculates any Estimated Payable Net Sum in 

circumstances in which the previously Estimated Payable Net Sum was higher in 

circumstances in which any resulting Negative Product Termination Amount would have 

been lower or eliminated or a Positive Product Termination Amount would have been 

higher based on the later Estimated Payable Net Sum; or (3) an actual net sum is declared 

by the Clearing House under Rule 906 in circumstances in which any resulting Negative 

Product Termination Amount would have been lower or eliminated or a Positive Product 

Termination Amount would have been higher based on the actual net sum. Where this 

Rule 916(n) applies, the Clearing House shall distribute such amounts as it has received 

or estimates are now available (as applicable) (after deducting any administration and 

other costs of the Clearing House, including, without limitation, the costs of recovering or 

recalculating any such amounts):
NYDOCS01/1643340.2 230

(i) first to Clearing Members and Sponsored Principals that are not Defaulters who 

would, but for this Rule 916, have received a Termination Price in full, with the 

payments determined on a pro rata basis based on the difference between the 

Discounted Product Repayment Amount and the Product Repayment Amount in 

respect of each Clearing Member or Sponsored Principal;

(ii) secondly, in accordance with Rule 914(k); and 

(iii) for the avoidance of doubt, thirdly, under Rule 1102(k) (as modified by 

Rule 914(k)).

(o) Nothing in this Rule 916 shall require the Clearing House to pursue any litigation, claim 

or other action against a Clearing Member, Sponsored Principal, Sponsor or Defaulter in 

respect of any amount, obligation or asset (not being Available Resources or Available 

Defaulter Resources) which is owed or due but unpaid or unsatisfied by such Clearing 

Member, Sponsored Principal, Sponsor or Defaulter. 

(p) Payments of Negative Product Repayment Amounts, Positive Product Repayment 

Amounts and Discounted Product Repayment Amounts may be made following such 

netting with other payment obligations as are provided for in Part 3 and the Finance 

Procedures. 

Rule 917 Cooling-off period and Clearing Member termination rights11

(a) Upon the occurrence of any Cooling-off Period Trigger Event, the Clearing House shall 

issue a Circular notifying Clearing Members and Sponsored Principals of the 

commencement of the Cooling-off Period, setting out the date on which such period is 

scheduled to end (and on the date on which the Cooling-off Termination Period is 

scheduled to end), and specifying the Relevant Contract Category.

(b) From the commencement of, and solely for the duration of, the Cooling-off Period: 

(i) None of the second sentences of any of Rule 909(c), Rule 910(c) or Rule 911(c)

shall apply to a Clearing Member with the Membership Category of the Relevant 

Contract Category, until the end of the Cooling-off Period;

(ii) Relevant Assessment Contributions of Clearing Members under Rules 909, 910

and 911 for all Events of Default occurring or declared during the Cooling-off 

Period in relation to the Relevant Contract Category shall not exceed three times 

the amount of the Clearing Member's required Relevant Guaranty Fund 

Contribution immediately prior to the commencement of the Cooling-off Period 

(with any Assessment Contributions payable in respect of the Event of Default 

which occurred prior to the start of the Cooling-Off Period being counted towards 

reducing such maximum amount); and a Clearing Member in a Cooling-off 

 11 Rule 917 does not apply to the CDS Contract Category. 
NYDOCS01/1643340.2 231

Period that has made a total of three Relevant Assessment Contributions shall not 

be liable for any further replenishments of its Relevant Guaranty Fund 

Contribution or Relevant Assessment Contributions, regardless of how many 

additional Events of Default take place;

(iii) for the avoidance of doubt, the required Guaranty Fund Contribution-based caps 

on the amount of Assessment Contributions for a Clearing Member in respect of 

each particular Relevant Contract Category shall apply on a per Event of Default 

basis, in the same way as set out in the first sentences of each of Rule 909(c), 

Rule 910(c) and Rule 911(c), in respect of each Event of Default occurring or 

declared during the Cooling-off Period;

(iv) no replenishment of Relevant Guaranty Fund Contributions under Rule 1102(i) or 

Rule 1102(j) shall take place; and

(v) there shall be no rebalancing, re-setting or recalculation of Relevant Guaranty 

Fund Contribution requirements or the total required amount in any Relevant 

Guaranty Fund for purposes of determining liability for replenishment of Relevant 

Guaranty Fund Contributions or Relevant Assessment Contributions;

provided that the limits set out in this Rule 917(b) shall only apply if the Clearing 

Member continues during the Cooling-off Period to pay the Clearing House all amounts 

when due (subject to the caps and limits set out in this Rule 917(b)). 

(c) At any time during the Cooling-off Termination Period, a Clearing Member or Sponsored 

Principal with the Relevant Membership Category may give written notice of termination 

of that Membership Category or of its membership of the Clearing House to the Clearing 

House. 

(d) At the end of the Cooling-off Period, the restrictions and requirements of Rule 917(b)

shall cease to apply, subject to Rule 918(a)(ii), going forwards, to each Clearing Member 

that has not served a Termination Notice during the Cooling-off Termination Period.

Rule 918 Termination of membership12

(a) A Clearing Member or Sponsored Principal that has served a Termination Notice, under 

Rule 917(c) is subject to the following requirements, obligations and provisions (and 

certain of these provisions are also applicable pursuant to other sorts of termination or 

withdrawal, pursuant to Rule 105(c), Rule 209(b) and Rule 209(d)) (in the case of a 

Sponsored Principal, solely in respect of the relevant Individually Segregated Sponsored 

Account):

 12 Rule 918 does not apply to the CDS Contract Category. Rule 918 further does not apply to CDS Clearing 

Members (regardless of whether they are also F&O Clearing Members or FX Clearing Members).
NYDOCS01/1643340.2 232

(i) it must use all reasonable endeavours, until such time (if any) as there is a 

subsequent Clearing House Event, to close out all of its open Contracts of the 

Relevant Contract Category prior to the Termination Close-Out Deadline Date;

(ii) if it closes out all of its open Contracts in respect of the Relevant Contract 

Category prior to the Termination Close-Out Deadline Date and complies with the 

other requirements of this Rule 918, it shall maintain the benefit of the protections 

set out in Rule 917(b) and such provision shall not apply solely during the 

Cooling-off Period;

(iii) after the Termination Notice Time, it shall only be entitled to submit Transactions 

relating to the Relevant Contract Category for clearing or become party to 

Contracts of the Relevant Contract Category which it can demonstrate have the 

overall effect of reducing Open Contract Positions in any Set of Contracts of a 

Relevant Contract Category or risks to the Clearing House associated with 

Contracts of a Relevant Contract Category, whether by hedging, novating, 

Transferring, terminating, liquidating or otherwise closing out such Contracts;

(iv) if it is a Clearing Member and has any open Contracts of the Relevant Contract 

Category with the Clearing House (whether recorded in a Proprietary Account or 

Customer Account) after the Termination Close-Out Deadline Date (and 

notwithstanding any provision of Rules 909 to 911 to the contrary) the Clearing 

Member shall as from the Termination Close-Out Deadline Date:

(A) become liable to replenish any Relevant Guaranty Fund Contribution that 

would have fallen due for replenishment but has not been paid, become 

liable to have applied any Relevant Guaranty Fund Contribution that 

would have been applied but was not so applied and become liable to pay 

any Relevant Assessment Contribution that would have fallen due but has 

not been paid, in each case to the extent that the same would have been 

payable or applied but for its service of a Termination Notice and in each 

case in respect of any Event of Default affecting a Clearing Member with 

a Relevant Membership Category that has occurred subsequent to the 

Termination Notice Time; 

(B) become liable for further obligations to replenish any Relevant Guaranty 

Fund Contribution, have any Relevant Guaranty Fund Contribution 

applied or pay Relevant Assessment Contributions in the same way as any 

other Clearing Member with its Membership Categories in respect of any 

Event of Default occurring prior to the Termination Date; and 

(C) be subject to the Clearing House exercising rights in Part 9 to liquidate or 

Transfer the Open Contract Positions of the Clearing Member of the 

Relevant Contract Category (insofar as they relate to clearing of Contracts 

relating to a Relevant Contract Category) and otherwise deal with the 

Clearing Member's Contracts and property in the same way as if the 

Clearing Member were a Defaulter. 
NYDOCS01/1643340.2 233

(v) the Clearing House may call for additional Original/Initial Margin until such time 

as all of its open Contracts of the Relevant Contract Category have been 

terminated, and such Clearing Member or Sponsored Principal shall pay such 

additional Original/Initial Margin to the Clearing House as is requested on time;

(vi) if it is a Clearing Member, it shall be obliged to participate in Default Auctions 

pursuant to the Default Auction Procedures in the same way as any other nondefaulting Clearing Member and subject to the provisions of Rule 908(h) in 

respect of all Events of Default occurring prior to the Cooling-off Period Trigger 

Event which gave rise to or extended the Cooling-off Termination Period during 

which the Clearing Member served its Termination Notice (or, if Rule 917(c)

does not apply, the Termination Notice Time);

(vii) there shall be no rebalancing, re-setting or recalculation of Relevant Guaranty 

Fund Contribution requirements or the total required amount in any Relevant 

Guaranty Fund for purposes of determining liability for replenishment of Relevant 

Guaranty Fund Contributions or Relevant Assessment Contributions of the 

Clearing Member that has served a Termination Notice;

(viii) following termination of all open Contracts of the Relevant Contract Category to 

which a terminating Clearing Member or Sponsored Principal (the "Terminating 

Participant") was party in relation to a particular Customer Account or 

Proprietary Account, the Clearing House shall then declare a net sum (which may 

be declared in parts, as envisaged below) as due to or from the Terminating 

Participant in accordance with Rules 904 and 906, in the same way as if the 

Terminating Participant were a Defaulter but with the following modifications: 

(A) references in Part 9 to "Default" or an "Event of Default" shall be read as 

references to a Terminating Participant terminating its membership of the 

Relevant Membership Category and, in the case of a failure to close out 

Contracts of the Relevant Contract Category only in respect of a particular 

Customer Account or Proprietary Account, shall be construed as applying 

only in respect of such account;

(B) any net sum calculated in relation to the Terminating Participant under 

Rule 906 will be calculated only with regard to rights, obligations and 

liabilities relating to the Relevant Contract Category and any such net sum 

which is payable to the Terminating Participant shall not be paid by the 

Clearing House to such Terminating Participant until the later of: 

(1) ten Business Days after the date on which the termination 

of the Terminating Participant's open Contracts of the 

Relevant Contract Category and the realisation or return of 

any Original/Initial Margin provided in respect of such 

Contracts, Relevant Guaranty Fund Contributions or other 

assets remaining credited to the Terminating Participant's 

relevant Proprietary Account or Customer Account in 
NYDOCS01/1643340.2 234

respect of clearing of the Relevant Contract Category or 

otherwise in the Clearing House's possession in respect of 

clearing of the Relevant Contract Category is completed 

(subject always to Rule 102(q)); or

(2) if the Terminating Participant has any unapplied Relevant 

Guaranty Fund Contributions, the date of expiry of the 

Guaranty Fund Period for the Relevant Guaranty Fund 

immediately following the Guaranty Fund Period current 

on the Termination Date;

(C) notwithstanding anything in Part 9 or elsewhere in these Rules:

(1) the Clearing House may at its discretion return amounts 

due to the Terminating Participant in different currencies or 

by way of transfer or return of non-cash Permitted Cover to 

the Terminating Participant; 

(2) the Clearing House may further pay any net sum calculated 

under Rule 906 and payable to the Terminating Participant

in different amounts denominated in different currencies 

and is not required to pay a single sum in one currency; and

(3) the Clearing House may make part payment of any

amounts due excluding the Relevant Guaranty Fund 

Contribution prior to the time specified in 

Rule 918(a)(viii)(B).

(D) it is acknowledged that any 'net sum' declared in accordance with this 

Rule 918(a)(viii) is not formally a 'net sum' for purposes of the Companies 

Act 1989;

(E) a Clearing Member or Sponsored Principal subject to these provisions is 

not a Defaulter and no Default Notice will be issued or required to be 

issued in respect of such Clearing Member, Sponsor or Sponsored 

Principal in order for the Clearing House to exercise its rights under this 

provision or for the Clearing Member, Sponsor or Sponsored Principal in 

question to receive any payment or return of assets; and

(F) references to Part 9 in any other Rules or in the Procedures, Circulars or 

Guidance shall be construed in accordance with this Rule 918 when they 

fall to be applied in relation to the termination of a Clearing Member's 

membership or Sponsored Principal’s status under this Rule 918 and any 

action taken by the Clearing House following such termination taking 

effect.

(b) If: 
NYDOCS01/1643340.2 235

(i) a Clearing Member has served a Termination Notice under Rule 917(c); 

(ii) there is an Event of Default or are Events of Default before the relevant 

Termination Date,

then the Clearing Member in question shall remain liable for the application of any then 

unapplied Relevant Guaranty Fund Contributions and unapplied Relevant Assessment 

Contributions (including those paid or which the Clearing Member is liable to pay under 

Rule 209(d)) for all such Events of Default (as if all such Events of Default had been 

declared by the Clearing House prior to the Termination Notice Time), subject to the 

general limits relating to particular Events of Default and all Events of Default referred to 

in this Rule 918.

(c) Any Termination Notice issued by a Clearing Member or Sponsored Principal shall be 

irrevocable by the Clearing Member or Sponsored Principal and membership may only 

be reinstated pursuant to a new application for membership following the close-out of all 

its open Contracts of the Relevant Contract Category.

(d) A Clearing Member whose membership in respect of the Relevant Membership Category 

has terminated shall, following the Termination Date, cease to be liable for Guaranty 

Fund Contribution replenishments under Rule 1102 in respect of Events of Default 

relating to the Relevant Contract Category or affected Membership Category that occurs

after the Termination Date. 

Rule 919 Non-Default Losses and Investment Losses

(a) This Rule 919 shall only apply if:

(i) there has been a Non-Default Loss or Investment Loss; and

(ii) there has been no Clearing House Event.

(b) Any Non-Default Loss will first be met by the Clearing House applying any Loss Assets 

that were available at the time of the event giving rise to the Non-Default Loss and after 

that, only by applying any other available capital or assets of the Clearing House. The 

first portion of any Investment Loss will also be met by the Clearing House first applying 

any Loss Assets that were available at the time of the event giving rise to the Investment 

Loss prior to taking any action under Rule 919(c).

(c) Upon the Clearing House certifying an Investment Loss Amount in a Circular of an 

amount greater than the Loss Assets that were available at the time of the event giving 

rise to the Investment Loss, all Clearing Members shall indemnify the Clearing House 

and become liable to pay Collateral Offset Obligations to the Clearing House in 

accordance with the formula set out in Rule 919(d). Any Circular under this Rule 919(c) 

shall specify:

(i) the nature and extent of the Investment Loss
NYDOCS01/1643340.2 236

(ii) the date on which Collateral Offset Obligations will become due; and

(iii) such other matters as the Clearing House considers are relevant.

(d) The Collateral Offset Obligation payable by each Clearing Member shall be the amount:

(ILA – LA) x GF&M(CM)

GF&M(all)

subject to the caps in Rules 919(d)-(e).

where:

ILA is the Investment Loss Amount certified by the Clearing House in a Circular;

LA is the total amount of available Loss Assets at the time of the event giving rise to the 

Investment Loss and have been or are to be attributed to meet the Investment Loss 

Amount;

GF&M(CM) is the total of all Original/Initial Margin, Guaranty Fund Contributions and 

Permitted Cover in respect thereof for all Contract Categories across all Accounts of the 

relevant Clearing Member at the time of the event giving rise to the Investment Loss 

(provided that for a Defaulter, GF&M(CM) shall only equal the amount of such 

Original/Initial Margin and Permitted Cover that is not otherwise used to offset amounts 

representing losses in the net sum calculation as a result of the Default); and

GF&M(all) is the total of all Original/Initial Margin, Guaranty Fund Contributions and 

Permitted Cover in respect thereof for all Contract Categories across all Accounts of all 

Clearing Members at the time of the event giving rise to the Investment Loss (less 

Original/Initial Margin, Guaranty Fund Contributions and Permitted Cover in respect 

thereof provided by Defaulters that is used to offset amounts representing losses in the 

net sum calculation pursuant to these Rules as a result of the Default and excluding the 

Clearing House Contributions and Loss Assets).

(e) The Collateral Offset Obligation of any Clearing Member shall at no time exceed the 

total of the Original/Initial Margin, Guaranty Fund Contributions and Permitted Cover in 

respect thereof that it has deposited with or transferred to the Clearing House at the time 

of the event giving rise to the Investment Loss across all its Accounts.

(f) All Collateral Offset Obligations shall arise on the date specified in the Circular under 

Rule 919(c). Any Collateral Offset Obligations falling due may, at the election of the 

Clearing House, be offset against the obligation of the Clearing House to return or pay 

any Original/Initial Margin, Guaranty Fund Contributions or other Permitted Cover to a 

Clearing Member and will be collected pursuant to a call for additional cash Margin or 

cash Guaranty Fund Contributions from a Proprietary Account of the Clearing Member in 

accordance with Rule 302 and the Finance Procedures. In the case of a Defaulter, 

Collateral Offset Obligations may, at the election of the Clearing House, be included in 

any net sum calculation or offset against any obligation to return or pay outside of the net 
NYDOCS01/1643340.2 237

sum calculation any Original/Initial Margin, Guaranty Fund Contributions or other 

Permitted Cover that has not been included in the net sum calculation pursuant to these 

Rules as a result of the Default. Collection from a Proprietary Account is not intended to 

prevent the Clearing Member from passing on the cost of a Collateral Offset Obligation 

to any of its Customers under the relevant Customer-Clearing Member Agreement or 

Standard Terms, to the extent that the Collateral Offset Obligation relates to Margin on a 

Customer Account or is otherwise attributable to a Customer and to the extent permitted 

by Applicable Laws.

(g) The Clearing House shall apply Collateral Offset Obligations solely to meet Investment 

Losses referred to in a Circular under Rule 919(c).

(h) If, after any Collateral Offset Obligations have fallen due, the Clearing House collects 

amounts from an issuer, counterparty or otherwise so as to reduce an Investment Loss, in 

either case in cleared funds, the Clearing House shall be obliged to pay the amount or 

value of Permitted Cover so collected (less any expenses of the Clearing House, 

including without limitation any expenses incurred in connection with recovery) to the

Clearing Members that provided such Collateral Offset Obligations pro rata in respect of 

satisfied Collateral Offset Obligations relating to the event in question, subject to the 

Clearing House first retaining or repaying amounts up to the amount of any assets of the 

Clearing House (not being Loss Assets) or other Persons applied to meet the Investment 

Loss following exhaustion of the assets specified in this Rule 919 or in substitution of 

any such assets.

(i) No Collateral Offset Obligation shall reduce or otherwise affect the liability of a Clearing 

Member to make Guaranty Fund Contributions pursuant to Rule 1101 et seq., to replenish 

any Guaranty Fund Contribution pursuant to Rule 1102(i) or to pay Assessment 

Contributions. Notwithstanding any Collateral Offset Obligations, Clearing Members 

shall remain liable to pay, and shall continue to make timely payment of, all amounts 

falling due to, and shall remain liable to deliver, and shall continue to make timely 

delivery of, all property falling due for delivery to, the Clearing House in accordance 

with the Rules and Procedures, including obligations to pay Original/Initial Margin, 

Guaranty Fund Contributions and Assessment Contributions and the Clearing House will 

remain liable to pay or release Margin and Permitted Cover to Clearing Members in the 

usual way, subject to netting under Part 3 and the Finance Procedures to take into account 

the effect of any Collateral Offset Obligation. All such payments shall be made without 

regard to whether any payment which would have fallen due (were it not for the 

Collateral Offset Obligations) and without any offsetting or withholding of amounts 

under any other right of or to netting, set-off, lien, recouping, property, combination of 

accounts or other basis.

(j) If the Clearing House determines that it has provided for Collateral Offset Obligations in 

excess of that required or actually applied against an Investment Loss (less Loss Assets 

applied) or makes a recovery that is due to Clearing Members under Rule 911(h), it shall 

credit any excess or recovered amounts due to the Clearing Member's Proprietary 

Account. Credit to a Proprietary Account is not intended to prevent the Clearing Member 

from passing on the credit related to a Collateral Offset Obligation to any of its 
NYDOCS01/1643340.2 238

Customers under the relevant Customer-Clearing Member Agreement and Standard 

Terms, to the extent that the Collateral Offset Obligation relates to Margin or Permitted 

Cover on a Customer Account or is otherwise attributable to a Customer. If a Proprietary 

Account becomes over-collateralised as a result of any such credit, any resulting Surplus 

Collateral will be available for withdrawal under Part 3 and the Finance Procedures in the 

normal way.

(k) Liabilities of Clearing Members in respect of Collateral Offset Obligations under this 

Rule 919 shall apply independently from any powers of assessment under Rules 909 to 

911 and give rise to a separate and additional payment obligation for Clearing Members. 

For the avoidance of doubt, none of the caps on powers of assessment liabilities arising 

pursuant to Rule 917 or 918 shall restrict or limit any liability of a Clearing Member in 

respect of Collateral Offset Obligations under this Rule 919. The conditions in Rule 

916(a)(ii)(B)(2) shall not be considered satisfied to the extent that they are only satisfied 

as a result of any Non-Default Loss or Investment Loss.

(l) Any right being exercised or circumstances occurring that are governed by this Rule 919 

shall not constitute any kind of Clearing House Event.

(m) Payments of Collateral Offset Obligations may be made pursuant to Part 3 of the Rules 

and the Finance Procedures. This Rule 919 is without prejudice to the Clearing House's 

rights to set off or net any sum owed by a Clearing Member to the Clearing House 

against any sum payable by the Clearing House to a Clearing Member or to any other 

powers of the Clearing House under Parts 3, 9 or 11 or the Procedures, but the Clearing 

House may not take any action under those provisions to the extent inconsistent with the 

provisions of this Rule 919. 

(n) Nothing in this Rule 919 shall require the Clearing House to pursue any litigation, claim 

or other action against a Clearing Member, Defaulter, Custodian or any other Person in 

respect of any amount, obligation or asset which is owed or due but unpaid or unsatisfied 

by such Clearing Member, Defaulter, Custodian or other Person.

(o) In carrying out any calculations or making any determinations pursuant to this Rule 919, 

the Clearing House may convert any amounts denominated in one currency into another 

currency chosen by the Clearing House in its discretion and at a rate of exchange chosen 

by the Clearing House in its discretion, provided the Clearing House shall act in a 

commercially reasonable manner when choosing a currency or a rate of exchange for the 

aforesaid purposes. 

(p) The Clearing House will notify Clearing Members from time to time, by Circular of the 

total amount of Loss Assets, which will be set at a level of USD 90 million as at the date 

of introduction of this Rule.

(q) The total amount of Loss Assets applied in connection with any Investment Loss shall be 

notified to Clearing Members in a Circular prior to or promptly after the same being 

applied or replenished. The Clearing House may also replenish any regulatory capital, 

using its or its Affiliates' resources or otherwise, as is required to bring it in compliance 
NYDOCS01/1643340.2 239

with Applicable Laws at any time including following an Investment Loss or NonDefault Loss. However, no such recapitalisation shall result in any obligation of any 

Clearing Member to pay Collateral Offset Obligations being reduced nor the size of any 

Investment Loss being reduced. The Clearing House may replenish Loss Assets through 

re-applying retained earnings, where these are available. To the extent that the Clearing 

House replenishes Loss Assets or its capital in such or other circumstances, its liability 

for any further Non-Default Losses or Investment Losses shall not exceed the amount 

specified in Rule 919(p) or such other amount as is notified by Circular.

(r) Without limiting Rule 111 or Rule 502, but subject to any contrary requirements of law, 

the Clearing House shall not be liable to any Clearing Member, Customer or other Person 

for any losses, liabilities, damages, costs, claims, shortfalls or expenses arising out of or 

relating to any failure, in whole or in part, of any payment or securities services provider, 

including without limitation any Custodian, Approved Financial Institution, central 

securities depository or central bank. 
NYDOCS01/1643340.2 240

Part 10 Disciplinary Proceedings

Rule 1001 Complaints

(a) The Clearing House shall consider all complaints made to it in writing by a Clearing 

Member and may consider any complaints made to it by any other person. If the 

Clearing House, in its discretion, considers it appropriate or if it is otherwise compelled 

to do so under any Applicable Law, the Clearing House may refer the matter or make a 

report on the matter to a Market, Regulatory Authority or Governmental Authority.

(b) In the case of a complaint which alleges a breach of these Rules, the Clearing House may 

authorise an investigation or commence disciplinary proceedings under this Part 10 or 

take no further action if it considers it disproportionate or otherwise, in its discretion.

(c) The Clearing House shall inform the complainant in writing of any steps taken as a result 

of the complaint and of the result thereof.

(d) In the event of a complaint against the Clearing House or any of its officers or employees 

(or agents in their capacity as such), such complaint shall be investigated in accordance 

with the Complaints Procedures and shall not otherwise be subject to this Part 10.

Rule 1002 Investigations

(a) Investigations into breaches or alleged breaches of the Rules may be authorised and 

conducted by the Clearing House.

(b) Upon determining that a complaint, matter or concern requires investigation, the Clearing 

House shall issue a Notice of Investigation ("NoI") notifying the Clearing Member 

concerned that an investigation has been commenced. The NoI shall be sent to the 

Clearing Member or the person concerned and shall contain a brief description of the 

matter under investigation.

(c) In the course of conducting an investigation, the Clearing House may call for the 

assistance of such professional, legal or accounting advisers, Clearing Organisations, 

Exchanges, Regulatory Authorities and advisers or other Persons as it thinks fit. Any 

external adviser appointed by the Clearing House shall be required to treat all information 

obtained in the course of the investigation as confidential and to disclose it only to the 

Clearing House, save where compelled to disclose such documents to a third party under 

any Applicable Law.

(d) Clearing Members shall co-operate fully with all investigations (whether or not such 

Clearing Member or person is the direct subject of such investigation). Without 

limitation, each Clearing Member shall:

(i) promptly furnish to the Clearing House such information and documentary and 

other material (including any information in electronic form) as may reasonably 

be requested (including without limitation in the case of Clearing Members, 

details of the Clearing Member's Customers' accounts);
NYDOCS01/1643340.2 241

(ii) permit those persons appointed to carry out or assist in carrying out the 

investigation on reasonable notice, such notice being commensurate with the 

seriousness of the potential or alleged breach of the Rules and to enter any 

premises in any part of the world where the Clearing Member carries on its 

business or maintains its records during normal business hours for the purpose of 

carrying out such investigation. Each Clearing Member hereby irrevocably grants 

the Clearing House a licence for this purpose and shall procure a licence to the 

Clearing House from any Affiliated Person, agent or third party under its control 

that is necessary for this purpose;

(iii) exercise best endeavours to make available for interview such of the Clearing 

Member's Representatives as may reasonably be requested and use its best 

endeavours to ensure that such persons answer truthfully and fully any question 

put to him or them by or on behalf of the Clearing House. A Clearing Member 

who fails to procure any of its Representatives to attend an interview or hearing 

with the Clearing House and who fails in the reasonable opinion of the Clearing 

House to demonstrate good cause for such failure may be fined £1000 per day of 

non-attendance, such fine representing a genuine pre-estimate of the likely cost to 

the Clearing Houses attributable to such non-attendance, and the Clearing 

Member may be suspended until the Clearing Member takes reasonable steps to 

make its Representatives available on an alternative date;

(iv) make available for inspection such documents, records or other material in its 

possession, power or control as may reasonably be required and, upon request, 

provide copies of the same; and

(v) use its best endeavours to ensure that so far as possible its Representatives give 

similar co-operation.

(e) Failure to co-operate with an investigation by the Clearing House, failure to provide 

information requested on a timely basis and concealment or destruction of evidence are 

each, for the avoidance of doubt, a breach of these Rules.

(f) The Clearing House, having conducted an investigation into an alleged breach of the 

Rules, shall send to the relevant Clearing Member a letter of mindedness ("Letter of 

Mindedness") setting out its preliminary factual conclusions and its intended course of 

action in relation to the alleged breach.

(g) Following its issuing of the Letter of Mindedness, the Clearing House shall invite the 

Clearing Member to either attend an initial meeting ("IM") or alternatively send the 

Clearing House written comments. The purpose of the IM or the written comments shall 

be to afford the Clearing Member an opportunity to correct any factual error it considers 

to be contained in the Letter of Mindedness. The IM is not intended to be a hearing. The 

proceedings of the IM will take place on a confidential basis, subject, in the case of the 

Clearing House, to Rule 106. The Clearing House and Clearing Member shall each be 

entitled to nominate up to four attendees, who may include lawyers or legal advisers.
NYDOCS01/1643340.2 242

(h) Following the IM or the receipt of written comments from the Clearing Member (if 

received within a reasonable time) the Clearing House shall finalise its initial findings 

and communicate these in writing to the Clearing Member.

(i) Without prejudice to any other powers, the possible powers of the Clearing House 

following the completion of its investigation and the communication of its initial findings 

to the Clearing Member include:

(i) to decide that no further action should be taken and notify any Clearing Member 

or other Person concerned in writing accordingly;

(ii) in the event of a minor breach, to issue a written warning (which shall be private 

save as provided for in Rule 1002(i)(vii) below) to the Clearing Member 

concerned (or, in the case of such a breach by some other Person, that Person with 

a copy to any Clearing Member with whom he was associated at the time of such 

breach);

(iii) to order that the Clearing Member concerned pay a fine which the Clearing House 

in its discretion regards as commensurate with a breach of the Rules, the amount 

of such fine to be appellable to the Appeals Panel directly without reference first 

to a Disciplinary Panel;

(iv) to commence disciplinary proceedings;

(v) to refer the matter for further enquiry where the Clearing House considers it 

necessary to investigate further;

(vi) to report the findings of the investigation and hand over any documents or 

communicate any information it has acquired whether during the course of its 

investigation or otherwise, to other Clearing Organisations, Exchanges, 

Regulatory Authorities or Governmental Authorities; or

(vii) to publish such findings as it has made following the IM and in such detail as the 

Clearing House deems appropriate where the matter under investigation is 

considered of relevance to the market in general or in the public interest, save that 

the Clearing Member shall be afforded an opportunity to comment on the text of 

such an announcement during a period of no less than 48 hours prior to 

publication, such period commencing on a Business Day;

provided that the Clearing House may, in an appropriate case, take more than one of the 

above actions in relation to any one Clearing Member and/or different actions in relation 

to different Clearing Members concerned in the same investigation or on similar facts.

Rule 1003 Disciplinary Proceedings

(a) Disciplinary proceedings may be commenced by the Clearing House only when the 

Clearing House is satisfied (whether or not a formal investigation has taken place under 
NYDOCS01/1643340.2 243

this Part 10) that there is prima facie evidence of a breach of the Rules by a Clearing 

Member.

(b) Upon determining that disciplinary proceedings should be commenced, the Clearing 

House must establish a Disciplinary Panel. Each Disciplinary Panel shall consist of a 

chairman sitting with two other persons. Such persons, including the Chairman, that are 

appointed to the Disciplinary Panel may be drawn from market practitioners, experts, 

lawyers or other suitable persons at the discretion of the Clearing House. Neither 

employees nor directors of the Clearing House or Clearing Member subject to 

disciplinary proceedings nor any of their Affiliated Persons, Representatives or 

Customers shall be appointed to a Disciplinary Panel. Expert assessors may be 

appointed, at the discretion of the Disciplinary Panel itself, to sit with and advise the 

Disciplinary Panel but not to vote. No person shall serve on or sit with a Disciplinary 

Panel if he has a personal or financial interest in or has been involved in any investigation 

into or previous disciplinary panel hearing on the matter under consideration.

(c) The Clearing Member alleged to have committed the breach may object to any particular 

appointment to the Disciplinary Panel, which objection will be determined in the first 

instance by the chairman of the Disciplinary Panel and, in the event that the objection is 

in relation to the chairman of the Disciplinary Panel, the Chairman of the Clearing House.

(d) In the event of any member of the Disciplinary Panel having or acquiring a personal or 

financial interest in the outcome or in any other way being or becoming incapacitated or 

permanently unavailable, the chairman of the Disciplinary Panel (or in the case of the 

chairman of the Disciplinary Panel, the Chairman of the Clearing House) may direct that 

the Disciplinary Panel shall continue to act with a reduced number or appoint another 

person to take the place of the retiring member of the Disciplinary Panel (and the 

disciplinary proceedings shall then proceed as if such person had been originally 

appointed in lieu of the first person) or may direct that a new Disciplinary Panel should 

be appointed to rehear the matter.

(e) In the event of equality of votes, the chairman shall have a second or casting vote in 

reaching any determination.

(f) The Clearing House may discontinue disciplinary proceedings or reach a settlement with 

the Clearing Member on such terms as it sees fit at any stage during the course of the 

disciplinary proceedings (including any Summary Procedure pursuant to Rule 1004 or 

any appeal).

(g) When the Clearing House commences disciplinary proceedings, it shall send a written 

notice ("Notice") to the Clearing Member, setting out the alleged breach of the Rules, 

including a summary of facts relied upon in sufficient detail for a party in the Clearing 

Member's position properly to understand and respond to the allegations made against it.

(h) The Clearing Member or other person the subject of a Notice shall have 20 days (or such 

further time as either the Clearing House or Disciplinary Panel may in their discretion 

allow) from the service of the Notice in which to provide a statement of defence (the 
NYDOCS01/1643340.2 244

"Defence") responding to all or any of the allegations, stating its intended pleas and what 

admissions of fact, if any, it makes. If no Defence has been served within 20 days of 

service of the Notice or such extended period as has been agreed, the Disciplinary Panel 

may in its discretion deem the Clearing Member to have accepted the facts and matters 

alleged in the Notice.

(i) Having seen and considered the Defence, the Clearing House may proceed with the 

disciplinary proceedings, discontinue the disciplinary proceedings or deal with the matter 

as set out in Rule 1003(j).

(j) The Clearing House may at any time amend a Notice by deletion, alteration or addition, 

change to the Rule breach alleged in the Notice or addition of another Rule breach in the 

Notice provided that:

(i) the deletion, alteration, addition, change, amendment or variation is relevant to the 

course of conduct under investigation;

(ii) the essential character of the allegation or Rule breach has not been changed;

(iii) the Clearing Member or other respondent would not be substantially prejudiced in 

any defence he might wish to put before the Disciplinary Panel; and

(iv) the Disciplinary Panel has not previously and does not subsequently make a 

procedural ruling adverse to the Clearing House in connection with such deletion, 

alteration, addition, change, amendment or variation.

(k) For the avoidance of doubt, the power of the Clearing House to amend a Notice will exist 

where the Clearing House has in its discretion determined that a separate or unrelated 

prima facie breach of the Rules has been revealed during the course of the disciplinary 

proceedings. The Disciplinary Panel may order an adjournment at any stage upon an 

application by the Clearing House to enable such an alleged separate or unrelated prima 

facie breach to be investigated further. The Clearing House shall not be obliged to hold a 

further IM or otherwise consult with the Clearing Member in respect of additional or new 

alleged breaches.

(l) Upon amendment of a Notice, the Clearing Member shall have 14 days or such extended 

period as may be agreed with the Clearing House or as directed by the Disciplinary Panel 

to make any consequential amendment of its Defence. If no amended Defence has been 

served within 14 days of service of the amended Notice on the Clearing Member, the 

Disciplinary Panel may in its discretion deem the Clearing Member to have accepted the 

facts and matters alleged in the Notice.

(m) The Disciplinary Panel shall hear submissions on the matter of the alleged breach of the 

Rules and shall determine whether there has been a violation of the Rules and, if so, the 

appropriate sanction (if any) to be imposed. In carrying out this function, the 

Disciplinary Panel acting as a whole or through the Chairman may adopt such procedure 

as it thinks fit, including the holding of a pre-hearing review to hear procedural 

applications by the Clearing House or Clearing Member at any stage following its 
NYDOCS01/1643340.2 245

composition or in order to set a procedural timetable. Without limitation, the 

Disciplinary Panel may:

(i) order the disclosure by the Clearing House or Clearing Member of such further 

statements, information, documents or other evidence as may be necessary;

(ii) allow either party to the proceedings to present to it further evidence within time 

limits ordered by the Disciplinary Panel;

(iii) issue directions and take such other steps as it considers appropriate for the 

clarification of the facts and issues and for the just and expeditious determination 

of the case;

(iv) balancing the need for cases to be dealt with expeditiously and the need for 

affected Persons to have sufficient opportunity to prepare and present their case: 

specify deadlines for the production of documents or hearings, which shall be 

binding on the parties;

(v) if it considers appropriate, but only with the express agreement of the Clearing 

House and the Clearing Member concerned (or the Person concerned and any 

associated Clearing Member), decide to determine the case upon written 

submissions and evidence placed before it;

(vi) in all other cases, give the opportunity to, or require, the Clearing House and the 

Clearing Member to attend hearings before the Disciplinary Panel and the 

Clearing House and the Clearing Member may call witnesses to give evidence and 

be questioned;

(vii) allow the Clearing Member and the Clearing House to be assisted or represented 

by any person, who may or may not be legally qualified;

(viii) call for any person to attend its hearings;

(ix) require hearings to be held in private unless the Clearing Member or Clearing 

House requests otherwise and the other consents; and

(x) appoint its own legal advisers.

(n) The Disciplinary Panel shall apply the civil standard of proof on the balance of 

probabilities, with the cogency of evidence required being commensurate with the 

seriousness of the alleged breach.

(o) The Disciplinary Panel shall not be bound by any rule of law or court procedure 

concerning admissibility of evidence and may accept as conclusive any finding of fact 

made by a court or any other Governmental Authority.

(p) If the Clearing House or Clearing Member should fail to meet a time limit imposed by the 

Disciplinary Panel or fail to attend a hearing, the Disciplinary Panel may in its discretion 
NYDOCS01/1643340.2 246

allow an extension of time, adjourn its proceedings or proceed, if necessary in the 

absence of the Clearing Member.

(q) Upon having determined whether a breach of the Rules has been proven in accordance 

with the standard of proof set out in Rule 1003(n), the Disciplinary Panel shall 

communicate in writing its findings and particulars of any sanction determined to the 

Clearing House and to the Clearing Member concerned. Such findings and sanction shall 

be deemed conclusive and binding upon expiry of the time permitted for appeal or receipt 

by the Clearing House of any earlier written notice from the Clearing Member that such 

right of appeal will not be exercised. The Disciplinary Panel may in its absolute 

discretion communicate its findings to the parties and give them, where there is a finding 

that there has been a disciplinary breach, the opportunity to make representations as to 

the appropriate sanction(s) before deciding on the sanction(s).

(r) Subject to Rule 1003(u), the sanctions which may be imposed on a person subject to the 

Rules by a Disciplinary Panel shall be communicated to the Clearing Member and shall 

not exceed the following:

(i) the issue of a private warning or reprimand;

(ii) the issue of a public notice of censure;

(iii) in the case of a Representative, a finding that any Clearing Member for which 

such Representative is a director, controller or officer would not meet the Clearing 

House's membership criteria for any period or indefinitely;

(iv) in the case of a Clearing Member, disqualification (either indefinitely or for a 

fixed term) of any of its Representatives from being a Director or member of a 

committee or any panel of the Clearing House;

(v) a fine of any amount, to be paid on such terms as may be prescribed;

(vi) the disgorgement of any gain made by the Clearing Member or its Representatives 

in connection with the breach of the Rules;

(vii) a recommendation to the Clearing House to suspend membership for a period of 

time or terminate the membership of the Clearing Member;

(viii) the issue of an order requiring the Clearing Member or Representative found to 

have committed the breach to take such steps including making an order for 

compensation, as the Disciplinary Panel may direct, to remedy the situation 

including, without limitation, making an order for restitution to any affected 

person when the Clearing Member (or person concerned) has profited (or avoided 

a loss) from a breach at that person's expense;

(ix) in an appropriate case, more than one of the above actions in relation to any one 

Clearing Member and/or different actions in relation to different Clearing 

Members concerned in the same investigation or on similar facts; and
NYDOCS01/1643340.2 247

(x) any combination of the foregoing.

(s) Following the suspension or expulsion of a Clearing Member, the Clearing House may 

make such directions as it thinks fit in respect of Contracts to which that Clearing 

Member is a party (including, without limitation, directions for the reduction, transfer or 

elimination of any of them).

(t)

(i) The contravention of any sanction imposed or direction made under or pursuant to 

Rule 1003(q) may be treated for all purposes as a breach of the Rules.

(ii) A Disciplinary Panel may order any party to the proceedings to pay costs as it 

thinks appropriate, including, but not limited to the costs of running the 

Disciplinary Panel, further administration costs directly attributable to the 

disciplinary proceedings, costs incurred in the investigation, preparation and 

presentation of the case, including the costs of the Clearing House's and 

Disciplinary Panel's external advisers.

(u) The following sanctions may be imposed by a Disciplinary Panel where the conduct in 

question is found by the Disciplinary Panel to result in whole or in part from the conduct 

of a Customer or client of a Customer of a Clearing Member:

(i) the issue of a private warning or reprimand naming the Customer or client of a 

Customer or any of their Representatives;

(ii) the issue of a public notice of censure naming the Customer or client of a 

Customer or any of their Representatives;

(iii) a recommendation to the Clearing House to suspend the Customer or client of a 

Customer (either indefinitely or for a fixed term) or any of their Representatives 

from being a Director or member of a committee or any panel or from being a 

Customer or client of a Customer of any Clearing Member of the Clearing House 

for purposes of Clearing or the Clearing of any particular product at the Clearing 

House;

(iv) a fine of any amount, to be paid by such Person as is specified by the Disciplinary 

Panel to the Clearing House (which shall be binding on the Customer or client of 

a Customer or any of their Representatives if so specified by the Disciplinary 

Panel), on such terms as may be prescribed;

(v) the disgorgement of any gain made by the Customer or client of a Customer or 

any of their Representatives in connection with the breach of the Rules payable by 

such Person as is specified by the Disciplinary Panel to the Clearing House 

(which shall be binding on the Customer or client of a Customer or any of their 

Representatives if so specified by the Disciplinary Panel), on such terms as may 

be prescribed;
NYDOCS01/1643340.2 248

(vi) in an appropriate case, more than one of the above actions in relation to any one 

Customer or client of a Customer or any of their Representatives and/or different 

actions in relation to different Customers or clients of Customers or any of their 

Representatives concerned in the same investigation or on similar facts; and

(vii) any combination of the foregoing.

The Disciplinary Panel shall only impose any sanction on a Person that it determines is or 

was responsible (whether solely, jointly or by way of contribution) for the relevant 

conduct. If sanctions are to be imposed as a result of any conduct of a Customer or client 

of a Customer, the relevant Clearing Member may present information or evidence to the 

relevant Disciplinary Panel as to whether any sanctions should be limited to those set out 

in this Rule 1003(u). If any pecuniary sanction imposed by a Disciplinary Panel is 

expressed to be payable by a Customer or any of its clients or their Representatives but 

not to be payable by the Clearing Member, the Clearing Member shall not be liable for 

payment of, or to collect, any such amount.

Rule 1004 Summary Procedure

(a) A Clearing Member may submit in writing a request that the Clearing House adopt a 

summary procedure under this Rule 1004 ("Summary Procedure") for disposing of the 

matter. Such notice may be served by the Clearing Member at any time prior to the 

formation of the Disciplinary Panel.

(b) The Clearing House may in its discretion agree to refer the matter to the Summary 

Procedure and shall notify the Clearing Member of any such determination.

(c) Upon reference of the matter to the Summary Procedure the Clearing House in its 

absolute discretion shall nominate three Directors or employees of the Clearing House or 

of any Clearing Member other than the Clearing Member subject to the Summary 

Procedure to hear the submissions of the Clearing Member into the alleged breach, who 

shall form a Summary Disciplinary Committee. The Clearing House shall nominate one 

such member of the Summary Disciplinary Committee to act as Chairman.

(d) The Summary Disciplinary Committee shall make such directions as to the procedural 

conduct of the case before it as it sees fit.

(e) The Summary Disciplinary Committee shall apply the civil standard of proof on the 

balance of probabilities, with the cogency of evidence required being commensurate with 

the seriousness of the alleged breach. The Summary Disciplinary Committee shall not be 

bound by any rule of law or court procedure concerning admissibility of evidence and 

may accept as conclusive any finding of fact by a court or Governmental Authority.

(f) The Summary Disciplinary Committee shall hold a private hearing at which the Clearing 

Member shall be present in order to put to the Clearing Member the alleged breach of the 

Rules and hear any submissions the Clearing Member or its Representatives make in 

relation to the alleged breach or the mitigation.
NYDOCS01/1643340.2 249

(g) None of the Clearing House, the Clearing Member or the Summary Disciplinary 

Committee shall be represented by legal advisors at a hearing except with the prior 

express agreement of the Summary Disciplinary Committee.

(h) Save as provided in Rule 1005, a Clearing Member that chooses to submit itself to the 

Summary Procedure expressly waives any right of appeal or review by any body 

including any court of law against any determination or ruling of the Summary 

Disciplinary Committee.

(i) The Summary Disciplinary Committee shall, following the hearing, determine whether a 

Clearing Member has breached the Rules and shall determine what sanction or sanctions 

are to be imposed on the Clearing Member or Representative. Upon having determined 

in its absolute discretion whether a breach of the Rules has occurred, the Summary 

Disciplinary Committee shall communicate its findings and particulars of any sanction to 

the Clearing Member. The Summary Disciplinary Committee shall enjoy the full range 

of powers of sanction open to a Disciplinary Panel and may impose a combination of any 

such sanctions as it sees fit.

(j) A determination or sanction imposed by the Summary Disciplinary Committee may be 

appealed under Rule 1005 to an Appeals Panel and shall not be referred to a Disciplinary 

Panel.

Rule 1005 Appeals

(a)

(i) Within 14 days of receiving notice in writing of a decision of a Disciplinary 

Panel, a determination in writing of a Summary Disciplinary Committee or a 

notice of sanction (whichever is the later), or such longer period as the chairman 

of the Disciplinary Panel or the Summary Disciplinary Committee may in his 

discretion direct, a Clearing Member (whether current or former in the case of 

expulsion) or the Clearing House, or both, may appeal to an Appeals Panel by 

lodging with the Clearing House a notice of appeal in writing and by delivering a 

copy thereof to any other party to the disciplinary proceedings.

(ii) A notice of appeal shall set out the grounds of the appeal and shall contain a brief 

statement of all matters relied on by the appellant. The grounds of the appeal may 

be any one or more of the following:

(A) the Disciplinary Panel or Summary Disciplinary Committee misdirected 

itself; or

(B) the Disciplinary Panel's or Summary Disciplinary Committee's decision 

was:

(1) one which no reasonable tribunal could have reached; or
NYDOCS01/1643340.2 250

(2) unsupported by the evidence or was against the weight of the 

evidence; or

(3) in the case of the Disciplinary Panel only, based on an error of law, 

or a misinterpretation of the Rules; or

(C) the sanction imposed by the Disciplinary Panel, Clearing House or 

Summary Disciplinary Committee was excessive or, in the case of an 

appeal by the Clearing House, was insufficient or inappropriate; or

(D) new evidence is available and that, had it been made available, the

Disciplinary Panel, Clearing House or Summary Disciplinary Committee 

could reasonably have come to a different decision. This will not apply, in 

the case of the Disciplinary Panel only, if the evidence could have been 

adduced before the Disciplinary Panel by the exercise of reasonable 

diligence;

but no party may otherwise appeal.

(iii) In the case of appeal against a sanction, the Appeals Panel may affirm, vary or 

revoke the sanction. The Appeals Panel may make such order or give such 

direction as it considers fit, including, in the case of an appeal from the 

Disciplinary Panel, a direction for a rehearing of the case by another newly 

constituted Disciplinary Panel.

(b) Upon receipt of such a notice of appeal, the Clearing House shall appoint an Appeals 

Panel.

(c) The Clearing House shall have 14 working days or such other period as the Chairman of 

the Disciplinary Panel or the Summary Disciplinary Committee, as the case may be (or 

the Appeals Panel in its exclusive discretion should it be constituted at such time), may 

allow from the service of the notice of appeal to serve notice of any grounds on which it 

objects to such appeal.

(d) An Appeals Panel shall consist of a chairman sitting alone who shall be a solicitor 

admitted in England and Wales or a member of the Bar of England and Wales and who 

shall be appointed at the discretion of the Clearing House. No members of any 

disciplinary panel, serving members of the Clearing House's committees dealing with any 

disciplinary or summary disciplinary proceedings, employees of the Clearing House or 

Clearing Member subject to disciplinary proceedings or any of their Affiliated Persons, 

Representatives or Customers shall be appointed to an Appeals Panel. Expert assessors 

may be appointed, at the discretion of the Chairman of the Appeals Panel, to sit with and 

advise the Appeals Panel but not to vote. No Person shall serve on or sit with an Appeals 

Panel if he has a personal or financial interest in or has been involved in any investigation 

into or previous disciplinary panel or Summary Disciplinary Committee hearing 

(including that which is the subject of the appeal itself) on the matter under consideration.
NYDOCS01/1643340.2 251

(e) An Appeals Panel may adopt such procedure as it thinks fit and just, including, without 

limitation, the procedures described in Rule 1003(m) and shall be bound by Rule 1003(n)

and (o). An Appeals Panel shall further enjoy all powers vested in disciplinary panels, 

procedural or otherwise. The appellant and the respondent may appear, make 

representations and (subject to any restriction on adducing new evidence), call witnesses, 

who may be examined and cross-examined.

(f) The decision of an Appeals Panel shall be final and binding and there shall be no further 

appeal. The decision with reasons shall be notified to the appellant and respondent in 

writing without undue delay.

Rule 1006 Sponsored Principals

(a) This Part 10 applies to Sponsored Principals in the same way as it applies to Clearing 

Members with no Customers.
NYDOCS01/1643340.2 252

Part 11 Guaranty Funds

Rule 1101 Establishment and parameters of the Guaranty Funds

(a) There shall be three separate Guaranty Funds operated by the Clearing House: the F&O 

Guaranty Fund, the CDS Guaranty Fund and the FX Guaranty Fund. F&O Clearing 

Members shall be liable to make and maintain F&O Guaranty Fund Contributions. CDS 

Clearing Members shall be liable to make and maintain CDS Guaranty Fund 

Contributions. FX Clearing Members shall be liable to make and maintain FX Guaranty 

Fund Contributions. The total amount required in each Guaranty Fund will be 

established by the Clearing House in accordance with the Finance Procedures. F&O 

Guaranty Fund Contributions will be designated for each Guaranty Fund Period and F&O 

Clearing Member as relating primarily to either Energy or Financials & Softs Clearing, 

based on the Margin requirements for such Contracts for the purposes of Rule 908(a)(v) 

to (vii). The total amounts of each Guaranty Fund will be expressed (and Guaranty Fund 

Contributions will be called) in the currency or currencies set out in the Finance 

Procedures and will be reviewed periodically by the Clearing House in advance of the 

end of each Guaranty Fund Period for each of those Guaranty Funds. If the Clearing 

House determines that the total amount in any Guaranty Fund is to change, Clearing 

Members will be given notice by Circular and will be informed of their new Guaranty 

Fund Contribution requirements prior to the start of the Guaranty Fund Period when the 

change becomes effective.

(b) The Clearing House will communicate to Clearing Members by Circular the basis on 

which their Guaranty Fund Contributions are calculated.

(c) The Clearing House may vary the parameters by reference to which Guaranty Fund 

Contributions are calculated from time to time and at any time upon issuing a Circular to 

Clearing Members. Any new parameters will come into effect on the date of the next 

applicable re-calculation of Guaranty Fund Contributions, unless Clearing Members are 

otherwise notified of a different effective date. Parameters for Guaranty Funds will be 

established on the basis that the Guaranty Fund Contributions of each Clearing Member 

for F&O, CDS or FX will be proportional to the exposures of each Clearing Member in 

F&O, CDS or FX and that each Guaranty Fund shall enable the Clearing House to 

withstand, under extreme but plausible market conditions, (i) at least the largest default of 

the Clearing Member to which it has the largest exposures or the second and third largest 

Clearing Members, if the sum of their exposures is larger or (ii) such other higher default 

parameters required by other Applicable Laws with respect to financial resource 

requirements. The Clearing House may add further parameters to define the size of any 

Guaranty Fund.

(d) Clearing Members shall be required and liable to make Guaranty Fund Contributions in 

the amounts and at the times specified in accordance with Rule 1102 and (a), such that 

the Guaranty Funds are always at least of the size required pursuant to this Rule 1101, 

except in circumstances in which amounts are drawn down from any Guaranty Fund in 

order to meet liabilities resulting from an Event of Default and such amounts have not 

been replenished in accordance with this Part 11. For the avoidance of doubt, a Clearing 
NYDOCS01/1643340.2 253

Member will not be in breach of the Rules nor capable of being declared a Defaulter 

solely as a result of any of its Guaranty Fund Contributions being applied and its 

Guaranty Fund Contributions with the Clearing House not being the total required 

amount (unless and until such time as the Clearing House issues a call for further 

Guaranty Fund Contributions and the amount called is not paid when due, in which case 

such Clearing Member may be declared a Defaulter).

(e) Separate amounts of CDS Guaranty Fund Contribution will be calculated based on the 

Proprietary Account Positions and Customer Account Positions (if any) relating to CDS 

Contracts of a CDS Clearing Member but this shall not result in any restriction on the use 

of any CDS Guaranty Fund Contribution following an Event of Default.

Rule 1102 Clearing Members' Contributions

(a) Clearing Members' required Guaranty Fund Contributions at the start of each Guaranty 

Fund Period (or otherwise when a payment to a Guaranty Fund is due) will be calculated 

with reference to the total amount of the relevant Guaranty Fund established pursuant to 

Rule 1101.

(b) F&O Guaranty Fund Contributions, CDS Guaranty Fund Contributions and FX Guaranty 

Fund Contributions, for each Clearing Member, will be calculated each Guaranty Fund 

Period based on criteria set out in the Finance Procedures, risk policies and Circulars, in 

accordance with the requirements of EMIR and other Applicable Laws.

(c) Required Guaranty Fund Contributions will be calculated or re-calculated, as the case 

may be, by the Clearing House for each Clearing Member and notified in advance of each 

Guaranty Fund Period.

(d) Guaranty Fund Contributions must be in the form of cash or other Permitted Cover, 

subject to such limits as are specified in the Finance Procedures and Circulars.

(e) In the event of any change in the value of non-cash Guaranty Fund Contributions, the 

Clearing Member may be required by the Clearing House to make an additional Guaranty 

Fund Contribution. Clearing Members will be permitted (and may be required) at any 

time to make additional Guaranty Fund Contributions (beyond the required Guaranty 

Fund Contributions) in order to reduce the risk that revaluations of non-cash Permitted 

Cover result in such additional Guaranty Fund Contributions falling due.

(f) New Clearing Members admitted to membership of the Clearing House shall make the 

required minimum Guaranty Fund Contributions plus such other amount as the Clearing 

House at its discretion determines is necessary based on projected clearing activity. Any 

such Guaranty Fund Contributions by a new Clearing Member or Clearing Members shall 

not result in any obligation on the Clearing House to repay any Guaranty Fund 

Contributions to other Clearing Members and the size of the relevant Guaranty Funds 

shall be increased accordingly until the end of the relevant Guaranty Fund Period.

(g) F&O Guaranty Fund Contributions and CDS Guaranty Fund Contributions of a Clearing 

Member following termination of its membership of the Clearing House will be returned 
NYDOCS01/1643340.2 254

to the Clearing Member on the first date of the first new Guaranty Fund Period beginning 

after the Transfer, close out or termination of all of its positions at the Clearing House 

and the payment of all other amounts due to the Clearing House (subject to F&O 

Guaranty Fund Contributions and CDS Guaranty Fund Contributions being applied under 

Part 9 or this Part 11 and further subject to any extension to the F&O Guaranty Fund 

Period or CDS Guaranty Fund Period pursuant to Rule 1102(l)). CDS Guaranty Fund 

Contributions of a Clearing Member that is both an F&O Clearing Member and a CDS 

Clearing Member following termination of its membership of the Clearing House in 

relation to CDS under Rule 209(f)13 under the Continuing CDS Rule Provisions will be 

returned to the Clearing Member on the first date of the first new Guaranty Fund Period 

for the CDS Guaranty Fund beginning after the Transfer, close out or termination of all of 

its CDS Contract positions at the Clearing House and the payment of all other amounts 

due to the Clearing House in respect of CDS Contracts (subject to CDS Guaranty Fund 

Contributions being applied under Part 9 or this Part 11 and further subject to any 

extension to the Guaranty Fund Period for the CDS Guaranty Fund pursuant to Rule 

1102(l)). The obligation of the Clearing House to return to an F&O Clearing Member 

any remaining portion of its F&O Guaranty Fund Contributions in the event of 

termination of its F&O clearing membership of the Clearing House will be satisfied by 

accounting for the amount of that obligation in the determination of a net sum under Rule 

906 or, a net sum as referred to in Rule 918(a)(viii) (whichever is applicable or the 

earlier), in either case payable by the Clearing House or the Clearing Member to the 

other, provided that in the case of a termination under Rule 209(c)(i)(A), the 

determination of the portion of such F&O Guaranty Fund Contributions to be so taken 

into account may be made up to and including the first date of the first new F&O 

Guaranty Fund Period beginning after the transfer or liquidation of all of the relevant 

F&O Clearing Member's F&O Contracts at the Clearing House. The obligation of the 

Clearing House to return to an FX Clearing Member any remaining portion of its FX 

Guaranty Fund Contributions in the event of termination of its FX clearing membership 

of the Clearing House will be satisfied by accounting for the amount of that obligation in 

the determination of a net sum under Rule 906 or a net sum as referred to in Rule 

918(a)(viii) (whichever is applicable or the earlier), in either case payable by the Clearing 

House or the Clearing Member to the other, provided that in the case of a termination 

under Rule 209(c)(i)(A), the determination of the portion of such FX Guaranty Fund 

Contributions to be so taken into account may be made up to and including the first date 

of the first new FX Guaranty Fund Period beginning after the transfer or liquidation of all 

of the relevant FX Clearing Member's FX Contracts at the Clearing House. 

(h) Each Clearing Member will be entitled to receive interest payments on its cash Guaranty 

Fund Contributions each quarter through the banking arrangements detailed in Part 3 and 

no accommodation charges will apply to any non-cash Guaranty Fund Contributions.

(i) In the event of application of any Guaranty Fund Contributions taking place pursuant to 

Rule 908 or Rule 1103, the Clearing House shall:

 13 This reference is to Rule 209(f) under the Continuing CDS Rule Provisions.
NYDOCS01/1643340.2 255

(i) give notice by Circular of the amount by which each relevant Guaranty Fund has 

been reduced;

(ii) notify each Clearing Member and any relevant former Clearing Member of the 

amount for which it is liable to make additional Guaranty Fund Contributions in 

order to replenish the relevant Guaranty Funds;

(iii) in the case of any F&O Guaranty Fund Contributions being applied, specify the 

new amount of each of the Clearing House F&O Contributions by Circular;

(iv) in the case of any CDS Guaranty Fund Contributions being applied, specify the 

new amount of each of the Clearing House CDS Contributions by Circular; and

(v) in the case of any FX Guaranty Fund Contributions being applied, specify the new 

amount of each of the Clearing House FX Contributions by Circular.

Clearing Members must make required replenishment Guaranty Fund Contributions 

upon demand (subject to Rule 917 and Rule 918(a)(ii)).

14 The Clearing House shall 

ensure that any specified new Clearing House Contributions are held by it in accordance 

with Rule 1103(e) at the same date as Guaranty Fund Contributions for the relevant 

Guaranty Fund are so due. Any obligation on a Clearing Member to make payments 

pursuant to this Rule 1102(i) is separate from, and shall apply in addition to, any 

obligation to make payment in respect of F&O Assessment Contributions pursuant to

Rule 909, CDS Assessment Contributions pursuant to Rule 910 (subject only to the 

provisions of Rule 910(h) and (i)), or FX Assessment Contributions pursuant to Rule 911.

(j) If:

(i) an Event of Default is declared in relation to more than one Defaulter 

contemporaneously (excluding an Event of Default declared in respect of a 

Disclosed Principal Member or Sponsored Principal when an Event of Default is 

declared contemporaneously in respect of its Clearing Member or Sponsor, 

respectively) (the defaulter in respect of whom default proceedings are first 

completed being the "First Defaulter" and any other defaulter being an 

"Additional Defaulter" or, if default proceedings are completed at the same time, 

the Defaulter whose name would appear first alphabetically being the "First 

Defaulter" and any other Defaulter or Defaulters being an "Additional 

Defaulter"); or

(ii) a separate Event of Default is declared in relation to a Defaulter or Defaulters that 

has or have made a Guaranty Fund Contribution or Guaranty Fund Contributions 

 14 This sentence shall not apply to CDS Clearing Members. In accordance with the Continuing CDS Rule 

Provisions, CDS Clearing Members must make required CDS Guaranty Fund Contributions prior to the opening 

of business on the first Business Day following the notice under Rule 1102(i)(ii) or such other later date as is 

specified by the Clearing House at its discretion.
NYDOCS01/1643340.2 256

to the same Guaranty Fund (any, an "Additional Defaulter") prior to the 

termination of default proceedings in relation to an existing Defaulter ("First 

Defaulter"),

and recourse is made to Guaranty Fund Contributions in respect of the First Defaulter (or 

any Additional Defaulter), then (subject to Rule 917 and Rule 918(a)(ii) in the case of the 

F&O and FX Contract Categories) Clearing Members shall be required to replenish the 

relevant Guaranty Fund pursuant to Rule 1102(i) separately in respect of each Defaulter 

causing a reduction in the Guaranty Fund. The Clearing House may apply Guaranty 

Fund Contributions and Clearing House Contributions resulting from replenishment 

following default proceedings in relation to the First Defaulter to meet the liabilities of an 

Additional Defaulter and may apply Guaranty Fund Contributions and Clearing House 

Contributions resulting from replenishment following default proceedings in relation to 

an Additional Defaulter to meet the liabilities of another Additional Defaulter. Other 

than as set out in this Rule 1102(j), amounts transferred by Clearing Members or former 

Clearing Members in order to replenish Guaranty Fund Contributions under Rule 1102(i)

or amounts designated as Clearing House Contributions may not be applied to meet 

liabilities arising in connection with any Event of Default occurring prior to the time at 

which the relevant replenishment or designation is required under these Rules.

(k) In the event of the Clearing House applying any Guaranty Fund Contributions of nondefaulting Clearing Members, the Clearing House will make payment to the Persons 

whose Guaranty Fund Contributions have been applied (and retain assets in respect of 

Clearing House F&O GF Contributions, Clearing House CDS GF Contributions and 

Clearing House FX GF Contributions) pro rata in respect of any amounts received from 

the Defaulter as a result of its being a creditor of the Defaulter in the Defaulter's 

Insolvency or otherwise (net of the Clearing House's costs of recovery), up to the amount 

by which the relevant Guaranty Fund was reduced (excluding the Guaranty Fund 

Contribution of the Defaulter) but without counting for interest, subject to the Clearing 

House first: (i) retaining or repaying amounts up to the amount of any other assets of the 

Clearing House (including following claims under insurance policies) or other third 

parties applied to meet any shortfall or loss following exhaustion of the assets specified in 

Rule 908 or in substitution of any such assets; and (ii) making reimbursement payments 

to Persons that have made Assessment Contributions (in that order of priority).

(l) If an Event of Default occurs prior to the end of a Guaranty Fund Period where the total 

amount of Guaranty Fund Contributions or the Guaranty Fund Contribution of any 

particular Clearing Member would otherwise subsequently be reduced in the next 

Guaranty Fund Period, the Clearing House shall at its discretion be entitled to defer the 

end of the current Guaranty Fund Period and start of the next Guaranty Fund Period until 

the completion of default proceedings or retain all then held Guaranty Fund Contributions 

made to any potentially affected Guaranty Fund. In either such circumstance, the 

Clearing House shall not be obliged to make any repayment to Clearing Members in 

respect of Guaranty Fund Contributions to any such Guaranty Fund until and subject to 

completion of the relevant Default proceedings pursuant to Part 9 and this Part 11. For 

the avoidance of doubt: in such circumstances, the Clearing House shall nonetheless be 

entitled to make periodic adjustments to Guaranty Fund Contributions as otherwise set 
NYDOCS01/1643340.2 257

out in these Rules at its discretion; and this Rule 1102(l) is without prejudice to 

Rule 1102(m) and Rule 1102(n).

(m) If a CDS Clearing Member's business changes in a material way, a CDS Clearing 

Member's anticipated clearing volume of Contracts indicates a potential increase in risk 

to the Clearing House at any time during a Guaranty Fund Period or as otherwise 

required by the Finance Procedures, which determinations shall be made and conducted 

at the Clearing House's discretion, then the Clearing House may require the CDS 

Clearing Member to increase the amount of its Guaranty Fund Contribution at the time 

specified by the Clearing House. Any such Guaranty Fund Contributions shall not result 

in any obligation on the Clearing House to repay any Guaranty Fund Contributions to 

other Clearing Members and the size of the relevant Guaranty Funds shall be increased 

accordingly until the end of the relevant Guaranty Fund Period.

(n) If an FX Clearing Member's business changes in a material way, an FX Clearing 

Member's anticipated clearing volume of Contracts indicates a potential increase in risk 

to the Clearing House at any time during a Guaranty Fund Period or as otherwise 

required by the Procedures, which determinations shall be made and conducted at the 

Clearing House's discretion, then the Clearing House may require the FX Clearing 

Member to increase the amount of its Guaranty Fund Contribution at the time specified 

by the Clearing House. Any such Guaranty Fund Contributions shall not result in any 

obligation on the Clearing House to repay any Guaranty Fund Contributions to other 

Clearing Members and the size of the relevant Guaranty Funds shall be increased 

accordingly until the end of the relevant Guaranty Fund Period.

Rule 1103 Use of Guaranty Fund Contributions

(a) Following an Event of Default, the Clearing House shall apply the Guaranty Fund 

Contribution of a Defaulter or its Sponsor only pursuant to Rules 906 and Rule 908. 

Otherwise, Guaranty Fund Contributions of a Clearing Member or proceeds thereof may 

be applied or used by the Clearing House at its discretion in any of the following manners 

to the extent of the relevant Clearing Member's Guaranty Fund Contribution:

(i) against any amount that becomes due to the Clearing House by that Clearing 

Member for any reason (including but not limited to Margin, amounts due 

pursuant to Contract Terms, fees, dues, assessments and fines);

(ii) in managing an Event of Default or an event which could be declared by the 

Clearing House as an Event of Default, including:

(A) where necessary, to meet the Clearing House's costs involved in 

facilitating the transfer of Contracts recorded in a Clearing Member's 

Customer Position Account, if that Clearing Member is experiencing 

financial difficulty or during a termination of membership to another 

Clearing Member;

(B) provisionally, in respect of any actual or potential shortfall, loss, 

obligation or liability if the Clearing House at its discretion determines 
NYDOCS01/1643340.2 258

that Guaranty Fund Contributions are likely to be applied pursuant to 

Rule 908 or Rule 1103(a)(i), provided that to the extent that any Guaranty 

Fund Contributions are not applied pursuant to Rule 908 or 

Rule 1103(a)(i) within a reasonable period of time, the Clearing House 

shall account to the relevant Clearing Member for the difference between 

the amount by which any Guaranty Fund Contributions were actually 

applied and the amount by which the same were provisionally applied 

under this Rule 1103(a)(ii)(A); or

(iii) for making payments, including for liquidity or to raise liquidity for liabilities to 

make payments in respect of obligations incurred by the Clearing House in its 

capacity as a clearing house and central counterparty,

provided that: (1) F&O Guaranty Fund Contributions may only be used to meet actual or 

prospective liabilities or obligations relating to F&O Clearing, CDS Guaranty Fund 

Contributions may only be used to meet actual or prospective liabilities or obligations 

relating to CDS Clearing and FX Guaranty Fund Contributions may only be used to meet 

actual or prospective liabilities or obligations relating to FX Clearing; (2) nothing in this 

Rule 1103(a) shall affect the order of application of assets following a declared Event of 

Default pursuant to Rule 908; (3) any Guaranty Fund Contributions used or applied under 

this Rule 1103(a) (but not actually applied under Rule 908) shall be returned or 

reallocated by the Clearing House to the relevant Guaranty Fund; and (4) following an

Event of Default declared by the Clearing House, Guaranty Fund Contributions may only 

be used or applied under this Rule 1103(a) after available resources of the Defaulter have 

been exhausted.

(b) The Clearing House may at any time and from time to time sell, substitute, set off, 

transfer, assign, mortgage, pledge, repledge or otherwise create or grant a lien, interest, 

charge or other security interest on or use as collateral by way of title transfer 

arrangement, any proceeds of Guaranty Fund Contributions for any of the purposes set 

out in Rule 1103(a). Any borrowings using proceeds of Guaranty Fund Contributions as 

collateral shall be on terms and conditions deemed necessary or advisable by the Clearing 

House in its sole discretion, and may be in amounts greater, and extend for periods of 

time longer, than the obligations, if any, of any Clearing Member to the Clearing House 

for which such cash, securities or other property was pledged to or deposited with the 

Clearing House. Any amounts so borrowed shall be used and applied by the Clearing 

House solely for the purposes set out in Rule 1103(a); provided that the failure of the 

Clearing House to comply with Rule 1103(a) in respect of any borrowings, facility or 

agreement shall not impair any of the rights or remedies of any transferee, assignee, 

mortgagee, pledgee, collateral taker or holder of any lien or security interest.

(c) Any expense (including, without limitation, legal fees and expenses) incurred by the 

Clearing House in connection with the use, application or transfer of Guaranty Fund 

Contributions, or the return of equivalent assets to a Clearing Member, may, at the option 

and discretion of the Clearing House, be charged to the account of such Clearing 

Member.
NYDOCS01/1643340.2 259

(d) A Clearing Member's entitlement to repayment of any Guaranty Fund Contribution or 

any part of it or interest thereon shall not be capable of assignment or transfer by the 

Clearing Member or being made subject to any Encumbrance whatsoever purporting to 

rank in priority over, pari passu with, or subsequent to, the rights of the Clearing House 

or in conflict with Rule 908. Any purported Encumbrance of a Clearing Member in 

respect of any Guaranty Fund Contribution shall be null and void.

(e) Default insurance policies of which the Clearing House is the beneficiary (if any) may be 

subject to limits on claims applicable in respect of particular time periods (each such 

period, a "Relevant Period"). Furthermore, pursuant to the terms of any such insurance 

obtained by the Clearing House, it is possible that (i) insurance claims may be payable in 

excess of losses resulting from a Default or Defaults above a certain amount ("Loss 

Threshold") occurring within a Relevant Period as opposed to following the application 

of particular assets in respect of particular Defaults in the order set out in Rule 908; or 

(ii) default insurance policies may apply only in relation to losses occurring in relation to 

certain Sets of Contracts cleared by the Clearing House or particular Guaranty Funds. As 

a result, it is possible that: (A) insurance receipts may be available to (and applied by) 

the Clearing House at an earlier order to that specified in Rule 908 if the total available 

Guaranty Fund Contributions exceed the Loss Threshold or in respect of a second or 

subsequent Default where the limit on claims for the Relevant Period has not been 

exhausted; (B) no or reduced insurance may be available in the case of a second or 

subsequent Default occurring in a Relevant Period; (C) the insurance policies (if any) 

may not provide cover in respect of certain Events of Default; or (D) there may be no 

default insurance either generally or in respect of any particular products cleared by the 

Clearing House. The Clearing House will issue a Circular to Clearing Members 

specifying the amount of insurance, Loss Threshold, Relevant Period and any restrictions 

by Set of Contract or Guaranty Fund applicable to any default insurance obtained by the 

Clearing House. Neither this Rule 1103(e) nor any Circular issued by the Clearing House 

shall affect the liability of Clearing Members in respect of Guaranty Fund Contributions 

under these Rules.

(f) The Clearing House will notify Clearing Members from time to time, by Circular and in 

accordance with the Finance Procedures, of each of the Clearing House Contributions. 

The Clearing House undertakes to all non-defaulting Clearing Members from time to 

time to maintain amounts equal to the total of the Clearing House Contributions in a 

separate account from its other assets (other than Loss Assets) and to use such amounts 

only for the purposes of meeting shortfalls arising directly or indirectly from Defaults in 

accordance with this Part 11. This Rule 1103(f) shall not restrict the Clearing House 

from investing such amounts in any way that it is able to invest Guaranty Fund 

Contributions made by Clearing Members. Clearing House Contributions may be used 

by the Clearing House in the same way as Guaranty Fund Contributions may be used 

pursuant to Rule 1103(a).

(g) The total amount of Guaranty Fund Contributions for each Guaranty Fund and any 

Clearing House Contributions applied in connection with any Event of Default shall be 

notified to Clearing Members in a Circular prior to the same being applied.
NYDOCS01/1643340.2 260

Part 12 Settlement Finality Regulations and Companies Act 1989

Rule 1201 Introduction and Interpretation

(a) The Clearing House is the system operator of a Designated System for the purposes of 

the Settlement Finality Regulations in respect of Transfer Orders. In addition, Part VII of 

the Companies Act 1989 applies in respect of Contracts, the 'default rules' and 'default 

proceedings' of the Clearing House and certain other matters related to the Clearing 

House.

(b) Clearing Members and other Participants are subject to various obligations and 

requirements as a result of the Settlement Finality Regulations and Companies Act 1989. 

Clearing Members and other Participants must comply with, facilitate compliance by the 

Clearing House with, and comply with any action taken by the Clearing House pursuant 

to, the Settlement Finality Regulations or the Companies Act 1989. Furthermore, various 

modifications to Applicable Laws relating to Insolvency affecting Clearing Members and 

other Participants apply pursuant to the Settlement Finality Regulations and Companies 

Act 1989.

(c) Each Participant in the Designated System is on notice of the provisions of this Part 12. 

Each Participant shall, by participating in the Designated System, be deemed to have 

agreed that: 

(i) (without prejudice to the generality of the provisions of any Clearing Membership 

Agreement), the provisions set out in this Part 12 apply to and shall bind such 

Participant (and to any Insolvency Practitioner appointed for, or with powers in 

respect of, it) in connection with such Participant's participation in the Designated 

System; and 

(ii) (without prejudice to the generality of Rule 102(f)), to the extent that there is any 

conflict between any provision of this Part 12 and any provision of any agreement 

(including any AFI Agreement) or any contractual or non-contractual obligation 

which may arise or exist from to time between any Participant and the Clearing 

House, the relevant provision of this Part 12 shall prevail, control, govern and be 

binding upon the parties (regardless of the date of entry into or amendment of any 

such agreement or obligation).

(d) The term "AFI Agreement" means a payment services agreement between the Clearing 

House and an Approved Financial Institution.

(e) The term "Default Arrangements" means the Rules and Procedures relating to, or that 

can be exercised upon, an Event of Default including, without limitation, all of Part 9 and 

Part 11 and this Part 12 of the Rules and Procedures relating thereto and any and all 

actions, omissions, powers and arrangements of the Clearing House pursuant to such 

Rules or Procedures.

(f) The term "Designated System" means the system operated by the Clearing House 

consisting of the formal arrangements, between the Clearing House and Participants 
NYDOCS01/1643340.2 261

including the common rules (including the Rules and the Procedures) and the 

standardised arrangements (including the AFI Agreements, Investment Agency 

Agreements, Clearing Membership Agreements, Sponsored Principal Clearing 

Agreements, Sponsor Agreements and other agreements involving the Clearing House, 

Clearing Members, Sponsored Principals, Sponsors, Approved Financial Institutions, 

Concentration Banks and Investment Agent Banks, provided that in the event of any 

conflict between any provision of the Rules or Procedures and any provision of any such 

agreement or arrangements, the provision of the Rules or Procedures shall prevail, 

control, govern and be binding on the parties) and related functionality for the effecting 

of Transfer Orders between the Clearing House and Participants which, inter alia:

(i) enable the Clearing House to give instructions and to place at the disposal of 

Clearing Members amounts of money on the account of Approved Financial 

Institutions;

(ii) enable Clearing Members to give instructions and to place at the disposal of the 

Clearing House amounts of money on the accounts of Approved Financial 

Institutions;

(iii) enables the Clearing House to give instructions and make transfers between its 

accounts at Approved Financial Institutions, Concentration Banks and Investment 

Agent Banks;

(iv) enables the Clearing House to give instructions and make transfers between 

Individually Segregated Margin-flow Co-mingled Accounts by way of book entry 

through its own systems;

(v) enable the Clearing House and Clearing Members to fulfil the obligations they 

incur in respect of Contracts and otherwise to one another pursuant to the Rules;

(vi) enable transfers, assignments and novations of Contracts between Clearing 

Members or following a Default;

(vii) enable transfers of Non-Cash Collateral to or to the order of the Clearing House 

and Clearing Members;

(viii) enable Bilateral CDS Transactions and CDS Trade Particulars to give rise to CDS 

Contracts;

(ix) enable FX Trade Particulars to give rise to FX Contracts;

(x) enable ICE Endex Block Transactions, ICE Futures Europe Block Transactions, 

ICE Futures US Block Transactions and Financials & Softs Block Transactions to 

give rise to F&O Contracts;

(xi) facilitate physical settlement obligations under CDS Contracts and obligations for 

the delivery of Deliverables that are SFD Securities under Financials & Softs

Contracts; 
NYDOCS01/1643340.2 262

(xii) facilitate the transfer between the Clearing House and Participating Exchanges of 

Linked Incoming Contracts, Linked Outgoing Contracts and Participating 

Exchange Transactions pursuant to Rule 410; and

(xiii) facilitate supplementary and incidental matters to the satisfaction of obligations 

pursuant to Contracts and the collection and payment of amounts due in respect of 

Contracts or Permitted Cover.

(g) The term "Indirect Participant" means any Disclosed Principal Member or Customer, 

provided that: (i) it is an 'indirect participant', within the meaning of the Settlement 

Finality Regulations, in the Designated System; (ii) the identity of that Disclosed 

Principal Member or Customer has been notified to the Clearing House in writing by the 

Clearing Member; (iii) the Clearing House has accepted such notification and treatment 

as an indirect participant in writing (and this Part 12 shall apply equally to any 

Insolvency Practitioner appointed for, or with powers in respect of, an Indirect 

Participant); and (iv) such Disclosed Principal Member or Customer has executed such 

agreement as is prescribed by the Clearing House from time to time in order for it to 

become contractually bound by these Rules and this Part 12 in particular.

(h) The term "Intermediary Financial Institution" means any bank or branch used by a 

System Bank, whether as banker, corresponding banker, intermediary or agent, for the 

fulfilment of a Payment Transfer Order, that is a 'participant' (as defined in the Settlement 

Finality Regulations) in the Designated System (and this Part 12 shall apply equally to 

any Insolvency Practitioner appointed for, or with powers in respect of, such a person).

(i) The term "Investment Agent Bank" means a bank used by the Clearing House for the 

deposit of cash prior to such cash being invested. An Investment Agent Bank may also 

be an Approved Financial Institution or Concentration Bank. 

(j) The term "Investment Agency Agreement" means an agreement between an Investment 

Agent Bank and the Clearing House, including in respect of the deposit of cash prior to 

such cash being invested. 

(k) The term "Non-Cash Collateral" means any Permitted Cover that is in the form of an 

SFD Security.

(l) The term "Participant" means the Clearing House, each Clearing Member, each 

Sponsored Principal, each Participating Exchange, each Approved Financial Institution, 

each Concentration Bank, each Investment Agent Bank, each Intermediary Financial 

Institution and each Custodian, in the case of a Clearing Member, Sponsored Principal, 

Approved Financial Institution, Concentration Bank, Investment Agent Bank, 

Intermediary Financial Institution or Custodian to the extent that it is a 'participant' (as 

defined in the Settlement Finality Regulations) in the Designated System (and this 

Part 12 shall apply equally to any Insolvency Practitioner appointed for, or with powers 

in respect of, a Participant).

(m) The term "Payment Transfer Order" means a payment transfer order (as defined in the 

Settlement Finality Regulations) that is a New Contract Payment Transfer Order, 
NYDOCS01/1643340.2 263

Credit/Debit Payment Transfer Order, ISOC Credit/Debit Payment Transfer Order or CH 

Account Payment Transfer Order subject to this Part 12.

(n) The term "Securities Transfer Order" means a securities transfer order (as defined in 

the Settlement Finality Regulations) that is a Position Transfer Order, Collateral Transfer 

Order, F&O Block Clearing Order, Transaction Clearing Order, CDS Physical Settlement 

Order, Security Derivative Delivery Order, Linked Exchange Incoming Order or Linked 

Exchange Outgoing Order subject to this Part 12.

(o) The term "SFD Custodian" means any Custodian used by a Clearing Member or the 

Clearing House for the holding or transfer of Non-Cash Collateral that is subject of a 

Collateral Transfer Order provided that such person is a 'participant' (as defined in the 

Settlement Finality Regulations) in the Designated System (and this Part 12 shall apply 

equally to any Insolvency Practitioner appointed for, or with powers in respect of, such a 

person).

(p) The term "SFD Security" means a 'security', as defined in the Settlement Finality 

Regulations.

(q) The term "System Bank" means an Approved Financial Institution, Concentration Bank 

or Investment Agent Bank. 

(r) The term "Transfer Order" means a Payment Transfer Order or a Securities Transfer 

Order.

(s) The term "ICE Post Trade and Clearing Systems" or the "ICE Systems" means the 

trade registration, clearing processing and finance hardware and software used by the 

Clearing House and Clearing Members from time to time, as further described in the 

Procedures.

(t) No transfer orders (as defined in the Settlement Finality Regulations) shall arise, enter the 

Designated System or become irrevocable under these Rules except as set out in this 

Part 12.

(u) The Clearing House and each Clearing Member with a Pledged Collateral Account that is 

a Participant in the Designated System acknowledge and agree that: (i) all forms of 

Permitted Cover provided as Pledged Collateral constitute "realisable assets"; and 

(ii) Pledged Collateral is provided under a "charge or a repurchase or similar agreement" 

which has been entered into "for the purpose of securing rights and obligations 

potentially arising in connection with a designated system", for purposes of the 

Settlement Finality Regulations. Accordingly, the Clearing House and each such 

Clearing Member that is a Participant in the Designated System intend and agree that: (a) 

Pledged Collateral constitutes both "collateral security" and "collateral security in 

connection with participation in a designated system" for purposes of the Settlement 

Finality Regulations; and (b) the Clearing Membership Agreement, any Sponsored 

Principal Clearing Agreement, any Sponsor Agreement, any Pledged Collateral 

Addendum, Rules and Contracts insofar applicable to Pledged Collateral constitute a 
NYDOCS01/1643340.2 264

"collateral security charge" in respect of the Pledged Collateral, for purposes of the 

Settlement Finality Regulations.

(v) In relation to an Individually Segregated Sponsored Account, any reference to a Clearing 

Member in this Part 12 shall be interpreted as a reference to the Sponsored Principal, 

provided that where a Transfer Order applies to, is binding on or is irrevocable with 

respect to a Sponsored Principal, it shall also apply to, be binding on or be irrevocable 

with respect to the Sponsor.

Rule 1202 Transfer Orders Arising

(a) Subject to regulation 20 of the Settlement Finality Regulations, a Payment Transfer Order 

shall arise and shall enter the Designated System immediately and automatically upon:

(i) in relation to a Contract that forms in accordance with Rule 401(a) (excluding any 

F&O Contract arising under Rule 401(a)(vii) and further excluding any CDS 

Contract arising under Rule 401(a)(x) pursuant to the Clearing of CDS Trade 

Particulars relating to a Bilateral CDS Transaction already recorded in 

Deriv/SERV) at the time that a Contract arises under Rule 401 (such Payment 

Transfer Order, a "New Contract Payment Transfer Order");

(ii) the Clearing House sending an instruction for payment to or from the Clearing 

House pursuant to Rule 302, Rule 502 to Rule 503 and/or the Finance Procedures 

(such Payment Transfer Order, a "Credit/Debit Payment Transfer Order"); 

(iii) the Clearing House making an instruction for the transfer of an amount standing 

to the credit of one Individually Segregated Margin-flow Co-mingled Account to 

another Individually Segregated Margin-flow Co-mingled Account pursuant to 

503(k) and the Finance Procedures (such Payment Transfer Order, an "ISOC

Credit/Debit Payment Transfer Order"); and

(iv) the Clearing House sending an instruction by means of a SWIFT message, other 

electronic message, fax, telephone or other means to a System Bank to transfer a 

sum of money from an account of the Clearing House at such System Bank to an 

account of the Clearing House at the same or a different System Bank (such 

Payment Transfer Order, a "CH Account Payment Transfer Order").

(b) Subject to regulation 20 of the Settlement Finality Regulations, a Securities Transfer 

Order shall arise and shall enter the Designated System immediately and automatically 

upon:

(i) if either:

(A) the Clearing House, the relevant Market (if any) and the two Clearing 

Members involved (both being Participants) have already agreed to a 

transfer, assignment or novation of Contracts from one Clearing Member 

to another Clearing Member pursuant to Rule 408(a)(i); or
NYDOCS01/1643340.2 265

(B) the Clearing House has declared an Event of Default under Rule 901 and 

any Contracts to which a Defaulter is party are proposed to be transferred 

from the Defaulter to another Clearing Member (being a Participant) 

pursuant to the Clearing House's powers under Rule 903, Rule 904, 

Rule 905 or otherwise,

in either case, instructions for settlement of the transfer, assignment or novation in 

question being effected through the ICE Systems at the relevant settlement 

transfer deadline for the relevant Contract (such Securities Transfer Order, a 

"Position Transfer Order");

(ii) the Clearing House accepts, through the ICE Systems, that a Clearing Member 

has validly requested either:

(A) the transfer of Non-Cash Collateral to or to the order of the Clearing 

House; or

(B) a transfer to that Clearing Member or to its order of Non-Cash Collateral

(such Securities Transfer Order, in either case, a "Collateral Transfer Order");

(iii) in respect of an ICE Endex Block Transaction, ICE Futures Europe Block 

Transaction, ICE Futures US Block Transaction or Financials & Softs Block 

Transaction at the point at which the relevant details of the relevant Transaction 

have passed through the credit filter and risk controls of both relevant Clearing 

Members in the ICE Systems (such Securities Transfer Order, a "F&O Block 

Clearing Order");

(iv) in respect of CDS Trade Particulars or FX Trade Particulars submitted for 

Clearing in relation to a Bilateral CDS Transaction or FX transaction already 

recorded in Deriv/SERV or a Repository, as the case may be, the Clearing House 

providing a report to a Clearing Member after it has checked whether CDS Trade 

Particulars or FX Trade Particulars submitted for Clearing are consistent with the 

records submitted by another Clearing Member and, where applicable, with the 

records in Deriv/SERV or a Repository (such Securities Transfer Order, a 

"Subsisting Transaction Clearing Order");

(v) in respect of CDS Trade Particulars or FX Trade Particulars other than as referred 

to in (iv) above submitted for Clearing, the Clearing House issuing an Acceptance 

Notice or FX Acceptance Notice in accordance with Rule 401(a)(ix) or (xii) to a 

Clearing Member through the ICE Systems (such Securities Transfer Order, a 

"New Transaction Clearing Order" and, together with a Subsisting Transaction 

Clearing Order, "Transaction Clearing Order");

(vi) (A) the Clearing House being provided with a copy of a notice delivered by a 

Matched CDS Buyer to a Matched CDS Seller in a Matched Pair of a Notice of 

Physical Settlement in respect of Matched CDS Contracts, where the Notice of 

Physical Settlement specifies an instrument to be delivered that is an SFD 
NYDOCS01/1643340.2 266

Security; or (B) the Clearing House being provided with a copy of a notice 

delivered by a Matched CDS Buyer to a Matched CDS Seller in a Matched Pair of 

a NOPS Amendment Notice in respect of Matched CDS Contracts, where the 

NOPS Amendment Notice specifies an instrument to be delivered that is an SFD 

Security but where the Notice of Physical Settlement (including, as amended by 

any previous NOPS Amendment Notice) had specified an instrument that is not 

an SFD Security as the instrument that was to be delivered (either such Securities 

Transfer Order, a "CDS Physical Settlement Order"); or

(vii) delivery of an SFD Security as a Deliverable is required following expiry of a 

relevant Financials & Softs Contract that is a Future or following exercise of a 

relevant Financials & Softs Contract that is an Option (such Securities Transfer 

Order, a "Security Derivative Delivery Order");

(viii) the Clearing House receiving instructions from a Clearing Member or 

Participating Exchange for the transfer of a Participating Exchange Contract to the 

Clearing House (such Securities Transfer Order, a "Linked Exchange Incoming 

Order"); or

(ix) the Clearing House receiving instructions from a Clearing Member or 

Participating Exchange for the transfer of a Linked Outgoing Contract to a 

Participating Exchange (such Securities Transfer Order, a "Linked Exchange 

Outgoing Order").

(c) If two or more Transfer Orders exist in respect of the same obligation prior to becoming 

irrevocable, all such Transfer Orders shall be valid. No duplication of an obligation to 

pay shall arise as a result of two or more Transfer Orders existing in respect of the same 

obligation.

(d) The status of a Transfer Order shall not be affected by any calculation of Open Contract 

Position, netting, set off or closing out of a Contract to which it relates.

(e) Each Payment Transfer Order shall apply and have effect in respect of the following 

amounts:

(i) in the case of a New Contract Payment Transfer Order, the amount due to or from 

the Clearing House pursuant to the Contract Terms as a result of the Contract 

referred to in Rule 1202(a)(i) arising; or

(ii) in the case of a Credit/Debit Payment Transfer Order, ISOC Credit/Debit Payment 

Transfer Order or CH Account Payment Transfer Order, the amount specified in 

the relevant instruction referred to in Rule 1202(a);

(f) Each Position Transfer Order shall apply and have effect in respect of the Contracts to be 

transferred, assigned or novated.

(g) Each Collateral Transfer Order shall apply and have effect in respect of the Non-Cash 

Collateral to be transferred to or to the order of the Clearing House or Clearing Member.
NYDOCS01/1643340.2 267

(h) Each F&O Block Clearing Order shall apply and have effect in respect of the ICE Endex 

Block Transaction, ICE Futures Europe Block Transaction, ICE Futures US Block 

Transaction or Financials & Softs Block Transaction in question and any resulting F&O 

Contract.

(i) Each Transaction Clearing Order shall apply and have effect, for CDS in respect of the 

CDS Trade Particulars and any Bilateral CDS Transaction in question and any resulting 

CDS Contract or for FX in respect of the FX Trade Particulars and any FX transaction in 

question and any resulting FX Contract.

(j) Two separate CDS Physical Settlement Orders shall apply and shall have effect 

separately in respect of each of the CDS Contracts in the Matched Pair that are subject to 

a physical settlement obligation, and the instrument to be delivered pursuant thereto.

(k) Two separate Security Derivative Delivery Orders shall apply and shall have effect 

separately in respect of each of the Financials & Softs Contracts that are subject to an 

obligation to make delivery of an SFD Security, and the SFD Security to be delivered 

pursuant thereto.

(l) Each Linked Exchange Incoming Order shall apply and have effect in respect of the 

Participating Exchange Transaction in question and any resulting Linked Incoming 

Contract.

(m) Each Linked Exchange Outgoing Order shall apply and have effect in respect of the 

Linked Outgoing Contract in question and any resulting transaction between a Clearing 

Member and a Participating Exchange.

(n) Transfer Orders shall apply to, and have effect as against and between each of the 

following Persons, in respect of any particular Person only to the extent that such Person 

is a Participant or an Indirect Participant:

(i) in the case of a New Contract Payment Transfer Order, the affected Clearing 

Member (if it is a Participant) and the Clearing House and, as from and after the 

time of irrevocability only, the affected Approved Financial Institution;

(ii) in the case of a Credit/Debit Payment Transfer Order or ISOC Credit/Debit 

Payment Transfer Order, the affected Clearing Member (if it is a Participant), the 

affected Approved Financial Institutions and the Clearing House;

(iii) in the case of a CH Account Payment Transfer Order, the affected System Bank 

or System Banks and the Clearing House;

(iv) in the case of a Position Transfer Order:

(A) the Clearing Members (that are the transferor, assignor or person whose 

rights, liabilities and obligations are novated and the transferee, assignee 

or person that assumes rights, liabilities and obligations pursuant to a 

novation);
NYDOCS01/1643340.2 268

(B) each Customer and Disclosed Principal Member affected by the Position 

Transfer Order which is an Indirect Participant (if any); and

(C) the Clearing House.

(v) in the case of a Collateral Transfer Order:

(A) the Clearing Member that is the transferor of the Non-Cash Collateral in 

question;

(B) any SFD Custodian of the Clearing Member or the Clearing House; and

(C) the Clearing House;

(vi) in the case of an F&O Block Clearing Order:

(A) each Clearing Member that has submitted or confirmed details of the ICE 

Endex Block Transaction, ICE Futures Europe Block Transaction, ICE 

Futures US Block Transaction or Financials & Softs Transaction;

(B) any Affiliate of the Clearing Member that was party to an ICE Endex 

Block Transaction, ICE Futures Europe Block Transaction, ICE Futures 

US Block Transaction or Financials & Softs Block Transaction and which 

is an Indirect Participant (if any); and

(C) the Clearing House;

(vii) in the case of an Transaction Clearing Order:

(A) each Clearing Member that has submitted or confirmed details of the 

Transaction;

(B) any Affiliate of a Clearing Member that is or was party to a Bilateral CDS 

Transaction or FX transaction and which is an Indirect Participant (if any); 

and

(C) the Clearing House;

(viii) in the case of a CDS Physical Settlement Order:

(A) each Clearing Member in the Matched Pair; and

(B) the Clearing House; 

(ix) in the case of a Security Derivative Delivery Order:

(A) each Clearing Member that is party to a relevant Financials & Softs

Contract under delivery; 
NYDOCS01/1643340.2 269

(B) any SFD Custodian of the Clearing Member or the Clearing House; and

(C) the Clearing House;

(x) in the case of a Linked Exchange Incoming Order or Linked Exchange Outgoing 

Order:

(A) each Clearing Member that is party to a Linked Incoming Contract, 

Linked Outgoing Contract or Participating Exchange Transaction, as 

applicable; 

(B) the relevant Participating Exchange; and

(C) the Clearing House.

(o) Where a Transfer Order applies to a System Bank, it shall also apply to and be effective 

against any Intermediary Financial Institution used by that System Bank.

(p) Where a Transfer Order applies additionally to an Indirect Participant, the liability of any 

Participant pursuant to the same Transfer Order shall not be affected.

Rule 1203 Transfer Orders Becoming Irrevocable

(a) A Credit/Debit Payment Transfer Order shall become irrevocable at the time when the 

Approved Financial Institution sends a SWIFT confirmation message, other electronic 

message, fax, telephone or other message confirming that the relevant payment will be or 

has been made. An ISOC Credit/Debit Payment Transfer Order shall become irrevocable 

at the time when the Clearing House updates its records to reflect the transfer.

(b) A CH Account Payment Transfer Order shall become irrevocable at the time when the 

System Bank of the account from which payment is to be made sends a SWIFT 

confirmation message, other electronic message, fax, telephone or other message 

confirming that the relevant payment will be or has been made.

(c) Without prejudice to Rule 1205(g) and Rule 1205(h), a New Contract Payment Transfer 

Order shall become irrevocable upon an Approved Financial Institution sending a SWIFT 

confirmation message, other electronic message, fax, telephone or other message 

confirming that amount to which the New Contract Payment Transfer Order relates (as 

specified in Rule 1202(e)(i)) will be or has been made.

(d) A Position Transfer Order shall become irrevocable at the time when the definitive record 

of the Open Contract Position of the Clearing Member (that is the assignee, transferee or 

person that assumes rights, liabilities and obligations pursuant to a novation) is updated 

as a result of a successful position transfer clearing run in the ICE Systems to reflect the 

transfer, assignment or novation of Contracts which are given effect pursuant to the 

Position Transfer Order.
NYDOCS01/1643340.2 270

(e) A Collateral Transfer Order shall become irrevocable at the earlier of the time when: 

(i) the Clearing House receives the Non-Cash Collateral; or (ii) any related securities 

transfer order (which relates to the same subject matter as the Collateral Transfer Order 

but which a securities transfer order in a designated system for purposes of Directive 

98/26/EC which is not the Designated System) becomes irrevocable.

(f) An F&O Block Clearing Order shall become irrevocable at the time that the Clearing 

House becomes party to resulting Contracts with the Clearing Members in question, 

pursuant to Rule 401(a)(iii).

(g) A Transaction Clearing Order shall become irrevocable, for CDS when the time specified 

pursuant to the CDS Procedures occurs for the acceptance of the resulting CDS Contracts 

in question, pursuant to Rule 401(a)(x) or for FX when the time specified pursuant to the 

FX Procedures occurs for the acceptance of the resulting FX Contracts in question, 

pursuant to Rule 401(a)(xii).

(h) A CDS Physical Settlement Order shall become irrevocable at the earliest of: (i) the time 

when the Matched CDS Buyer in the Matched Pair has submitted irrevocable instructions 

to a Custodian for the transfer of securities to or to the account of the Matched CDS 

Seller; (ii) the time at which the instrument subject to physical settlement is delivered or 

assigned or at which physical settlement obligations are otherwise discharged; or (iii) if 

the Matched CDS Buyer or Matched CDS Seller has (in the absence of any Matching 

Reversal Notice or not later than one Business Day after any Matching Reversal Notice) 

given notice to the Clearing House in accordance with Rule 1511 or the CDS Procedures 

(as applicable) that the relevant Matched Pair have settled the relevant Matched CDS 

Contracts, at the time of such notice.

(i) A Security Derivative Delivery Order shall become irrevocable at the earlier of the time 

when: (i) the Clearing House (or a Clearing Member that is due to receive delivery 

directly from another Clearing Member under Part 7) receives the SFD Security into its 

account; or (ii) any related securities transfer order (which relates to the same subject 

matter as the Collateral Transfer Order but which is a securities transfer order in a 

designated system for purposes of Directive 98/26/EC which is not the Designated 

System) becomes irrevocable.

(j) A Linked Exchange Incoming Order or Linked Exchange Outgoing Order shall become 

irrevocable at the time that the Clearing House becomes party to resulting Contracts with 

the Clearing Members in question, pursuant to Rule 401(a)(xiv).

(k) As from the time when a Transfer Order becomes irrevocable, it shall not be revoked or 

purported to be revoked by any Participant or the Clearing House and shall be binding 

upon all Participants.

Rule 1204 Variations to or Cancellation of Transfer Orders

(a) This Rule 1204 applies only to a Transfer Order that is not irrevocable and:
NYDOCS01/1643340.2 271

(i) in the case of any Transfer Order, it is affected by manifest or proven error or an 

error that is agreed so to be by all affected Participants;

(ii) in the case of a New Contract Payment Transfer Order, Credit/Debit Payment 

Transfer Order, ISOC Credit/Debit Payment Transfer Order or Position Transfer 

Order, it relates to a Contract which is (or a Transaction or CDS Trade Particulars 

which, if accepted, would be):

(A) void ab initio pursuant to Rule 403;

(B) avoided pursuant to Rule 404; or

(C) amended as a result of the Clearing House exercising its discretion 

pursuant to Rule 104 or otherwise pursuant to these Rules; or

(iii) without prejudice to the generality of Rule 1204(a)(i), in the case of a Subsisting 

Transaction Clearing Order, if an error or omission is noted by or notified to the 

Clearing House prior to the Acceptance Time or the data in the CDS Trade 

Particulars ort FX Trade Particulars to which the Subsisting Transaction Clearing 

Order relates is otherwise capable of being amended in accordance with the CDS 

Procedures or FX Procedures (as applicable);

(iv) in the case of a CDS Physical Settlement Order, if a NOPS Amendment Notice is 

validly delivered by the Matched CDS Buyer in accordance with Rule 1505 and 

Rule 1509; or

(v) without prejudice to the generality of Rule 1204(a)(i), (ii) or (iii), in the case of an 

F&O Block Clearing Order, Transaction Clearing Order, Linked Exchange 

Incoming Order or Linked Exchange Outgoing Order, it relates to a Transaction 

which is, or CDS Trade Particulars which are, not eligible for Clearing or which is 

or are not accepted for Clearing by the Clearing House.

(b) Subject to Rule 1204(d), (e), (f) and (g), neither the validity nor the irrevocability of any 

Transfer Order shall of itself be affected by any event described in Rule 1204(a)

occurring.

(c) The terms of all Transfer Orders that have not become irrevocable shall each be subject 

to a condition (which, if not satisfied, shall enable the Clearing House to exercise its 

rights under this Rule 1204) that that the circumstances described in Rule 1204(a) have 

not occurred.

(d) If any of the circumstances described in Rule 1204(a) has occurred, the amount payable, 

Contracts to be transferred or to arise or SFD Securities or Non-Cash Collateral to be 

delivered pursuant to the affected Transfer Order may at the discretion of the Clearing 

House be increased, decreased or otherwise varied, as necessary, to reflect the payments, 

transfers, Contracts, assignments, novations, SFD Securities, Non-Cash Collateral or 

deliveries that would have been required:
NYDOCS01/1643340.2 272

(i) in the case of Rule 1204(a)(i) applying, had there been no error;

(ii) in the case of Rule 1204(a)(ii)(A), Rule 1204(a)(ii)(B) or Rule 1204(a)(v)

applying, had no Contract, Transaction or CDS Trade Particulars ever arisen, 

occurred or been submitted;

(iii) in the case of Rule 1204(a)(ii)(C) applying, had the Contract always been subject 

to such amended terms as are agreed or determined;

(iv) in the case of Rule 1204(a)(iii) applying, had the details of the CDS Trade 

Particulars always been corrected or amended as permitted in accordance with the 

CDS Procedures; or

(v) in the case of Rule 1204(a)(iv) applying and the NOPS Amendment Notice 

specifies an instrument to be delivered that is an SFD Security, had the Notice of 

Physical Settlement been originally issued as amended pursuant to the NOPS 

Amendment Notice

(any such variation, a "Transfer Order Variation").

(e) A Transfer Order Variation may be effected only by the Clearing House delivering a 

notice of amendment of an existing Transfer Order to all affected Participants. Valid 

delivery of a NOPS Amendment Notice in accordance with Rules 1505 and 1509 by a 

Matched CDS Buyer in a Matched Pair shall be deemed to constitute notice by the 

Clearing House for purposes of this Rule 1204(e) in respect of a Transfer Order Variation 

to a CDS Physical Settlement Order, if the NOPS Amendment Notice specifies an 

instrument to be delivered that is an SFD Security.

(f) If any of the circumstances described in Rule 1204(a) has occurred, the Transfer Order in 

question may at the discretion of the Clearing House alternatively be cancelled. Any 

such cancellation may be effected by the Clearing House serving a notice of cancellation 

on all affected Participants. In respect of an F&O Block Clearing Order or Transaction 

Clearing Order, such notice shall be deemed to have been given if the Clearing House 

(or, in the case of an F&O Block Clearing Order, any Market) rejects a Transaction or 

CDS Trade Particulars for Clearing.

(g) A CDS Physical Settlement Order shall be cancelled immediately and automatically if 

and when a copy is provided to the Clearing House of a validly delivered NOPS 

Amendment Notice specifying an instrument for delivery which is not an SFD Security.

(h) A Security Derivative Delivery Order shall be cancelled immediately and automatically 

if, prior to it becoming irrevocable, the issuer of the SFD Security that is the Deliverable 

becomes subject to an Insolvency, redeems all its SFD Securities of a kind which would 

have been the Deliverables for the delivery or another event occurs under which delivery 

obligations are substituted for cash settlement obligations under the Contract Terms.
NYDOCS01/1643340.2 273

(i) A Linked Exchange Incoming Order or Linked Exchange Outgoing Order shall be 

cancelled immediately and automatically if, prior to it becoming irrevocable, the 

Participating Exchange or Clearing House rejects or cancels the transfer.

(j) This Rule 1204 does not affect the ability of the Clearing House to take steps giving rise 

to a new Transfer Order of opposite effect to an existing Transfer Order or part thereof if 

any of the events described in Rule 1204(a) occur. No Transfer Order Variation shall 

preclude the cancellation of a Transfer Order in any circumstances in which a Transfer 

Order may alternatively be cancelled by the Clearing House. The ability of the Clearing 

House to cancel or vary a Transfer Order shall not preclude a Transfer Order Variation 

from taking effect. 

Rule 1205 Termination of Transfer Orders

(a) Each Payment Transfer Order shall be satisfied immediately and automatically upon all 

payments required pursuant to the Payment Transfer Order being received in cleared 

funds or full satisfaction of the relevant underlying obligations is otherwise made and 

recorded in the Clearing House's systems, in either case not subject to any Encumbrances 

(except as envisaged under a Pledged Collateral Addendum).

(b) Each Position Transfer Order shall be satisfied immediately and automatically at the 

same time that it becomes irrevocable under Rule 1203(d) (whereupon all Contracts to 

which the Transfer Order in question relates will have been transferred, assigned or 

novated pursuant to the Rules).

(c) Each Collateral Transfer Order shall be satisfied immediately and automatically at the 

later of the time when: (i) the Clearing House receives the Non-Cash Collateral in its 

account; or (ii) the definitive record of the Permitted Cover transferred by the Clearing 

Member that is the transferor is updated in the ICE Systems to reflect the successful 

transfer of Non-Cash Collateral to or to the order of the Clearing House pursuant to the 

Collateral Transfer Order.

(d) An Transaction Clearing Order, F&O Block Clearing Order, Linked Exchange Incoming 

Order or Linked Exchange Outgoing Order shall be satisfied immediately and 

automatically at the same time that the relevant resulting Contracts arise under 

Rule 401(a).

(e) A CDS Physical Settlement Order shall be satisfied immediately and automatically at the 

time when the Clearing House updates its records of the relevant CDS Contracts in the 

ICE Systems to reflect that either physical delivery of the security in question has been 

completed or the delivery obligations of the parties under the relevant CDS Contracts 

have otherwise been discharged or settled.

(f) A Security Derivative Delivery Order shall be satisfied immediately and automatically at 

the time when the Clearing House (or a Clearing Member to whom delivery is to be made 

directly from another Clearing Member under Part 7) receives the SFD Security that is 

the Deliverable, unencumbered in its account.
NYDOCS01/1643340.2 274

(g) If a Credit/Debit Payment Transfer Order or ISOC Credit/Debit Payment Transfer Order 

becomes irrevocable in respect of the same obligation to which a New Contract Payment 

Transfer Order relates, the New Contract Payment Transfer Order shall automatically be 

satisfied and shall not become irrevocable. It is acknowledged that New Contract 

Payment Transfer Orders will generally terminate in accordance with this Rule 1205(g)

when standard Clearing and payment processes apply.

(h) A New Contract Payment Transfer Order relating to an F&O Contract shall be satisfied 

immediately and automatically if and at the point that the relevant F&O Transaction or 

Contract is transferred or allocated to another Clearing Member pursuant to 

Rule 401(a)(viii) or Rule 408(a)(ii).

Rule 1206 Provision of Information by the Clearing House and Participants

(a) The Clearing House and any Participant must provide, upon payment of a reasonable 

charge, the following information to any person who requests it, save where the request is 

frivolous or vexatious, within 14 days of a request being made:

(i) details of the Designated System; and

(ii) information about the Rules relevant to the functioning of the Designated System.

(b) The Clearing House will provide a copy of information referred to in Rule 1206(a) to any 

Clearing Member upon request.

Rule 1207 Notice to the Bank of England

(a) Any notice which under Rule 204(a)(viii) must be copied to the Bank of England, shall 

be sent to the following addresses:

(b) Bank of England:

The Senior Manager, Payment Systems Oversight

Financial Resilience Division, HO-3

Bank of England

Threadneedle Street

London EC2R 8AH

Fax: 020 7601 3217

(c) Any such notice will only be effectively served, filed, made or provided and delivered to 

the Bank of England:

(i) if sent by post, on the fifth Business Day (or tenth Business Day in the case of 

airmail) after the day on which it was deposited in the post, full postage prepaid, 

in a correctly addressed envelope;
NYDOCS01/1643340.2 275

(ii) if delivered in person to the officer or department specified, at the time of delivery 

or, if not delivered during business hours on a Business Day, on the following 

Business Day.

(d) Any notice by fax shall not be effective until hard copy confirmation is served pursuant 

to Rule 1207(c).
NYDOCS01/1643340.2 276

Part 13 [Not used]

Part 14 Transition Rules for ICE Energy Markets in 2008 [No longer applicable: available on 

request.]
NYDOCS01/1643340.2 277

Part 15 Credit Default Swaps

Part 15 of the Rules does not apply to F&O Contracts or FX Contracts. References to Contracts 

in this section are to CDS Contracts. References to any Account in this section are references 

only to an Account in which CDS Contracts may be recorded and the terms 'Customer Margin 

Account', 'Customer Position Account', 'Proprietary Margin Account' and 'Proprietary Position 

Account' shall be construed accordingly. References to Customers in this section are solely to 

Customers of CDS Clearing Members in relation to CDS Contracts.

Rule 1501 Definitions

(a) The term "2010 PD Amending Directive" means Directive 2010/73/EU.

(b) The term "Applicable Close-out Rate" means:

(i) in respect of obligations which would have been payable but for 

paragraph 8.2(a)(i)(B) or (C) of the CDS Procedures, as the case may be, by a 

Defaulting Party, the Late Payment Rate; and

(ii) in respect of obligations which would have been payable but for 

paragraphs 8.2(a)(i)(B) or (C) of the CDS Procedures, as the case may be, by a 

Non-defaulting Party, the Non-default Rate.

(c) The term "Applicable Credit Event", in relation to a CDS Contract, means any of the 

Credit Events specified in that CDS Contract as being applicable.

(d) The term "Asset Package Delivery Notice" means the notification required to be given 

by a protection buyer to a protection seller pursuant to section 8.2 of the 2014 Credit 

Derivatives Definitions of the detailed description of the Asset Package, if any, that it 

intends to Deliver to the protection seller in lieu of the Prior Deliverable Obligation or 

Package Observable Bond, if any, specified in the Notice of Physical Settlement or

NOPS Amendment Notice, as applicable.

(e) The term "CADP" or "CDS Alternative Delivery or Settlement Procedure" has the 

meaning set out in Rule 1514.

(f) The term "CADP Notice" means a notice delivered to the Clearing House and issued 

jointly by a Matched CDS Buyer and Matched CDS Seller concerning CADP in respect 

of a Matched Pair and related Matched CDS Contracts, in the form specified in the CDS 

Procedures.

(g) The term "CDS Buyer" means a CDS Clearing Member (or, in respect of an Individually 

Segregated Sponsored Account, the Sponsored Principal or, in the circumstances set out 

in the definition of "Matched Pair", the Clearing House) that is party to a CDS Contract 

as protection buyer.

(h) The term "CDS Seller" means a CDS Clearing Member (or, in respect of an Individually 

Segregated Sponsored Account, the Sponsored Principal or, in the circumstances set out 
NYDOCS01/1643340.2 278

in the definition of "Matched Pair", the Clearing House) that is party to a CDS Contract 

as protection seller.

(i) The term "Component Transaction", in relation to any CDS Contract, has the meaning 

given to that term in the relevant Contract Terms.

(j) The term "Deemed Discharge" has the meaning set out in Rule 1519.

(k) The term "Defaulter Close-Out" has the meaning set out in Rule 1519.

(l) The term "Defaulting Party" means with respect to (i) a Defaulter Close-Out, the 

relevant CDS Clearing Member or Sponsored Principal and (ii) a Deemed Discharge, the 

Clearing House.

(m) The term "Deferral Rate" means a rate certified by the relevant payer to be a rate offered 

to the payer by a major bank in a relevant interbank market for overnight deposits in the 

applicable currency, such bank to be selected in good faith by the payer for the purpose 

of obtaining a representative rate that will reasonably reflect conditions prevailing at the 

time in the relevant market.

(n) The term "Determining Body" means the Credit Derivatives Determinations Committee 

or any other relevant body or person that is expressed to have jurisdiction to make the 

relevant determination under the Applicable Credit Derivatives Definitions or the CDS 

Procedures. The Credit Derivatives Determinations Committee is not a Representative or 

committee of the Clearing House.

(o) The term "Failed Amount" has the meaning given to that term in Rule 1512.

(p) The term "Late Payment Rate" means a rate per annum equal to the cost (without proof 

or evidence of any actual cost) to the relevant payee (as certified by it) if it were to fund 

or of funding the relevant amount, plus 1% per annum.

(q) The term "Matched CDS Buyer Contract" means a CDS Contract (or part thereof) 

between a Matched CDS Buyer and the Clearing House which is the subject of a 

Matched Pair having a Floating Rate Payer Calculation Amount equal to the MP Amount 

relating to that Matched Pair.

(r) The term "Matched CDS Contract" means a Matched CDS Seller Contract or a 

Matched CDS Buyer Contract.

(s) The term "Matched CDS Seller Contract" means a CDS Contract (or part thereof) 

between a Matched CDS Seller and the Clearing House which is the subject of a Matched 

Pair having a Floating Rate Payer Calculation Amount equal to the MP Amount relating 

to that Matched Pair.

(t) The term "Matched Pair" means a CDS Buyer and CDS Seller matched by the Clearing 

House pursuant to Rule 1507 or Rule 1508, as applicable, where the CDS Buyer in such 

Matched Pair is the "Matched CDS Buyer" and the CDS Seller in such Matched Pair is 
NYDOCS01/1643340.2 279

the "Matched CDS Seller", provided that the Clearing House shall take the position of 

CDS Buyer or CDS Seller in any Matched Pair in order to create a Matched Pair for any 

CDS Seller or CDS Buyer which it is unable to match to another CDS Buyer or CDS 

Seller (other than the Clearing House), as the case may be.

(u) The term "Matched Pair Notice" has the meaning set out in Rule 1507(b) or 

Rule 1508(a), as the case may be.

(v) The term "MP Amount" means an amount equal to the portion of a Floating Rate Payer 

Calculation Amount in respect of which the Clearing House matches a Matched Pair for 

the purposes of Rule 1507(b) or Rule 1508(a), as applicable.

(w) The term "MP Notice" means a notice provided under Rule 1509(b) or Rule 1509(c) or 

an Electronic Notice.

(x) The term "Non-default Rate" means the rate certified by the Non-defaulting Party to be 

a rate offered to the Non-defaulting Party by a major bank in a relevant interbank market 

for overnight deposits in the applicable currency, such bank to be selected in good faith 

by the Non-defaulting Party for the purpose of obtaining a representative rate that will 

reasonably reflect conditions prevailing at the time in that relevant market.

(y) The term "Non-defaulting Party" means with respect to (i) a Defaulter Close-Out, the 

Clearing House and (ii) a Deemed Discharge, the Clearing Member or Sponsored 

Principal.

(z) The term "Offer to the Public" in relation to any Securities in any Relevant Member 

State means the communication in any form and by any means of sufficient information 

on the terms of the offer and any Securities to be offered so as to enable an investor to 

decide to purchase or subscribe for those Securities, as the same may be varied in that 

Relevant Member State by any measure implementing the Prospectus Directive in that 

Relevant Member State.

(aa) The term "PD Contract" means a CDS that is a Security (if any) and which is:

(i) a CDS Contract cleared or proposed to be cleared by the Clearing House;

(ii) a Customer-CM CDS Transaction; or

(iii) a CDS on terms identical or similar to a CDS Contract falling under 

Rule 1501(aa)(i).

(bb) The term "Prospectus Directive" means Directive 2003/71/EC (and amendments thereto, 

including the 2010 PD Amending Directive, to the extent implemented in the Relevant 

Member State in question) and includes any European Commission regulations 

thereunder and relevant implementing measures in each Relevant Member State. Any 

reference to a particular article of the Prospectus Directive shall be deemed to also be a 

reference to the relevant provision of the relevant implementing measure in each 

Relevant Member State.
NYDOCS01/1643340.2 280

(cc) The term "Relevant Member State" means any member state of the European Economic 

Area which has implemented the Prospectus Directive.

(dd) The term "Restructuring CDS Contract" means a CDS Contract (or in respect of a CDS 

Contract relating to an index, a CDS Contract which is a Component Transaction) in 

respect of a Reference Entity in relation to which a Restructuring Credit Event 

Announcement has been made (and no DC Credit Event Announcement has been made 

in respect of any other Applicable Credit Event) in relation to that Reference Entity and 

where relevant, the requirement for Publicly Available Information has been satisfied as 

determined by the Determining Body provided that if, after such Restructuring Credit 

Event Announcement has been made, a further DC Credit Event Announcement is made 

of the occurrence of an Applicable Credit Event other than a Relevant Restructuring 

Credit Event in relation to that Reference Entity, such CDS Contract, to the extent that it 

has not become a Triggered Restructuring CDS Contract Portion, will cease to be a 

Restructuring CDS Contract and provided further that any Restructuring CDS Contract, 

to the extent that it is not a Triggered Restructuring CDS Contract Portion, in respect of 

which an effective Restructuring Credit Event Notice can no longer be delivered 

(including, at the times and in the circumstances specified in the CDS Procedures, copied 

to the Clearing House) will cease to be a Restructuring CDS Contract and will thereafter 

be a CDS Contract subject to the provisions of these Rules.

(ee) The term "Restructuring Credit Event Announcement" means a DC Credit Event

Announcement of the occurrence of a Relevant Restructuring Credit Event.

(ff) The term "Restructuring Credit Event Notice" means a Credit Event Notice in respect 

of a Relevant Restructuring Credit Event, relating to all or, where permitted under 

Section 3.9 of the 2003 Credit Derivatives Definitions or Section 1.33 of the 2014 Credit 

Derivatives Definitions, as applicable, part of the Floating Rate Payer Calculation 

Amount of a Restructuring CDS Contract to be delivered in accordance with the Contract 

Terms by a Matched CDS Buyer or Matched CDS Seller (as applicable) to the Matched 

CDS Buyer or Matched CDS Seller (as applicable) in the Matched Pair and copied to the 

Clearing House where required in accordance with Rule 1509(d).

(gg) The term "Restructuring Reference Entity" means the Reference Entity in respect of 

which a DC Credit Event Announcement has been made in respect of a Relevant 

Restructuring Credit Event.

(hh) The term "Securities" means 'securities' within the meaning of article 2(1)(a) of the 

Prospectus Directive as the same may be varied in any Relevant Member State by any 

measure implementing the Prospectus Directive in that Relevant Member State; and the 

term "Security" shall be construed accordingly.

(ii) The term "Settlement Notice" means any notice under a CDS Contract that is not an MP 

Notice which is delivered pursuant to the Settlement and Notices Terms.

(jj) The term "Triggered Restructuring CDS Contract Portion" means a Restructuring 

CDS Contract in respect of which a Restructuring Credit Event Notice has been delivered 
NYDOCS01/1643340.2 281

in accordance with the Contract Terms, these Rules and the CDS Procedures, provided 

that, where permitted under Section 3.9 of the 2003 Credit Derivatives Definitions or 

Section 1.33 of the 2014 Credit Derivatives Definitions, as applicable, if such 

Restructuring Credit Event Notice specifies an Exercise Amount that is less than the 

Floating Rate Payer Calculation Amount of the Restructuring CDS Contract, such 

Restructuring CDS Contract shall be construed, pursuant to Section 3.9 of the 2003 

Credit Derivatives Definitions or Section 1.33 of the 2014 Credit Derivatives Definitions, 

as applicable, as if the parties had entered into two Restructuring CDS Contracts, one of 

which will constitute the Triggered Restructuring CDS Contract Portion and has a

Floating Rate Payer Calculation Amount equal to the Exercise Amount and the other of 

which has a Floating Rate Payer Calculation Amount equal to the Floating Rate Payer 

Calculation Amount outstanding immediately prior to the delivery of the Restructuring 

Credit Event Notice minus the Exercise Amount.

(kk) The term "Tripartite Representation" means the record relating to a CDS Contract in 

Deriv/SERV. In relation to each CDS Contract recorded in Deriv/SERV, it is 

acknowledged that Deriv/SERV will create a record as follows:

(i) Where the CDS Contract is recorded in a Customer Account (other than an 

Individually Segregated Sponsored Account):

(A) The record will identify three entities, namely the Clearing House, the 

CDS Clearing Member and the relevant Customer and will identify 

whether the Customer is a protection buyer or a protection seller.

(B) Where the CDS Clearing Member is an FCM/BD Clearing Member, 

unless the CDS Contract is recorded in an Individually Segregated 

Sponsored Account, such record will represent a CDS Contract between 

the Clearing House and such FCM/BD Clearing Member acting on behalf 

of or for the account of such Customer and such FCM/BD Clearing 

Member will be a CDS Buyer if such record identifies such Customer as a 

protection buyer and a CDS Seller if such record identifies such Customer 

as a protection seller.

(C) Where the CDS Clearing Member is a Non-FCM/BD CDS Clearing 

Member, unless the CDS Contract is recorded in an Individually 

Segregated Sponsored Account, such record will represent two contracts:

(1) a CDS Contract between the Clearing House and such 

Non-FCM/BD CDS Clearing Member; and

(2) a Customer-CM CDS Transaction between such Non-FCM/BD 

CDS Clearing Member and such Customer,

and where such record identifies such Customer as a protection buyer, the 

Non-FCM/BD CDS Clearing Member will be a CDS Buyer in respect of 

the CDS Contract and a protection seller in respect of the Customer-CM 

CDS Transaction; and where such record identifies such Customer as a 
NYDOCS01/1643340.2 282

protection seller, such Non-FCM/BD CDS Clearing Member will be a 

CDS Seller in respect of the CDS Contract and a protection buyer in 

respect of the Customer-CM CDS Transaction. Where, in these Rules or 

the CDS Procedures, a Customer-CM CDS Transaction is described as 

"related" or "connected" in the context of a CDS Contract, or a CDS 

Contract is described as "related" or "connected" in the context of a 

Customer-CM CDS Transaction, that is a reference to the CDS Contract 

and the Customer-CM CDS Transaction which are related or connected by 

virtue of being recorded in a single Tripartite Representation.

(ii) Where the CDS Contract is recorded in a Proprietary Account (excluding any 

Individually Segregated Sponsored Account), the record will have two entries and 

identify the Clearing House and the CDS Clearing Member in the same manner as 

set out under Rule 1501(kk)(i)(A) and will in addition identify the CDS Clearing 

Member where, under Rule 1501(kk)(i)(A), it would have identified the 

Customer, identifying whether the CDS Clearing Member is a protection buyer 

(in which case the CDS Clearing Member will be a CDS Buyer in respect of the 

CDS Contract) or a protection seller (in which case the CDS Clearing Member 

will be a CDS Seller in respect of the CDS contract).

(iii) Where the CDS Contract is recorded in an Individually Segregated Sponsored 

Account and the Sponsor is a Non-FCM/BD Clearing Member:

(A) The record will identify three entities, namely the Clearing House, the 

Sponsor and the Sponsored Principal and will identify whether the 

Sponsored Principal is a protection buyer or a protection seller.

(B) Such record will represent the rights and liabilities of the parties in respect 

of a CDS Contract recorded in an Individually Segregated Sponsored 

Account as set forth in Part 19 and the Sponsored Principal will be a CDS 

Buyer if such record identifies it as a protection buyer and a CDS Seller if 

such record identifies such Sponsored Principal as a protection seller.

(C) Such record will represent two contracts:

(1) a CDS Contract between the Clearing House and the Sponsored 

Principal, for which the Sponsor is jointly and severally liable as 

set forth in Part 19; and

(2) a Customer-CM CDS Transaction between the Sponsor and 

Sponsored Principal on the terms set forth in Part 19,

and where such record identifies such Sponsored Principal as a protection 

buyer, the Sponsor will also be a CDS Buyer in respect of its obligations 

under the CDS Contract and a protection seller in respect of its obligations 

under the Customer-CM CDS Transaction; and where such record 

identifies the Sponsored Principal as a protection seller, such Sponsor will 

be a CDS Seller in respect of its obligations under the CDS Contract and a 
NYDOCS01/1643340.2 283

protection buyer in respect of its obligations under the Customer-CM CDS 

Transaction. Where, in these Rules or the CDS Procedures, a CustomerCM CDS Transaction is described as "related" or "connected" in the 

context of a CDS Contract, or a CDS Contract is described as "related" or 

"connected" in the context of a Customer-CM CDS Transaction, that is a 

reference to the CDS Contract and the Customer-CM CDS Transaction 

which are related or connected by virtue of being recorded in a single 

Tripartite Representation.

(iv) Where the CDS Contract is recorded in an Individually Segregated Sponsored 

Account and the Sponsor is an FCM/BD Clearing Member, the record will have 

two entries and identify only the Clearing House and the Sponsored Principal (in 

the latter case, in the same way as the CDS Clearing Member would be identified 

as set out under Rule 1501(kk)(ii)), identifying whether the Sponsored Principal is 

a protection buyer (in which case the Sponsored Principal will be a CDS Buyer in 

respect of the CDS Contract) or a protection seller (in which case the Sponsored 

Principal will be a CDS Seller in respect of the CDS Contract).

(ll) The term "Unpaid Amounts" owing to a party pursuant to a CDS Contract means:

(i) with respect to the CDS Clearing Member or Sponsored Principal, the amounts 

that would have become payable but for paragraph 8.2(a)(i)(B) of the CDS 

Procedures to the Clearing Member or Sponsored Principal under 

paragraph 8.2(a)(i)(A) of the CDS Procedures on or prior to the date of the 

Defaulter Close-Out or Deemed Discharge, as the case may be, and which remain 

unpaid at the date of the Defaulter Close-Out or Deemed Discharge, as the case 

may be; and

(ii) with respect to the Clearing House, the amounts that would have become payable 

but for paragraph 8.2(a)(i)(C) of the CDS Procedures to the Clearing House under 

paragraph 8.2(a)(i)(A) of the CDS Procedures on or prior to the date of the 

Defaulter Close-Out or Deemed Discharge, as the case may be, and which remain 

unpaid at the date of the Defaulter Close-Out or Deemed Discharge, as the case 

may be.

(mm) The terms "Auction Settlement", "Auction Final Price Determination Date", "Cash 

Settlement Amount", "Credit Derivatives Determinations Committee", "Credit 

Event", "Credit Event Notice", "DC Credit Event Announcement", "DC Secretary", 

"Deliverable Obligation", "Deliver", "Delivery", "Exercise Amount", "Fallback 

Settlement Method", "Floating Rate Payer Calculation Amount", "Indicative 

Quotation", "Latest Permissible Physical Settlement Date", "NOPS Amendment 

Notice", "Notice of Physical Settlement", "Notice to Exercise Movement Option", 

"Obligation", "Physical Settlement Amount", "Publicly Available Information", 

"Reference Entity", "Restructuring", "Settlement Method" and "Undeliverable 

Obligations" each have the meaning given to those terms in the Applicable Credit 

Derivatives Definitions.
NYDOCS01/1643340.2 284

(nn) The terms "Asset Package Delivery", "Asset Package" and "Prior Deliverable 

Obligation", each have the meaning given to those terms in the 2014 Credit Derivatives 

Definitions.

(oo) The terms "CDS Default Committee", "Electronic Notice", "Electronic Notice 

Process", "Manual Notice Process", "Manual MP Notice", "NEMO Triggering 

Period" and “Relevant Restructuring Credit Event” each have the meaning given to 

those terms in the CDS Procedures.

(pp) Any term used but not defined in this Part 15 or elsewhere in the Rules shall have the 

meaning given to that term in the CDS Procedures.

Rule 1502 Terms of CDS Contracts and Initial Payments

(a) The terms of each CDS Contract shall be as follows:

(i) such quantity, notional and other economic terms (as determined pursuant to the 

CDS Procedures) as were submitted to the Clearing House in respect of the CDS 

Trade Particulars that gave rise to the CDS Contract, subject, in the case of a 

Restructuring CDS Contract, to such changes to such terms as result from the 

operation of these Rules and the CDS Procedures, subject to the provisions of 

Rule 401(a)(vi), (ix), (x) or (xi), as applicable;

(ii) the applicable terms set out in the Rules (including, without limitation, the CDS 

Procedures, the Settlement and Notices Terms and those provisions of the General 

Contract Terms Procedures as are specified in the CDS Procedures); 

(iii) the Applicable Credit Derivatives Definitions, as amended pursuant to these Rules 

(including, without limitation, pursuant to the CDS Procedures); and

(iv) the Settlement and Notices Terms.

(b) No CDS Contract arising pursuant to the Clearing of CDS Trade Particulars in respect of 

a Bilateral CDS Transaction already recorded in Deriv/SERV shall contain any rights or 

obligations in respect of any Initial Payment. If any CDS Trade Particulars submitted for 

Clearing relate to a Bilateral CDS Transaction which includes any binding obligation for 

payment or performance falling due before a CDS Contract arises pursuant to 

Rule 401(a)(ix), the obligation for such payment or performance shall remain a direct 

obligation of the relevant CDS Buyer or CDS Seller (as applicable) to the other party to 

the relevant Bilateral CDS Transaction. The Clearing House shall have no obligation to 

make or guarantee any Initial Payment in respect of a Bilateral CDS Transaction or any 

CDS Trade Particulars (but this shall not affect the Clearing House's obligations under 

CDS Contracts, including any obligation to make an Initial Payment under a CDS 

Contract in accordance with the Contract Terms) or to make or guarantee any payment or 

performance reflecting any payment or performance in respect of a Bilateral CDS 

Transaction or any CDS Trade Particulars falling due for payment or performance before 

a CDS Contract arises pursuant to Rule 401(a)(ix). For the avoidance of doubt: (i) each 

CDS Contract arising from the submission for Clearing of CDS Trade Particulars for 
NYDOCS01/1643340.2 285

which no Bilateral CDS Transaction is already recorded in Deriv/SERV will include an 

obligation to pay an Initial Payment constituting a payment obligation of the relevant 

party thereto reflecting the Initial Payment, if any, reflected in the CDS Trade Particulars 

submitted for Clearing; and (ii) CDS Contracts arising in other circumstances (other than 

pursuant to Clearing of CDS Trade Particulars in respect of a Bilateral CDS Transaction 

already recorded in Deriv/SERV, but including, without limitation, CDS Contracts 

arising pursuant to Rule 401(a)(vi), (ix), (x) or (xi)) may include an obligation to pay an 

Initial Payment constituting a payment obligation of the relevant party thereto.

Rule 1503 Prospectus Directive

(a) The Clearing House has not authorised, nor does it authorise, the making of any Offer to 

the Public by any Person of any PD Contract in circumstances in which: (i) an obligation 

arises for the Clearing House to publish or supplement a prospectus for any such offer; 

(ii) an obligation arises for the Clearing House to make any other public disclosure or 

filing required under the Prospectus Directive; or (iii) a "home member state" is 

determined in respect of the Clearing House for purposes of article 2(1)(m) of the 

Prospectus Directive. Accordingly, Clearing Members shall not make any such Offer to 

the Public in relation to PD Contracts.

(b) Without prejudice to the generality of Rule 1503(a), no Clearing Member shall enter into 

a PD Contract:

(i) with the Clearing House;

(ii) with another Clearing Member or Sponsored Principal pursuant to CADP; or

(iii) with any of its Customers on a back-to-back or agency basis with a contract 

falling under (i) or (ii),

unless one or more of the following conditions is satisfied:

(A) in the case of any PD Contract to which the Clearing House is a party, the 

Clearing Member is a "qualified investor" (as defined in article 2(1)(e) of 

the Prospectus Directive);

(B) in the case of any PD Contract relating to a Customer, the Clearing 

Member and its Customer are both "qualified investors" (as defined in 

article 2(1)(e) of the Prospectus Directive);

(C) the minimum total consideration is at least:

(1) €50,000, in relation to any Offer to the Public made in a Relevant 

Member State that has not implemented the 2010 PD Amending 

Directive; or
NYDOCS01/1643340.2 286

(2) €100,000, in relation to any Offer to the Public made in a Relevant 

Member State that has implemented the 2010 PD Amending 

Directive; or

(D) the requirement to publish or supplement a prospectus under the 

Prospectus Directive otherwise does not apply.

(c) Notwithstanding any other provision of these Rules, no Clearing Member shall be 

declared subject to an Event of Default or have its membership terminated or suspended 

under Rules 208 or 209 for breach of any provision of this Rule 1503 unless:

(i) a Governmental Authority has determined or published a determination, rule or 

guidance to the effect that any CDS is or may be characterised as a Security, in 

which case any breach of this Rule 1503 following such determination or 

publication shall be actionable as an Event of Default and constitute grounds for 

termination or suspension of membership under Rules 208 or 209; or

(ii) the Clearing House has suffered a loss or is subject to any investigation or 

proceeding by a Governmental Authority in relation to the Prospectus Directive 

caused by the Clearing Member's breach of this Rule 1503.

(d) Neither Rule 1501(aa) nor this Rule 1503 constitutes any agreement, admission or 

acknowledgement on the part of any Customer, Clearing Member or the Clearing House 

that any CDS is or could be characterised as a Security. Rule 1501(aa) and this 

Rule 1503 are without prejudice to any right of any Customer, Clearing Member or the 

Clearing House to assert, argue or provide evidence that any CDS is not a Security in any 

arbitration, disciplinary or other legal proceedings or to any Governmental Authority or 

to publish any view that the Prospectus Directive does or does not apply in relation to any 

such contract.

Rule 1504 Separate treatment of CDS Contracts for Proprietary Account and Customer 

Account

Further to Rule 102(q), CDS Contracts (and consequently Open Contract Positions including any 

Restructuring CDS Contracts, Matched CDS Contracts and Triggered Restructuring CDS 

Contract Portions) will be separately subject to the application of these Rules in respect of the 

following accounts of a CDS Clearing Member: each of its Proprietary Accounts, each of its 

Customer Accounts, and each Individually Segregated Sponsored Account for which it acts as 

Sponsor, in either case in which CDS Contracts of the relevant Set are recorded (if any).

Rule 1505 Credit Event Notices, Notices of Physical Settlement, NOPS Amendment 

Notices, Notices to Exercise Movement Option and Asset Package Delivery 

Notice 

(a) None of the Clearing House, any CDS Clearing Member or any Customer will be entitled 

to deliver a Credit Event Notice under a CDS Contract or any Customer-CM CDS 

Transaction, as the case may be, in relation to any Applicable Credit Event other than a 

Relevant Restructuring Credit Event.
NYDOCS01/1643340.2 287

(b) None of the Clearing House, any CDS Clearing Member or any Customer will deliver 

any of the following notices in respect of any CDS Contract or any Customer-CM CDS 

Transaction (as the case may be) unless and until the Clearing House has (or, pursuant to 

Rule 1507 or Rule 1508, should have) notified CDS Buyers and CDS Sellers of their 

Matched Pairs and associated MP Amounts and any such notices delivered before that 

time shall be void and of no effect:

(i) a Notice of Physical Settlement, NOPS Amendment Notice or, where applicable, 

Asset Package Delivery Notice in respect of a CDS Contract of a Set (or any 

related Customer-CM CDS Transaction) in respect of which an Applicable Credit 

Event other than a Relevant Restructuring Credit Event has occurred; or

(ii) a Credit Event Notice, Notice of Physical Settlement, NOPS Amendment Notice 

or, where applicable, Asset Package Delivery Notice or Notice to Exercise 

Movement Option in respect of a CDS Contract of a Set (or any related CustomerCM CDS Transaction) in respect of which a Relevant Restructuring Credit Event 

has occurred.

(c) If a CDS Clearing Member delivers (or, by virtue of a Customer delivering a Credit 

Event Notice in respect of a CDS Contract recorded in the Tripartite Representation, is 

deemed to have delivered) a Credit Event Notice, Notice to Exercise Movement Option, 

Notice of Physical Settlement or NOPS Amendment Notice in relation to a Matched CDS 

Contract in respect of a Floating Rate Payer Calculation Amount exceeding the MP 

Amount in respect of which it is matched in the relevant Matched Pair then such notice 

will be effective only in respect of a Floating Rate Payer Calculation Amount equal to the 

relevant MP Amount. This requirement will apply separately in relation to each Matched 

Pair in respect of which the CDS Clearing Member is matched.

(d) Nothing in this Rule 1505 shall restrict or prevent any deemed delivery of a Credit Event 

Notice pursuant to the CDS Procedures or Contract Terms.

(e) Any purported delivery of a Notice to Exercise Movement Option outside the NEMO 

Triggering Period shall not amount to valid delivery of that notice and shall be 

disregarded by the Clearing House and Clearing Members in relation to any CDS 

Contracts and any related Customer-CM CDS Transactions.

Rule 1506 Auction Settlement and Physical Settlement

Auction Settlement will be specified as the Settlement Method and "Physical Settlement" will be 

specified as the Fallback Settlement Method for all CDS Contracts.

Rule 1507 Physical Settlement Allocation of Buyers and Sellers: Applicable Credit Events 

other than Restructuring

(a) Following the occurrence of a DC Credit Event Announcement relating to an Applicable 

Credit Event other than a Relevant Restructuring Credit Event in respect of a CDS 

Contract, the Clearing House will be obliged, where the Fallback Settlement Method 
NYDOCS01/1643340.2 288

applies to the CDS Contract, to carry out the steps in Rule 1507(b) in accordance with the 

CDS Procedures.

(b) If Rule 1507(a) applies:

(i) the Clearing House shall match each CDS Seller in respect of a CDS Contract of 

the relevant Set with one or more CDS Buyers under CDS Contract(s) of the same 

Set in accordance with the CDS Procedures (such CDS Contracts thereby 

becoming Matched CDS Contracts and each matched CDS Seller and CDS Buyer 

becoming a Matched Pair), such that the Floating Rate Payer Calculation Amount 

related to each CDS Seller under each Matched CDS Seller Contract is fully 

allocated to one or more CDS Buyers under Matched CDS Buyer Contracts of the 

same Set as such Matched CDS Seller Contract; and

(ii) the Clearing House will, in accordance with the CDS Procedures, notify each 

CDS Buyer and CDS Seller of the details of the Matched CDS Contracts, 

Matched CDS Buyer and Matched CDS Seller (such notice, for purposes of this 

Rule 1507, the "Matched Pair Notice") and the associated MP Amount.

(c) If the Clearing House has delivered a Matched Pair Notice that specifies a MP Amount 

that is less than the outstanding Floating Rate Payer Calculation Amount applicable to a 

Matched CDS Contract to which such Matched Pair Notice relates, the relevant rights and 

obligations of the Clearing House and the Matched CDS Buyer or Matched CDS Seller 

pursuant to the Matched CDS Contract shall, with effect from the date such Matched Pair 

Notice is effective, be construed as if the Clearing House and such Matched CDS Buyer 

or Matched CDS Seller had entered into two CDS Contracts, one of which has a Floating 

Rate Payer Calculation Amount equal to the MP Amount and the other of which has a 

Floating Rate Payer Calculation Amount equal to the Floating Rate Payer Calculation 

Amount outstanding immediately prior to delivery of such Matched Pair Notice minus 

the MP Amount. Where this paragraph applies to a Matched CDS Contract recorded in a 

Customer Account of a Non-FCM/BD CDS Clearing Member, the related Customer-CM 

CDS Transaction will be treated as identically separated and as two Customer-CM CDS 

Transactions.

(d) The provisions of this Rule 1507 are subject to Rule 1515.

Rule 1508 Settlement Allocation of Buyers and Sellers: Relevant Restructuring Credit 

Event

(a) Following the occurrence of a Restructuring Credit Event Announcement, in accordance 

with the CDS Procedures:

(i) the Clearing House will match each CDS Seller with one or more CDS Buyers 

each of which is party to a Restructuring CDS Contract of the same Set in 

accordance with the CDS Procedures (such Restructuring CDS Contracts thereby 

becoming Matched CDS Contracts and each matched CDS Seller and CDS Buyer 

becoming a Matched Pair), such that the Floating Rate Payer Calculation Amount 

related to each Matched CDS Seller under each Matched CDS Contract is fully 
NYDOCS01/1643340.2 289

allocated to one or more CDS Buyers under Matched CDS Contracts of the same 

Set as such Matched CDS Seller Contract; and

(ii) the Clearing House will notify each CDS Buyer and CDS Seller of the Matched 

CDS Contracts, Matched CDS Buyer and Matched CDS Seller (such notice, for 

purposes of this Rule 1508, the "Matched Pair Notice") and the associated MP 

Amount (but the Clearing House shall not be obliged to provide any Matched Pair 

Notice to any Customer).

(b) If the Clearing House has delivered a Matched Pair Notice that specifies a MP Amount 

that is less that the outstanding Floating Rate Payer Calculation Amount applicable to a 

Matched CDS Contract to which such Matched Pair Notice relates, the relevant rights and 

obligations of the Clearing House and the relevant Matched CDS Buyer or Matched CDS 

Seller pursuant to the Matched CDS Contract shall, with effect from the date such 

Matched Pair Notice is effective, be construed as if the Clearing House has entered into 

two Restructuring CDS Contracts, one of which has a Floating Rate Payer Calculation 

Amount equal to the MP Amount and the other of which has a Floating Rate Payer 

Calculation Amount equal to the Floating Rate Payer Calculation Amount outstanding

immediately prior to delivery of such Matched Pair Notice minus the MP Amount. 

Where this paragraph applies to a Matched CDS Contract recorded in a Customer 

Account of a Non-FCM/BD CDS Clearing Member, the related Customer-CM CDS 

Transaction will be treated as identically separated into two Customer-CM CDS 

Transactions.

(c) The provisions of this Rule 1508 are subject to Rule 1515.

Rule 1509 Matched Pairs: Designations and Notices

(a) In respect of each Matched CDS Buyer Contract and each Matched CDS Seller Contract 

which is the subject of a Matched Pair, Restructuring Credit Event Notices and Notices to 

Exercise Movement Option shall, save in the limited circumstances provided for in the 

CDS Procedures when the Manual Notice Process applies, be given in accordance with 

the Electronic Notice Process and will have the effect set out in that process.

(b) For the purposes of the Manual Notice Process, in respect of each Matched CDS Buyer 

Contract which is the subject of a Matched Pair, the Clearing House, pursuant to 

Section 9.2(c)(iv) of the 2003 Credit Derivatives Definitions or Section 11.2(c)(iv) of the 

2014 Credit Derivatives Definitions, as applicable (each of which is amended for these 

purposes in the CDS Procedures), as designator, shall be deemed to have designated the 

Matched CDS Seller in such Matched Pair as its designee:

(i) to receive on its behalf from the Matched CDS Buyer in the Matched Pair:

(A) Notices of Physical Settlement (and any NOPS Amendment Notices or in 

Asset Package Delivery Notice), in each case, that are Manual MP Notices 

in relation to any CDS Contract in respect of which a DC Credit Event 

Announcement has been made in respect of an Applicable Credit Event 

other than a Relevant Restructuring Credit Event;
NYDOCS01/1643340.2 290

(B) Restructuring Credit Event Notices, Notices of Physical Settlement (and 

any NOPS Amendment Notices or Asset Package Delivery Notice) and, 

where applicable, Notices to Exercise Movement Option, in each case, 

that are Manual MP Notices in relation to any Restructuring CDS Contract 

or Triggered Restructuring CDS Contract Portion, as the case may be; and

(C) any Settlement Notices.

(ii) to deliver on its behalf to the Matched CDS Buyer in the Matched Pair 

Restructuring Credit Event Notices and, where applicable, Notices to Exercise 

Movement Option, in each case, that are Manual MP Notices in relation to any 

Restructuring CDS Contract or Triggered Restructuring CDS Contract Portion, as 

the case may be, and any Settlement Notices; other than in respect of the Physical 

Settlement Amount relating to the settlement of Non DVP Obligations as referred 

to in Rule 1510, to pay, on behalf of the Clearing House, the applicable Physical 

Settlement Amount in respect of any Matched CDS Contract to be settled in 

accordance with the Fallback Settlement Method to the Matched CDS Buyer in 

the Matched Pair;

(iii) to pay to the Matched CDS Buyer in the Matched Pair and receive from the 

Matched CDS Buyer in the Matched Pair, in either case on behalf of the Clearing 

House, any amounts in respect of the costs and expenses of settlement due under 

the Matched CDS Buyer Contract; and

(iv) to take Delivery, on behalf of the Clearing House, of Deliverable Obligations 

from the Matched CDS Buyer in the Matched Pair,

and each Matched CDS Seller is hereby notified of the same accordingly. The Matched 

CDS Seller shall assume such obligations as designee upon notification of any Matched 

Pair.

(c) For the purposes of the Manual Notice Process, in respect of each Matched CDS Seller 

Contract which is the subject of a Matched Pair, the Clearing House, pursuant to 

Section 9.2(c)(iv) of the 2003 Credit Derivatives Definitions or Section 11.2(c)(iv) of the 

2014 Credit Derivatives Definitions, as applicable (each of which is amended for these 

purposes in the CDS Procedures), as designator, shall be deemed to have designated the 

Matched CDS Buyer in such Matched Pair as its designee:

(i) to deliver on its behalf to the Matched CDS Seller in the Matched Pair:

(A) Notices of Physical Settlement (and any NOPS Amendment Notices or 

Asset Package Delivery Notice), in each case, that are Manual MP 

Notices in relation to any CDS Contract in respect of which a DC Credit 

Event Announcement has been made in respect of an Applicable Credit 

Event other than a Relevant Restructuring Credit Event;

(B) Restructuring Credit Event Notices, Notices of Physical Settlement (and 

any NOPS Amendment Notices or Asset Package Delivery Notice) and, 
NYDOCS01/1643340.2 291

where applicable, Notices to Exercise Movement Option, in each case, 

that are Manual MP Notices in relation to any Restructuring CDS Contract 

or Triggered Restructuring CDS Contract Portion, as the case may be; and

(C) any Settlement Notices.

(ii) to receive on its behalf from the Matched CDS Seller in the Matched Pair 

Restructuring Credit Event Notices and, where applicable, Notices to Exercise 

Movement Option, in each case, that are Manual MP Notices in relation to any 

Restructuring CDS Contract or Triggered Restructuring CDS Contract Portion, as 

the case may be, and any Settlement Notices;

(iii) other than in respect of the Physical Settlement Amount relating to the settlement 

of Non DVP Obligations as referred to in Rule 1510, to receive payment, on 

behalf of the Clearing House, of the applicable Physical Settlement Amount from 

the Matched CDS Seller in the Matched Pair;

(iv) to pay to the Matched CDS Seller in the Matched Pair and receive from the 

Matched CDS Seller in the Matched Pair, in either case on behalf of the Clearing 

House, any amounts in respect of the costs and expenses of settlement due under 

the Matched CDS Seller Contract; and

(v) to Deliver, on behalf of the Clearing House, the relevant Deliverable Obligations 

to the Matched CDS Seller in the Matched Pair,

and each Matched CDS Buyer is hereby notified of the same accordingly. The Matched 

CDS Buyer shall assume such obligations as designee upon notification of any Matched 

Pair.

(d) With respect to any rights exercised as a result of or pursuant to the delivery of Manual 

MP Notices or Settlement Notices, in relation to each Matched Pair:

(i) the exercise of any rights by the Matched CDS Buyer against the Clearing House 

under a Matched CDS Buyer Contract shall be deemed to constitute the exercise 

of equal and simultaneous rights by the Clearing House against the Matched CDS 

Seller under the Matched CDS Seller Contract in the relevant Matched Pair;

(ii) the exercise of any rights of the Matched CDS Seller against the Clearing House 

under a Matched CDS Seller Contract shall be deemed to constitute the exercise 

of equal and simultaneous rights by the Clearing House against the Matched CDS 

Buyer under the Matched CDS Buyer Contract in the relevant Matched Pair;

(iii) where the Matched CDS Buyer validly delivers or serves any Manual MP Notice 

or Settlement Notice to or on the Matched CDS Seller in accordance with the 

Contract Terms and Rule 1509(c), such Manual MP Notice or Settlement Notice 

shall be effective with respect to both the Matched CDS Buyer Contract and the 

Matched CDS Seller Contract; and
NYDOCS01/1643340.2 292

(iv) where the Matched CDS Seller validly delivers or serves any Manual MP Notice 

or any Settlement Notices to or on the Matched CDS Buyer in accordance with 

the Contract Terms and Rule 1509(b), such Manual MP Notice or Settlement 

Notice shall be effective with respect to both the Matched CDS Buyer Contract 

and the Matched CDS Seller Contract.

(e) Following delivery by a Matched CDS Buyer or Matched CDS Seller of any Manual MP 

Notice or Settlement Notice, the Matched CDS Buyer or Matched CDS Seller that 

delivered such Manual MP Notice or Settlement Notice shall, at the times and in the

circumstances specified in the CDS Procedures, deliver a written copy of such Manual 

MP Notice or Settlement Notice to the Clearing House, in the case of Manual MP Notices 

in accordance with the CDS Procedures. Where required by the CDS Procedures, the 

Clearing House will provide a copy of the copy of each Manual MP Notice so received 

by it to both the Matched CDS Buyer and Matched CDS Seller in each Matched Pair 

under which a Manual MP Notice has been served or appears to have been served, in 

accordance with the CDS Procedures.

(f) Any Matched CDS Buyer or Matched CDS Seller in a Matched Pair which disputes any 

MP Notice or Settlement Notice, or which considers that an MP Notice or Settlement 

Notice additional to those copied to it by the Clearing House has been served, must 

inform the Clearing House, in the case of MP Notices in accordance with the CDS 

Procedures. Unless the Clearing House receives any notice disputing an MP Notice, the 

Clearing House will update its and Deriv/SERV's records on the basis of the MP Notices 

(or, at the times and in the circumstances specified in the CDS Procedures, on the basis of 

equivalent information) notified by the Clearing House to the Matched CDS Buyer and 

Matched CDS Seller in the Matched Pair. The Clearing House shall not be obliged to act 

upon any disputed MP Notice or Settlement Notice until the relevant dispute has been 

resolved.

(g) The Matched CDS Buyer and Matched CDS Seller in each Matched Pair shall each make 

such payments and deliveries and deliver such tenders, notices and invoices in relation to 

settlement to one another and to the Clearing House as are required pursuant to a 

Matched CDS Contract, these Rules, the CDS Procedures or Applicable Laws, provided 

that if Asset Package Delivery is applicable in respect of a Prior Deliverable Obligation 

specified in the relevant Notice of Physical Settlement or NOPS Amendment Notice (as 

the case may be) and the Matched CDS Buyer has complied with its obligations to give 

an Asset Package Delivery Notice, then in circumstances where the Asset Package is 

deemed to be zero, settlement shall be deemed to settle on a delivery-versus-payment 

basis in accordance with the timetable set out in Section 8.12(b)(iii) of the 2014 Credit

Derivatives Definitions.

Rule 1510 Physical Settlement of Matched Pairs for Non DVP Obligations

(a) In respect of any Matched Pair and the associated MP Amount, if any Deliverable 

Obligations to be Delivered by the Matched CDS Buyer to the Matched CDS Seller are 

reasonably believed by the Matched CDS Buyer not to settle standardly on a 

delivery-versus-payment basis (such Deliverable Obligations, "Non DVP Obligations") 
NYDOCS01/1643340.2 293

(as notified by the Matched CDS Buyer to the Matched CDS Seller and to the Clearing 

House upon delivering any Notice of Physical Settlement or NOPS Amendment Notice

or Asset Package Delivery Notice), Delivery of such Non DVP Obligations and payment 

of the related Physical Settlement Amount, each relating to the relevant portion of the MP 

Amount (the "Non DVP MP Amount") shall take place as follows and in accordance 

with the CDS Procedures:

(i) the Matched CDS Buyer shall notify the Clearing House that it is ready to Deliver 

to the Matched CDS Seller the Non DVP Obligations in an amount at least equal 

to the Non DVP MP Amount;

(ii) following receipt of a valid notification under Rule 1510(a)(i), the Clearing House 

shall request that the Matched CDS Seller pays the full Physical Settlement 

Amount relating to such Non DVP MP Amount to the Clearing House;

(iii) following receipt of a request under Rule 1510(a)(ii), the Matched CDS Seller 

shall transfer the full Physical Settlement Amount relating to the Non DVP MP 

Amount to the Clearing House;

(iv) following receipt of the full Physical Settlement Amount relating to the Non DVP 

MP Amount in accordance with Rule 301(f), the Clearing House shall notify the 

Matched CDS Buyer that it is holding the full Physical Settlement Amount 

relating to such Non DVP MP Amount from the Matched CDS Seller;

(v) following receipt of the notice under Rule 1510(a)(iv), the Matched CDS Buyer 

shall Deliver the relevant Non DVP Obligations to the Matched CDS Seller in an 

amount at least equal to the relevant Non DVP MP Amount;

(vi) following its receipt of Delivery of the relevant Deliverable Obligations, the 

Matched CDS Seller shall deliver a Notice to the Clearing House in the form 

required by the Clearing House from time to time specifying that the Delivery has 

occurred, in full or, if in part, the percentage of the Non DVP MP Amount (the 

"Delivered Percentage") in respect of which Delivery has occurred;

(vii) following its receipt of a valid notice under Rule 1510(a)(vi), the Clearing House 

shall pay an amount equal to the Physical Settlement Amount (or, where the 

Matched CDS Seller notified the Clearing House of Delivery in part only, an 

amount equal to the Delivered Percentage of the Physical Settlement Amount) 

received from the Matched CDS Seller in respect of the relevant Non DVP MP 

Amount to the Matched CDS Buyer; and

(viii) if the Matched CDS Buyer does not Deliver the Non DVP Obligations in an 

amount at least equal to the relevant Non DVP MP Amount to the Matched CDS 

Seller within the required period under the CDS Procedures for compliance with 

Rule 1510(a)(v) ("Delivery Period"), the Matched CDS Seller may request that 

the Clearing House repay to the Matched CDS Seller the Physical Settlement 

Amount in respect of the relevant Non DVP MP Amount, less the Delivered 

Percentage of the Physical Settlement Amount, if any, together with accrued 
NYDOCS01/1643340.2 294

interest on such amount for the period it has been held by the Clearing House 

calculated by reference to the Clearing House's rate for overnight deposits in the 

currency of the Physical Settlement Amount.

The process set out in this Rule 1510 may, subject to the relevant Contract Terms, be 

repeated in relation to any Non DVP Obligations not in fact delivered during a relevant 

Delivery Period.

Rule 1511 Notice that Physical Settlement is complete

Where, pursuant to their rights and obligations under Matched CDS Contracts, the Matched CDS 

Seller and Matched CDS Buyer in any Matched Pair settle any Matched CDS Contract which is 

to be settled in accordance with the Fallback Settlement Method, the relevant Matched CDS 

Seller and Matched CDS Buyer shall each deliver a notice to the Clearing House in the form 

required by the Clearing House from time to time specifying the payment and Delivery that have 

occurred in respect of such Matched CDS Contracts. Any such notice shall constitute a 

representation by the CDS Clearing Member or Sponsored Principal delivering the notice to the 

Clearing House that, so far as it is aware, physical settlement has occurred successfully and that 

there are no outstanding claims known to him in respect of the Matched CDS Contract (save as is 

disclosed in the notice) but is otherwise without prejudice to the rights of any party to a Matched 

CDS Contract in respect of settlement.

Rule 1512 Failure to pay Physical Settlement Amount; Cash Settlement

If, in relation to any Matched Pair, a Matched CDS Seller fails to pay all or part of the Physical 

Settlement Amount either to the Matched CDS Buyer or (where Rule 1510 applies) to the 

Clearing House when, in accordance with the Contract Terms, it was obliged to pay such amount 

(the amount not paid being the "Failed Amount"):

(a) the Matched CDS Buyer may and the Matched CDS Seller in the Matched Pair shall, as 

soon as practicable, give notice in writing to the Clearing House, giving all material 

details of the Matched CDS Contracts involved, of the failure to pay and the Failed 

Amount and any material details of the amount of any Physical Settlement Amount paid 

in part;

(b) such failure to pay shall not constitute or be deemed to constitute a breach of contract by, 

Insolvency of or Failure To Pay by the Clearing House under these Rules, the applicable 

Contract Terms or any Matched CDS Buyer Contract or give rise to any termination 

rights under Rule 209(c), Rule 209(f) or Rule 91215;

(c) if the Matched CDS Buyer elects to notify the Clearing House of such failure to pay in 

accordance with Rule 1512(a), the Matched CDS Buyer may give any such notice as 

soon as reasonably practicable after the occurrence of such failure to pay by the Matched 

CDS Seller;

 15 References to Rules 209(c), 209(f) and 912 in this Rule 1512(b) are to the Continuing CDS Rule Provisions.
NYDOCS01/1643340.2 295

(d) the Matched CDS Seller will be deemed to have failed to pay an amount equal to the 

Failed Amount to the Clearing House under the relevant Matched CDS Seller Contract;

(e) upon notice being given to the Clearing House by the Matched CDS Buyer in accordance 

with Rule 1512(c), "Cash Settlement" between the Matched CDS Buyer and the Clearing 

House pursuant to the Partial Cash Settlement Terms (set out in Section 9.8 of the 2003 

Credit Derivatives Definitions or Section 9.6 of the 2014 Credit Derivatives Definitions, 

as applicable, each of which is amended for these purposes in the CDS Procedures) shall 

be deemed to apply to the Matched CDS Buyer Contract with respect to the Deliverable 

Obligations corresponding to the Failed Amount as though:

(i) the Deliverable Obligations not Delivered were Undeliverable Obligations;

(ii) the Latest Permissible Physical Settlement Date were the date on which the 

Matched CDS Buyer gave the relevant notice to the Clearing House as referred to 

in Rule 1512(c);

(iii) Indicative Quotations were not applicable; and

(iv) the Matched CDS Buyer were the Calculation Agent,

and the Clearing House and the Matched CDS Buyer will settle the Matched Buyer CDS 

Contract accordingly and Rule 1509 will not apply.

Rule 1513 Fallback to Cash Settlement in respect of Non-Deliverable Obligations

(a) If a Matched CDS Buyer is not permitted to Deliver one or more Deliverable Obligations 

(such Deliverable Obligations, the "Non-Deliverable Obligations") specified in the 

relevant Notice of Physical Settlement or NOPS Amendment Notice or Asset Package 

Delivery Notice to its Matched CDS Seller in the relevant Matched Pair because:

(i) the amount of such Deliverable Obligation is less than the relevant minimum

denomination of such Deliverable Obligation; or

(ii) such Matched CDS Seller is not a permitted transferee under such Deliverable 

Obligation or the Matched CDS Buyer does not obtain any requisite consent with 

respect to delivery of loans,

such occurrence shall be treated, in relation to both Matched CDS Contracts, as an 

illegality or impossibility outside the parties' control for the purpose of Section 9.3 of the 

2003 Credit Derivatives Definitions or Section 9.1 of the 2014 Credit Derivatives 

Definitions, as applicable. The Matched CDS Buyer shall deliver a notice describing in 

reasonable detail the facts giving rise to such deemed illegality or impossibility to its 

Matched CDS Seller and the Clearing House.

(b) Upon notice being given to the Clearing House by the Matched CDS Buyer under 

Rule 1513(a), "Cash Settlement" pursuant to the Partial Cash Settlement Terms (set out in 

Section 9.8 of the 2003 Credit Derivatives Definitions or Section 9.6 of the 2014 Credit 
NYDOCS01/1643340.2 296

Derivatives Definitions, as applicable, each of which is amended for these purposes in the 

CDS Procedures) shall be deemed to apply to the Matched CDS Contracts in respect of 

the relevant Matched Pair with respect to the Non-Deliverable Obligations as though:

(i) the Non-Deliverable Obligations were Undeliverable Obligations;

(ii) the Latest Permissible Physical Settlement Date were the date on which the 

Matched CDS Buyer gave the relevant notice to the Clearing House as referred to 

in Rule 1513(a);

(iii) in the case of Rule 1513(a)(ii), Indicative Quotations were not applicable; and

(iv) the Matched CDS Buyer were the Calculation Agent.

The Clearing House and the Matched CDS Buyer will settle the Matched CDS Buyer 

Contract and the Clearing House and the Matched CDS Seller will settle the Matched 

Seller CDS Contract accordingly as though references to the Physical Settlement Amount 

in Rule 1509(b) and (c) were references to the Cash Settlement Amount.

Rule 1514 CDS Alternative Delivery or Settlement Procedure

(a) A Matched CDS Buyer and Matched CDS Seller in any Matched Pair for which the 

Settlement Method is other than Auction Settlement may, in accordance with the CDS 

Procedures, elect to settle their rights and obligations in relation to such Matched CDS 

Contracts between each other outside the Clearing House and other than pursuant to 

Rule 1507 to Rule 1511 ("CDS Alternative Delivery or Settlement Procedure" or 

"CADP"). For CADP to be effective, the Matched CDS Buyer and Matched CDS Seller 

must jointly provide the Clearing House with a CADP Notice specifying the Matched 

CDS Contracts and the quantity of the related MP Amount intended to be the subject of 

CADP (which quantity, if the CDS Contracts are ones to which Section 3.9 (Credit Event 

Notice after Restructuring) of the 2003 Credit Derivatives Definitions or Section 1.33 

(Credit Event Notice after M(M)R Restructuring) of the 2014 Credit Derivatives 

Definitions, as applicable, applies, shall be an amount that would be permitted as an 

Exercise Amount in relation to such Matched CDS Contracts under such section and, 

otherwise, shall be the entire MP Amount) and obtain the consent of the Clearing House 

to CADP, which consent will not be unreasonably withheld or delayed. The Clearing 

House shall respond to any CADP Notice (including its consent to CADP or otherwise) 

within one Business Day of receipt thereof.

(b) With effect from the time that the Clearing House confirms its consent to CADP, the 

Floating Rate Payer Calculation Amount of the relevant Matched CDS Contracts will be 

deemed to be reduced by an amount equal to the quantity of the MP Amount specified in 

the CADP Notice, as referred to in (a) above. In such circumstances, Rules 1507 to 1511

(inclusive) shall not apply to such Matched CDS Buyer and Matched CDS Seller in 

respect of the notified reduced amount related to such Matched Pair or the relevant 

Matched CDS Contracts.
NYDOCS01/1643340.2 297

(c) In such circumstances, the Matched CDS Buyer and Matched CDS Seller shall be liable 

to satisfy their obligations to each other in respect of such CADP bilaterally pursuant to 

such arrangements or agreements as they may establish or agree between them.

Rule 1515 Separation of Matched Pairs

(a) If: -

(i) a DC Credit Event Announcement has been made in respect of an Applicable 

Credit Event other than a Relevant Restructuring Credit Event; and

(ii) settlement of the relevant CDS Contracts is to be made pursuant to the Fallback 

Settlement Method; and

(iii) a subsequent resolution of a Determining Body results in settlement of the 

relevant CDS Contracts no longer being required to be made pursuant to the 

Fallback Settlement Method,

then:

(iv) to the extent that the Clearing House has not by then matched CDS Sellers with 

CDS Buyers to form Matched Pairs in relation to the relevant CDS Contracts, 

pursuant to Rule 1507, it shall not do so; and

(v) to the extent that the Clearing House has by then matched CDS Sellers with CDS 

Buyers to form Matched Pairs in relation to the relevant CDS Contracts pursuant 

to Rule 1507, the Clearing House shall, as soon as reasonably practicable, give 

notice (the "Matching Reversal Notice") to the CDS Seller and CDS Buyer 

forming each affected Matched Pair of the proposal to reverse such matching and 

shall thereafter reverse such matching, provided that the Clearing House will not 

reverse any matching to the extent that the Matched CDS Buyer or Matched CDS 

Seller has, not later than one Business Day after the Matching Reversal Notice, 

given notice to the Clearing House in accordance with Rule 1511 or the CDS 

Procedures (as applicable) that the relevant Matched Pair have settled the relevant 

Matched CDS Contracts (or part thereof).

(b) If: -

(i) a Restructuring Credit Event Announcement has been made; and

(ii) a subsequent resolution of a Determining Body determines that the Relevant 

Restructuring Credit Event did not in fact occur,

then:

(iii) to the extent that the Clearing House has not by then matched CDS Sellers with 

CDS Buyers to form Matched Pairs in relation to the relevant CDS Contracts, 

pursuant to Rule 1508, it shall not do so; and
NYDOCS01/1643340.2 298

(iv) to the extent that the Clearing House has by then matched CDS Sellers with CDS 

Buyers to form Matched Pairs in relation to the relevant CDS Contracts pursuant 

to Rule 1508, the Clearing House shall:

(A) with respect to relevant CDS Contracts to which Auction Settlement is 

applicable and where the subsequent resolution of the Determining Body 

in (ii) above occurs prior to the Auction Final Price Determination Date, 

reverse such matching; and

(B) with respect to relevant CDS Contracts to which the Fallback Settlement 

Method is applicable, to the extent that the Clearing House has by then 

matched CDS Sellers with CDS Buyers to form Matched Pairs in relation 

to the relevant CDS Contracts pursuant to Rule 1508, the Clearing House 

shall, as soon as reasonably practicable, give a Matching Reversal Notice 

to the CDS Seller and CDS Buyer forming each affected Matched Pair of 

the proposal to reverse such matching and shall thereafter reverse such 

matching, provided that the Clearing House will not reverse any matching 

to the extent that the Matched CDS Buyer or Matched CDS Seller has, not 

later than one Business Day after the Matching Reversal Notice, given 

notice to the Clearing House in accordance with Rule 1511 or the CDS 

Procedures (as applicable) that the relevant Matched Pair have settled the 

relevant Matched CDS Contracts (or part thereof).

(c) In relation to any Matched CDS Contract for which the matching of the related Matched 

Pair is reversed pursuant to (a) or (b) of this Rule 1515, the Clearing House will 

recalculate Margin on the basis that such CDS Contract is no longer a Matched CDS 

Contract and will adjust the Margin required by it accordingly.

(d) In relation to any Matched CDS Contract for which the matching of the related Matched 

Pair is reversed pursuant to (a) or (b) of this Rule 1515, any notices sent by the Matched 

CDS Buyer or the Matched CDS Seller to the other for the purposes or in connection with 

the settlement of the relevant Matched CDS Contracts will be deemed not to have been 

delivered and will be ineffective.

(e) For the avoidance of doubt, reversal of a Matched CDS Contract means that the Clearing 

House will restore the CDS Contracts (and any related Customer-CM CDS Transactions) 

that existed before the initial Credit Event determination occurred including by amending 

records in Deriv/SERV and the relevant Clearing Members and Customers will make or 

confirm any required matching amendments to reflect such reversed positions.

Rule 1516 Customer Accounts

(a) CDS Clearing Members must make designations to the Clearing House pursuant to 

Rule 401(g) and Rule 406(d) which, if acted upon by the Clearing House in accordance 

with such provisions, would result in: 

(i) no CDS Sub-Account being used for more than one Customer for which such 

CDS Clearing Member provides clearing services; 
NYDOCS01/1643340.2 299

(ii) no CDS Sub-Account linked to a Segregated Customer Omnibus Account For 

CDS including any CDS Contract entered into in respect of Segregated TTFCA 

Customer business or the CDS Clearing Member's own account business;

(iii) no CDS Sub-Account linked to a Segregated TTFCA Customer Omnibus Account 

For CDS including any CDS Contract entered into in respect of Segregated 

Customer business or the CDS Clearing Member's own account business;

(iv) no CDS Sub-Account linked to a Proprietary Account (other than, in the case of 

an FCM/BD Clearing Member, an Individually Segregated Sponsored Account) 

including any CDS Contracts entered into for or in connection with Segregated 

Customer or Segregated TTFCA Customer business; and

(v) the only Segregated TTFCA Customers where related CDS Contracts are eligible 

for recording in a CDS Sub-Account linked to a Proprietary Account being 

Segregated TTFCA Customers that are Affiliates of the CDS Clearing Member 

which is an FCM/BD Clearing Member. 

(b) It is acknowledged by the Clearing House that presently, in respect of the Clearing of 

CDS Contracts, neither Customers nor clients of Customers are capable of being 

provided with any of the access referred to in Rule 102(j) (except in connection with 

Individually Segregated Sponsored Accounts) and that, accordingly in such 

circumstances:

(i) Rule 102(j) does not apply in respect of the Clearing of CDS Contracts unless: 

(A) a Customer or its client is duly appointed as a Clearing Member's agent; or 

(B) in respect of an Individually Segregated Sponsored Account where the 

Sponsor will act as the Sponsored Principal's Representative in any instance in 

which it exercises any right or is subject to any obligation or liability in respect of 

the Individually Segregated Sponsored Account, regardless of whether such right, 

obligation or liability arises under these Rules or pursuant to an agreement 

between the Sponsor and Sponsored Principal; and

(ii) neither a Customer nor client of a Customer of a CDS Clearing Member acting in 

such capacity is a Representative of that CDS Clearing Member in respect of the 

Clearing of CDS Contracts solely as a result of it being a Customer or client of 

such a Customer.

This Rule 1516(b) does not affect the validity or effects of any notice delivered in 

Deriv/SERV by a Customer which results in a notice being delivered between a CDS 

Clearing Member and the Clearing House. If the Customer would have breached the 

Rules in connection with any conduct relating to any notice relating to a CDS Contract or 

Customer-CM CDS Transactions in Deriv/SERV if it were a Clearing Member, then its 

Clearing Member may be subject to disciplinary proceedings where sanctions are limited 

to those in Rule 1003(u) in respect of conduct relating to such notices.
NYDOCS01/1643340.2 300

(c) The Settlement and Notices Terms published by the Clearing House will apply to all CDS 

Clearing Members and their Customers, save to the extent that the relevant Clearing 

Member and Customer agree to vary such terms.

Rule 1517 [Not used]

Rule 1518 CDS Committees and Dispute Panels

Rule 117 and Part 10 (and equivalent provisions of any Clearing Membership Agreement, 

Sponsored Principal Clearing Agreement and Sponsor Agreement) are hereby disapplied only to 

the extent that any matter is eligible for determination by a CDS Default Committee in 

accordance with the CDS Procedures or the Credit Derivatives Determinations Committee in 

accordance with the Contract Terms. This Rule applies in respect of a Person mentioned in the 

foregoing sentence unless and until any such Person resolves not to determine the matter 

concerned.

Rule 1519 Interest

(a) Prior to the occurrence of (A) the completion of a close out of a CDS Clearing Member's 

or Sponsored Principal's positions under Part 9 upon the declaration of an Event of 

Default in respect of such CDS Clearing Member or Sponsored Principal (a "Defaulter 

Close-Out") or (B) a deemed discharge of the rights and liabilities of a CDS Clearing 

Member or Sponsored Principal under CDS Contracts upon the occurrence of an 

Insolvency in respect of the Clearing House or a Failure To Pay in respect of the Clearing 

House (a "Deemed Discharge"):

(i) Interest payable by the Clearing House:

(A) Interest on Late Payments. If the Clearing House is late in the 

performance of any payment obligation pursuant to a CDS Contract 

(including but not limited to pursuant to Rule 110) that has become due 

and payable, it will, to the extent permitted by Applicable Laws, pay 

interest (before as well as after judgment) on the overdue amount in 

respect of the relevant Account on demand in the same currency as the 

overdue amount, for the period from (and including) the original due date 

for payment to (but excluding) the date of actual payment at the Late 

Payment Rate.

(B) Interest on Deferred Payments. If the Clearing House does not pay any 

amount that, but for paragraph 8.2(a)(i)(B) of the CDS Procedures, would 

have been payable pursuant to a CDS Contract in respect of the relevant 

Account, it will, to the extent permitted by Applicable Laws, pay interest 

(before as well as after judgment) on that amount in respect of the relevant 

Account on demand (after such amount becomes payable) in the same 

currency as that amount, for the period from (and including) the date the 

amount would, but for paragraph 8.2(a)(i)(B) of the CDS Procedures, have 

been payable to (but excluding) the date the amount actually becomes 

payable, at the Deferral Rate.
NYDOCS01/1643340.2 301

(ii) Interest payable by the CDS Clearing Member or Sponsored Principals:

(A) Interest on Late Payments. If the relevant CDS Clearing Member or 

Sponsored Principal is late in the performance of any payment obligation 

pursuant to a CDS Contract that has become due and payable, it will pay 

interest to the Clearing House in accordance with Rule 301(f).

(B) Interest on Deferred Payments. If the relevant CDS Clearing Member or 

Sponsored Principal does not pay any amount that, but for 

paragraph 8.2(a)(i)(C) of the CDS Procedures, would have been payable 

pursuant to a CDS Contract with that CDS Clearing Member or Sponsored 

Principal, it will, to the extent permitted by Applicable Law, pay interest 

(before as well as after judgment) on that amount to the Clearing House on 

demand (after such amount becomes payable) in the same currency as that 

amount, for the period from (and including) the date the amount would, 

but for paragraph 8.2(a)(i)(C) of the CDS Procedures, have been payable 

to (but excluding) the date the amount actually becomes payable, at the 

Deferral Rate.

(b) Upon the occurrence of:

(i) a Defaulter Close-Out with respect to a CDS Clearing Member or Sponsored 

Principal, interest will accrue and be payable on any Unpaid Amount under a 

CDS Contract with such CDS Clearing Member or Sponsored Principal for the 

period from (and including) the date the relevant obligation would, but for 

paragraph 8.2(a)(i)(B) or (C) of the CDS Procedures, as the case may be, have 

been required to be performed to (but excluding) the date of the Defaulter CloseOut, at the Applicable Close-out Rate; and

(ii) a Deemed Discharge with respect to a CDS Clearing Member or Sponsored 

Principal, interest will accrue and be payable on any Unpaid Amount under a 

CDS Contract with such CDS Clearing Member or Sponsored Principal for the 

period from (and including) the date the relevant obligation would, but for 

paragraph 8.2(a)(i)(B) or paragraph 8.2(a)(i)(C) of the CDS Procedures, as the 

case may be, have been required to be performed to (but excluding) the date of the 

Deemed Discharge, at the Applicable Close-out Rate.

(c) Any interest pursuant to this Rule 1519 will be calculated on the basis of daily 

compounding and the actual number of days elapsed.

(d) No interest or income shall accrue for the benefit of any CDS Clearing Member or 

Sponsored Principal:

(i) on any Permitted Cover provided to the Clearing House; or

(ii) on any other obligation of the Clearing House whether pursuant to the Clearing 

Membership Agreement, any Sponsored Principal Clearing Agreement, any 

Sponsor Agreement, any Pledged Collateral Addendum or any other provision of 
NYDOCS01/1643340.2 302

the Rules or the Procedures for such time and in respect of any such amounts on 

which any interest accrues pursuant to this Rule 1519.

Rule 1520 Unpaid Amounts

On the occurrence of a Defaulter Close-Out or a Deemed Discharge, Unpaid Amounts under a 

CDS Contract with a CDS Clearing Member or Sponsored Principal subject to the Defaulter 

Close-Out or affected by the Deemed Discharge, as the case may be, together with any amount 

of interest accrued in respect of those amounts pursuant to Rule 1519(b), are deemed 

immediately payable, including for purposes of Rule 906.
NYDOCS01/1643340.2 303

Part 16 FCM/BD Clearing Member Provisions

Rule 1601 Scope

This Part 16 of the Rules shall apply solely to FCM/BD Clearing Members. Except as provided 

in this Part 16 or to the extent inconsistent with this Part 16, all other provisions of the Rules 

applicable to Clearing Members shall apply to FCM/BD Clearing Members, and FCM/BD 

Clearing Members shall constitute Clearing Members for all purposes of the Rules. 

Rule 1602 Definitions

(a) The term "Clearing House DCM Segregated Account" means an omnibus account 

located in the United States maintained by the Clearing House with respect to DCM 

Customers of an FCM/BD Clearing Member, which is segregated in accordance with 

Applicable Law and contains Margin (or the Permitted Cover in respect thereof) or 

proceeds thereof deposited by such FCM/BD Clearing Member on behalf of its DCM 

Customers in connection with Contracts that are U.S. Futures. The Clearing House DCM 

Segregated Account will consist of one or more accounts at one or more depositories 

which may be co-mingled to the extent permitted by the applicable provisions of the CEA 

and CFTC regulations.

(b) The term "Clearing House Non-DCM/Swap Account" means an omnibus account 

maintained by the Clearing House with respect to Non-DCM/Swap Customers of an 

FCM/BD Clearing Member, which is maintained in accordance with Applicable Law and 

contains Margin (or Permitted Cover in respect thereof) or the proceeds thereof deposited 

by such FCM/BD Clearing Member on behalf of its Non-DCM/Swap Customers in 

connection with Non-DCM/Swaps. The Clearing House Non-DCM/Swap Account will 

consist of one or more accounts at one or more depositories which may be co-mingled to 

the extent permitted by the applicable provisions of the CEA and CFTC regulations.

(c) The term "Clearing House Swap Segregated Account" means an omnibus account 

located in the United States maintained by the Clearing House with respect to Swap 

Customers of an FCM/BD Clearing Member, which is segregated in accordance with 

Applicable Law and contains Margin (or Permitted Cover in respect thereof) or proceeds 

thereof deposited by such FCM/BD Clearing Member on behalf of its Swap Customers in 

connection with Contracts that are Swaps. The Clearing House Swap Segregated 

Account will consist of one or more accounts at one or more depositories which may be 

co-mingled to the extent permitted by the applicable provisions of the CEA and CFTC 

regulations.

(d) The term "Clearing House SBS Segregated Account" means an omnibus account 

located in the United States maintained by the Clearing House with respect to SBS 

Customers of an FCM/BD Clearing Member, which is segregated in accordance with 

Applicable Law and contains Margin (or the Permitted Cover in respect thereof) or 

proceeds thereof deposited by such FCM/BD Clearing Member on behalf of its SBS 

Customers in connection with Contracts that are SBS. The Clearing House SBS 

Segregated Account will consist of one or more accounts at one or more depositories 
NYDOCS01/1643340.2 304

which may be co-mingled to the extent permitted by the applicable provisions of the 

Exchange Act and SEC rules and regulations.

(e) The term "Clearing House FCM/BD Segregated Account" means the Clearing House 

Swap Segregated Account, the Clearing House DCM Segregated Account, the Clearing 

House SBS Segregated Account or the Clearing House Non-DCM/Swap Account, as the 

case may be.

(f) The term "Customer Swap Portfolio" means the portfolio of rights and obligations 

under Contracts that are registered in a Swap Customer Account of an FCM/BD Clearing 

Member and that are allocated to a particular Swap Customer in the books and records of 

the Clearing House in accordance with the Swap Customer Segregation Requirements. 

Rule 1603 FCM/BD Contracts

(a) A Contract that arises under Rule 401 between the Clearing House and an FCM/BD 

Clearing Member shall be subject to this Part 16, regardless of whether any offsetting 

Contract between the Clearing House and another Clearing Member is subject to this 

Part 16. In respect of any Contract between the Clearing House and an FCM/BD 

Clearing Member, and in respect of other matters relating to such FCM/BD Clearing 

Member and/or FCM/BD Customer under the Rules, this Part 16 shall govern in the 

event of any conflict with any other provision of the Rules, and, for the avoidance of 

doubt, the Procedures, Clearing Membership Agreement or Pledged Collateral 

Addendum. With respect to an FCM/BD Clearing Member, references in these Rules to 

such Clearing Member in respect of a Contract recorded in a Customer Account shall be 

deemed to refer to such FCM/BD Clearing Member acting for the account of and on 

behalf of one or more FCM/BD Customers in respect of such Contract under the terms of 

these Rules as set forth in Rule 1603(d).

(b) Each FCM/BD Clearing Member shall have at least one Proprietary Account and one or 

more Customer Accounts in which its Contracts shall be registered. Except as provided 

herein, references in the Rules to a Customer Account of an FCM/BD Clearing Member 

or to a "class" of Customer Account shall refer to one or more DCM Customer Accounts, 

Swap Customer Accounts, Non-DCM/Swap Customer Accounts, SBS Customer 

Accounts or General Customer Accounts, as applicable, each such account being of a 

different "class". Notwithstanding anything to the contrary herein, to the extent that 

pursuant to a CFTC rule, order or exemption (or a Rule of the Clearing House approved 

thereunder) it is permissible under Applicable Law for Contracts in U.S. Futures, Swaps 

and/or Non-DCM/Swaps (and related Margin or Permitted Cover) to be co-mingled in a 

single class of Customer Account, the Clearing House may permit such co-mingling in 

such class of Customer Account, and references herein to the relevant Customer Account 

and FCM/BD Customer shall thereupon be construed accordingly. Without limiting the 

foregoing, Permitted Co-mingled Contracts shall be treated as Swaps or U.S. Futures, as 

the case may be, and not as Non-DCM/Swaps, and the appropriate classes of Customer 

Account shall be construed accordingly.
NYDOCS01/1643340.2 305

(c) Each Customer Account of an FCM/BD Clearing Member that has executed a Pledged 

Collateral Addendum shall be a Pledged Collateral Account. Margin (or Permitted Cover 

in respect thereof) to be provided by an FCM/BD Clearing Member in respect of a 

Customer Account shall be provided in the form of Pledged Collateral, but in all other 

respects shall be provided in the forms, amounts, times and manners required under 

Rule 502 and Rule 503.

(d) Where an FCM/BD Clearing Member clears a Contract for FCM/BD Customers, (i) such 

FCM/BD Clearing Member becomes liable to the Clearing House in respect of such 

Contract to no less an extent than if such Contract were for the FCM/BD Clearing 

Member's own account (and without prejudice to the obligations of the FCM/BD 

Customers to the FCM/BD Clearing Member in respect of such Contract, including 

without limitation pursuant to any agreement between an FCM/BD Customer and the 

FCM/BD Clearing Member); (ii) the Clearing House becomes liable and is obligated to 

perform to the FCM/BD Clearing Member, which in turn it is acknowledged will be 

acting for the account of and on behalf of such FCM/BD Customers, in respect of such 

Contract; (iii) the Clearing House shall be deemed to have discharged such obligations by 

performing to such FCM/BD Clearing Member for credit to the relevant Customer 

Account in respect of all payments and other obligations owed by the Clearing House 

under and in respect of such Contract as otherwise set forth in and subject to these Rules, 

without having any obligation to perform directly to the FCM/BD Customers; and (iv) 

without prejudice to any agreement between an FCM/BD Customer and the FCM/BD 

Clearing Member, such FCM/BD Customers become liable to reimburse and indemnify 

such FCM/BD Clearing Member in respect of performance by the FCM/BD Clearing 

Member under such Contract, subject, in the case of each of paragraphs (i) through (iv) of 

this subsection, to the provisions of this Part 16. Nothing in this Rule 1603(d) (I) shall be 

deemed to affect the rights or obligations of an FCM/BD Customer as against such 

FCM/BD Clearing Member with respect to such a Contract under Applicable Law or the 

terms of any agreement between the FCM/BD Clearing Member and such FCM/BD 

Customer; (II) shall require the Clearing House to carry out any enquiry as to the identity 

or existence of any FCM/BD Customer or FCM/BD Customers, except as required by 

Applicable Law; or (III) shall be deemed to limit the right or ability of the Clearing 

House to net or offset Open Contract Positions or obligations within a particular class of 

Customer Account of an FCM/BD Clearing Member to the extent otherwise permitted by 

these Rules and Applicable Law.

(e) Rule 402(a) and clause 3.2 of the Clearing Membership Agreement shall not apply to an 

FCM/BD Clearing Member in respect of a Contract with respect to which it is acting for 

an FCM/BD Customer. None of Rule 405(d), Rule 408, or clause 3.4 of a Clearing 

Membership Agreement shall be deemed to preclude an FCM/BD Clearing Member from 

acting for an FCM/BD Customer in connection with a Contract.

(f) Where the FCM/BD Clearing Member acts for a Customer, Rule 405(c)(ii) shall not 

apply to any contracts, rights, obligations or liabilities as between that Customer and the 

FCM/BD Clearing Member.
NYDOCS01/1643340.2 306

(g) For purposes of Rule 303 and Rule 406(c) and for the avoidance of doubt: (i) Rule 905, 

Contracts and other obligations in any class of Customer Account of an FCM/BD 

Clearing Member shall not be netted or offset against Open Contract Positions or other 

obligations in any Proprietary Account of that Clearing Member; and (ii) Open Contracts 

or other obligations in any class of Customer Account of any FCM/BD Clearing Member 

may not be netted or offset against Open Contract Positions or other obligations in any 

other class of Customer Account of that FCM/BD Clearing Member.

(h) Notwithstanding anything to the contrary in Rule 502 and Rule 503, for each Customer 

Account if required by Applicable Law or otherwise if so specified in the relevant 

Procedures or by Circular, Margin shall be calculated and called for on a "gross" basis 

across all positions of the FCM/BD Customers of a particular FCM/BD Clearing 

Member.

(i) The first sentence of Rule 504(b) is not applicable. The second sentence of Rule 504(b)

is amended to read as follows: Except as provided by Applicable Law and Rule 1605

with respect to a Customer Account, the Clearing House will take no account of any right 

or interest which any Person other than the Clearing Member may have in any Margin 

furnished by such Clearing Member to the Clearing House. Nothing in the Rules nor any 

Pledged Collateral Addendum (including without limitation section 2.7 thereof as 

modified pursuant to Rule 1609) shall preclude an FCM/BD Clearing Member from 

providing Pledged Collateral to the Clearing House that was provided to the FCM/BD 

Clearing Member by an FCM/BD Customer and in which the FCM/BD Customer has 

granted the FCM/BD Clearing Member a security interest to secure the FCM/BD 

Customer's obligations; provided that FCM/BD Clearing Member hereby agrees that any 

such security interest in favour of FCM/BD Clearing Member is in all respects subject to 

the rights of the Clearing House in respect of such Pledged Collateral hereunder and 

under the Pledged Collateral Addendum and FCM/BD Clearing Member shall not, and 

shall not attempt to (i) exercise any rights or remedies or bring any proceeding or action 

with respect to such Pledged Collateral until such Pledged Collateral is released from the 

lien and security interest of the Clearing House hereunder and under the Pledged 

Collateral Addendum or (ii) otherwise interfere with, delay the exercise of or take any 

action to affect the Clearing House's rights hereunder or under the Pledged Collateral 

Addendum with respect to such Pledged Collateral.

(j) Without limiting Rule 111, save for any liability which it cannot exclude pursuant to 

Applicable Laws, the Clearing House shall have no obligation or liability in respect of an 

Open Contract Position in a Customer Account of an FCM/BD Clearing Member other 

than to the FCM/BD Clearing Member (acting as set forth in Rule 1603(d)) and no 

Person (including an FCM/BD Customer) other than an FCM/BD Clearing Member shall 

be entitled to enforce or exercise any rights or remedies with respect to such Open 

Contract Position as against the Clearing House. The Clearing House shall have no 

obligation or liability in respect of any transaction, agreement or arrangement between an 

FCM/BD Clearing Member and an FCM/BD Customer. This Rule 1603(j) shall not be 

deemed to limit the rights, if any, of an FCM/BD Customer as against such FCM/BD 

Clearing Member in respect of such Open Contract Positions, and payments or other 
NYDOCS01/1643340.2 307

performance thereunder, under Applicable Law or the terms of any agreement between 

the FCM/BD Clearing Member and such FCM/BD Customer.

(k) With respect to any Open Contract Position carried by an FCM/BD Clearing Member for 

a Customer Account, all terms of the position, as carried in the customer account on the 

books of the FCM/BD Clearing Member, must conform to the terms of the Open 

Contract Position under the Rules as in effect from time to time (including any changes 

therein or actions by the Clearing House in relation thereto).

(l) This Rule 1603 is without prejudice to and shall not restrict or exclude any of the other 

obligations of Clearing Members under the Rules.

(m) The Standard Terms shall not apply to FCM/BD Clearing Members.

Rule 1604 Additional default rules for FCM/BD Clearing Members

The following provisions constitute default rules for purposes of the Companies Act 1989.

(a) Any right of the Clearing House pursuant to Rule 902 or Rule 903 to transfer Open 

Contracts and related Margin (or Permitted Cover in respect thereof) of an FCM/BD 

Clearing Member that is a Defaulter will be subject to Applicable Law, including without 

limitation Part 190 of the CFTC Regulations.

(b) Where an FCM/BD Clearing Member wishes to terminate or close out an Open Contract 

Position in any class of Customer Account with respect to an FCM/BD Customer because 

of a default or similar event with respect to that FCM/BD Customer, the relevant 

FCM/BD Clearing Member must, in accordance with Rule 406 and the Clearing 

Procedures, either: (i) offset such Open Contract Position against a Contract or Contracts 

entered into by such FCM/BD Clearing Member for such Customer Account (which may 

be entered into contemporaneously with a separate Contract or Contracts entered into at 

the same time for one of its Proprietary Accounts) for the specific purpose of liquidating 

such Customer Account position; or (ii) to the extent permitted by Applicable Law, 

transfer such Open Contract Position from such Customer Account to one of its 

Proprietary Accounts, whereupon it shall be treated as an Open Contract Position in the 

relevant Proprietary Account for all purposes under these Rules. Nothing in this 

Rule 1604(b) is intended to create a condition precedent to any step being taken under 

any agreement between a Clearing Member and its Customer. However, a Clearing 

Member shall continue to be liable to the Clearing House in respect of any Contracts until 

such time as they are offset in accordance with this Rule 1604(b) or otherwise terminated 

in accordance with the Rules and the Clearing Procedures. For the avoidance of doubt, 

any Open Contract Position and any such offsetting Contract or Contracts entered into by 

an FCM/BD Clearing Member for a Customer Account for the specific purpose of 

liquidating such Open Contract Positions pursuant to this Rule 1604(b) may be 

aggregated and/or netted pursuant to Rule 406.

(c) Each FCM/BD Customer whose transactions are cleared through an FCM/BD Clearing 

Member with the Clearing House will be deemed to have consented to the actions taken 
NYDOCS01/1643340.2 308

in accordance with the following provisions if an Event of Default has occurred with 

respect to its FCM/BD Clearing Member:

(i) the FCM/BD Clearing Member (or its Insolvency Practitioner) and/or the 

Clearing House shall be entitled to transfer Open Contract Positions recorded in a 

Customer Account in accordance with Applicable Law and the Procedures;

(ii) such FCM/BD Customer appoints the Clearing House as its lawful agent and 

attorney-in-fact to take such actions on behalf of the FCM/BD Customer as the 

Clearing House determines necessary or appropriate in order to effectuate such 

transfer with respect to the Open Contract Positions carried by the FCM/BD 

Clearing Member for such FCM/BD Customer, including executing any 

document or instrument with respect to the transfer of the Open Contract 

Positions and/or exercising rights and remedies to transfer such positions;

(iii) the FCM/BD Customer shall take no action, including but not limited to 

attempting to obtain a court order, that could interfere with the ability of the 

FCM/BD Clearing Member, any Insolvency Practitioner for such FCM/BD 

Clearing Member, or the Clearing House to take action contemplated by these 

Rules, including, without limitation, the transfer or close-out of positions and the 

transfer or application of related Margin or Permitted Cover in respect thereof;

(iv) any determination made by the Clearing House with respect to the termination 

value of a Contract under the Rules or the value of any other asset or liability 

under Rule 905 shall be conclusive and binding;

(v) any amount payable by such FCM/BD Customer in respect of the termination of a 

Contract of a Defaulter in respect of its Customer Account shall not be netted or 

offset against any amount owed by such FCM/BD Clearing Member to such 

FCM/BD Customer under any other agreement or instrument and shall be paid 

directly to or as directed by the Clearing House; and

(vi) the Clearing House applying the Default Portability Rules with respect to Open 

Contract Positions relating to such FCM/BD Customer, including by taking any of 

the following steps:

(A) Transferring Contract Positions to a Transferee Clearing Member;

(B) terminating Open Contract Positions and arranging for the entry into of 

new replacement Open Contract Positions with a Transferee Clearing 

Member (by way of novation or otherwise); and/or

(C) transferring Margin (in such amount as the Clearing House may 

determine) credited to the Customer Margin Account of its FCM/BD 

Clearing Member to the Customer Margin Account of the Transferee 

Clearing Member (and, if such a transfer occurs, the Defaulter's 

obligations to the FCM/BD Customer in respect of such transferred 

Margin shall be fully discharged).
NYDOCS01/1643340.2 309

(d) In respect of any Contract to which a Defaulter that is or was an FCM/BD Clearing 

Member and the Clearing House is or was a party, any net sum certified by the Clearing 

House pursuant to Rule 905(b) as payable by the Clearing House to the Defaulter in 

respect of any class of Customer Account of the Defaulter is intended to be treated in 

accordance with Applicable Laws of the United States of America, including the U.S. 

Bankruptcy Code and the CEA. With respect to any FCM/BD Clearing Member, the 

Clearing House and such FCM/BD Clearing Member intend that:

(i) for purposes of the relevant provisions of the Federal Deposit Insurance 

Corporation Improvement Act of 1991:

(A) the Clearing House is a 'clearing organization';

(B) the Clearing House and each Clearing Member is a 'member';

(C) the Rules, Procedures, Clearing Membership Agreement, Contracts, 

Pledged Collateral Addendum and any other agreement between a 

Clearing Member and the Clearing House relating to Clearing of Contracts 

together constitute a 'netting contract' between those parties and include 

'security agreements or arrangements or other credit enhancements related 

to such netting contract';

(D) an obligation of a Clearing Member to make a payment to the Clearing 

House, or of the Clearing House to make a payment to a Clearing 

Member, subject to a netting agreement, is a 'covered clearing obligation' 

and a 'covered contractual payment obligation';

(E) an entitlement of a Clearing Member to receive a payment from the 

Clearing House, or of the Clearing House to receive a payment from a 

Clearing Member, subject to a netting contract, is a 'covered contractual 

payment entitlement';

(F) the amount by which the covered contractual payment entitlements of a 

Clearing Member or the Clearing House exceed the covered contractual 

payment obligations of such Clearing Member or the Clearing House after 

netting under a netting contract is its 'net entitlement'; and

(G) the amount by which the covered contractual payment obligations of a 

Clearing Member or the Clearing House exceed the covered contractual 

payment entitlements of such Clearing Member or the Clearing House 

after netting under a netting contract is its 'net obligation';

(ii) for purposes of the Title 11 of the United States Code (the "U.S. Bankruptcy 

Code"), each Contract or Open Contract Position is a 'commodity contract' or 

'securities contract', as applicable and the Rules, Procedures, Clearing 

Membership Agreement, Contracts, Pledged Collateral Addendum and any other 

agreement between a Clearing Member and the Clearing House relating to 

Clearing of Contracts constitute a 'master agreement' and include a 'security 
NYDOCS01/1643340.2 310

agreement or arrangement or other credit enhancement' related to a 'commodity 

contract' or 'securities contract', as applicable; and

(iii) for purposes of Title II of the Dodd-Frank Wall Street Reform and Consumer 

Protection Act, each Open Contract Position is a 'swap agreement' and the Rules, 

Procedures, Clearing Membership Agreement, Contracts, Pledged Collateral 

Addendum and any other agreement between a Clearing Member and the Clearing 

House relating to Clearing of Contracts constitute a 'master agreement' and 

include a 'security agreement or arrangement or other credit enhancement' related 

to a 'swap agreement'.

(e) Without limiting Rule 904(d)(v), for purposes of calculating M in Rule 906(a) and 

applying assets to meet the obligations and liabilities of a Defaulter that is an FCM/BD 

Clearing Member in respect of a Swap Customer Account, and determining any loss or 

shortfall to the Clearing House upon or following any Event of Default of that Clearing 

Member under Rule 1103, the Clearing House shall be entitled to rely conclusively on the 

allocation of Open Contract Positions to Customer Swap Portfolios and the allocation of 

the value of Margin to such Customer Swap Portfolios, as set forth in the books and 

records of the Clearing House from time to time in accordance with CFTC Rule 22.15 

(absent manifest error by the Clearing House in making such allocation based on accurate 

information provided to the Clearing House), without need for further enquiry by the 

Clearing House as to the origin, source or ownership of any such Margin. Without 

limiting the Clearing House's rights under the preceding sentence, if the Clearing House 

applies FCM Swap Customer IM allocated to a particular Customer Swap Portfolio as 

permitted hereunder and subsequently determines that such asset was not the property of 

the relevant Swap Customer of the Defaulter (a "Reviewed Application"), the Clearing 

House shall be entitled, to the extent permitted by Applicable Law, to apply any Guaranty 

Fund Contribution of the Defaulter remaining after satisfaction of the obligations and 

liabilities of the Defaulter to reimburse the Clearing House Swap Segregated Account up 

to the amount of the Reviewed Application. The Clearing House shall have no obligation 

to rescind or otherwise refund any Reviewed Application or to apply any other assets 

(including, without limitation, any other assets in the Guaranty Fund, Clearing House 

Contributions or Assessment Contributions) to any reimbursement pursuant to the 

immediately preceding sentence.

Rule 1605 Margin and Segregation Rules

(a) An FCM/BD Clearing Member shall require each FCM/BD Customer to provide margin 

(or permitted cover in respect thereof) (such assets, "FCM/BD Customer Collateral") in 

an amount at least equal to (or, if and to the extent so specified by Circular, greater than) 

the amount of Margin of each relevant type required on a gross basis by the Clearing 

House with respect to the relevant Open Contract Position(s), separately for each relevant 

class of Customer Account (regardless of whether the FCM/BD Clearing Member is 

required to provide such Margin to the Clearing House on a gross basis pursuant to 

Rule 503). Any additional required amount may be specified by the Clearing House in a 

Circular with reference to a percentage of required Customer Account Margin. For this 

purpose, "gross basis" shall mean that the margin requirement will be determined giving 
NYDOCS01/1643340.2 311

effect to any offset permitted under the Rules of such Open Contract Positions against 

Open Contract Positions relating to the same Set and same FCM/BD Customer in the 

same class of Customer Account, but without giving effect to any offset or permitted 

offset of such Open Contract Positions against Open Contract Positions relating to a 

different FCM/BD Customer.

(b) With respect to FCM/BD Customer Collateral transferred to the Clearing House in 

respect of Contracts registered in a DCM Customer Account arising from U.S. Futures 

(including for the avoidance of doubt Permitted Co-mingled Contracts recorded in such

DCM Customer Account) ("FCM/BD U.S. Futures Customer Collateral"), the 

Clearing House shall receive and hold such collateral in the Clearing House DCM 

Segregated Account and shall hold, use and segregate such collateral as customer 

property in accordance with Section 4d(a) and (b) of the CEA and the regulations of the 

CFTC thereunder. By means of this Rule, the FCM/BD Clearing Member shall have 

satisfied the requirement to obtain a segregation acknowledgement letter from the 

Clearing House under CFTC regulations.

(c) With respect to FCM/BD Customer Collateral transferred to the Clearing House in 

respect of Contracts registered in an SBS Customer Account arising from SBS 

("FCM/BD SBS Customer Collateral"), the Clearing House shall receive and hold such 

collateral in the Clearing House SBS Segregated Account and shall hold, use and 

segregate such collateral as customer property in accordance with Sections 3E(b) and/or 

15(c)(3) of the Exchange Act and the applicable rules and regulations of the SEC.

(d) With respect to FCM/BD Customer Collateral in respect of Contracts registered in a 

Swap Customer Account arising from Swaps (including for the avoidance of doubt 

Permitted Co-mingled Contracts recorded in such Swap Customer Account) ("FCM/BD 

Swap Customer Collateral"):

(i) An FCM/BD Clearing Member shall receive, hold and use all FCM/BD Swap 

Customer Collateral only as permitted under CEA Section 4d(f) and the 

regulations of the CFTC thereunder, including but not limited to Part 22 of the 

CFTC Regulations and any interpretations thereof by the CFTC or its staff (and, 

to the extent applicable, Securities Exchange Act Sections 3E(b) and/or 15(c)(3) 

and the regulations or any orders of the SEC thereunder) and as further set forth in 

these Rules and the Procedures (the "Swap Customer Segregation 

Requirements"). The Clearing House shall receive and hold such collateral 

transferred to the Clearing House in the Clearing House Swap Segregated 

Account and shall segregate, hold and use all such FCM/BD Swap Customer 

Collateral as "cleared swaps customer collateral" in accordance with the Swap 

Customer Segregation Requirements. By means of this Rule, FCM/BD Clearing 

Member shall have satisfied the requirement to obtain a segregation 

acknowledgement letter from the Clearing House under the Swap Customer 

Segregation Requirements.

(ii) Without prejudice to paragraph (i), Open Contract Positions in any Swap 

Customer Account and related FCM/BD Swap Customer Collateral (and, solely to 
NYDOCS01/1643340.2 312

the extent permitted by applicable rules, orders or exemptions of the CFTC and 

the SEC, Contracts or Open Contract Positions that are security-based swaps) 

shall be part of the cleared swaps account class for purposes of Part 190 of the 

CFTC regulations.

(iii) Property credited to or recorded in the Clearing House Swap Segregated Account 

may only be applied in respect of Contracts or Open Contract Positions in a Swap 

Customer Account as provided in these Rules and only to the extent permitted by 

the Swap Customer Segregation Requirements (including CFTC Rule 22.15). For 

the avoidance of doubt, following an Event of Default with respect to an FCM/BD 

Clearing Member, property credited to or recorded in the Clearing House Swap 

Segregated Account that is not eligible to be applied pursuant to the preceding 

sentence will be returned to the FCM/BD Clearing Member (or its trustee or 

representative) pursuant to the Pledged Collateral Addendum and Rule 502(i).

(e) With respect to FCM/BD Customer Collateral transferred to the Clearing House in 

respect of Contracts registered in a Non-DCM/Swap Customer Account arising from 

Non-DCM/Swap Transactions (other than Permitted Co-mingled Contracts) ("FCM/BD 

Other Transaction Collateral"), the Clearing House shall hold such FCM/BD Customer 

Collateral as constituting the foreign futures or foreign options secured amount subject to 

the requirements of CFTC Rule 30.7. By means of this Rule, the FCM/BD Clearing 

Member shall have satisfied the requirement to obtain an acknowledgement letter of such 

status from the Clearing House under CFTC regulations.

(f) In connection with any Open Contract Position and related FCM/BD U.S. Futures 

Customer Collateral, FCM/BD SBS Customer Collateral, FCM/BD Swap Customer 

Collateral or FCM/BD Other Transaction Collateral provided to the Clearing House, the 

FCM/BD Clearing Member shall keep and maintain written records with respect thereto 

as required under Applicable Law. Each FCM/BD Clearing Member shall provide such 

records to the Clearing House upon request and upon such other basis, if any, as may be 

provided in the Procedures.

(g) For the avoidance of doubt, the acknowledgement in the first sentence of Rule 505 and 

the first sentence of clause 2.11 of a Pledged Collateral Addendum are intended to apply 

in relation to Pledged Collateral to the extent that the characterisation of any Pledged 

Collateral or the terms of a Pledged Collateral Addendum fall to be considered under the 

laws of any member state of the European Economic Area that has implemented 

Directive 2002/47/EC. For the avoidance of doubt, neither Rule 505 nor clause 2.11 of a 

Pledged Collateral Addendum are intended to affect any of: (i) the choice of law of the 

parties to any Pledged Collateral Addendum in respect of such addendum; (ii) the choice 

of law under Rule 1608; (iii) the location or governing law of any account in which 

Pledged Collateral is held by the Clearing House; (iv) the location or governing law of 

any account from or to which assets intended to become or which were previously 

Pledged Collateral are transferred to or from the Clearing House; (v) the existence or 

nature of any place of business, establishment or office in any jurisdiction of any Person; 

or (vi) the principal place of business or centre of main interests of any FCM/BD 

Clearing Member or any of its Customers or Affiliates.
NYDOCS01/1643340.2 313

(h) Notwithstanding anything to the contrary in Parts 3 or 5 of these Rules, Margin shall be 

calculated, called and returned in respect of Contracts recorded in a Swap Customer 

Account of an FCM/BD Clearing Member as follows:

(i) The Clearing House shall calculate the amount of required FCM Swap Customer 

IM separately for each Customer Swap Portfolio. The Clearing House shall 

determine an amount for each Customer Swap Portfolio at the time of each FCM 

Swap Customer IM calculation equal to the amount of required FCM Swap 

Customer IM for such Customer Swap Portfolio minus the value of the Margin 

then standing to the credit of the relevant Swap Customer Account that is 

allocated by the Clearing House to such Customer Swap Portfolio as FCM Swap 

Customer IM (a "Customer Swap Portfolio Initial Margin Call/Return 

Amount"):

(A) with respect to each Customer Swap Portfolio Initial Margin Call/Return 

Amount applicable to a Swap Customer Account of the Clearing Member

that is a positive number, the Clearing House shall call such Clearing 

Member for an amount of FCM Swap Customer IM, such amount to be 

transferred otherwise using the same procedures as are applicable for 

transfers of Margin from the Clearing Member on other Customer 

Accounts under Parts 3 and 5 of the Rules and the Finance Procedures, 

equal to such Customer Swap Portfolio Initial Margin Call/Return 

Amount; 

(B) following the settlement in full of all Margin due to be transferred to the 

Clearing House pursuant to Rule 1605(h)(i)(A) above, the Clearing House 

will make available for return to the Clearing Member, for each Customer 

Swap Portfolio with a Customer Swap Portfolio Initial Margin Call/Return 

Amount that is a negative number, Permitted Cover in an amount as close 

as reasonably practicable to (but not to exceed) the absolute value of such 

Customer Swap Portfolio Initial Margin Call/Return Amount, such 

amount to be transferred otherwise using the same procedures as are 

applicable for transfers of Margin to the Clearing Member on other 

Customer Accounts under Parts 3 and 5 of the Rules and the Finance 

Procedures; and

(C) if the Customer Swap Portfolio Initial Margin Call/Return Amount is zero, 

no FCM Customer Swap IM will be required to be transferred in respect 

thereof.

(ii) The Clearing House shall calculate and collect Mark-to-Market Margin 

requirements for a Swap Customer Account of an FCM/BD Clearing Member on 

a net basis across all Customer Swap Portfolios in the same Swap Customer 

Account (but separately from any other amount due on the Swap Customer 

Account), such amount to be transferred otherwise using the same procedures as 

are applicable for transfers of Margin to or from the Clearing Member on other 

Customer Accounts under Parts 3 and 5 of the Rules and the Finance Procedures.
NYDOCS01/1643340.2 314

(iii) Notwithstanding anything to the contrary in the Rules, amounts required to be 

transferred between an FCM/BD Clearing Member and the Clearing House in 

respect of Margin pursuant to any of Rules 1605(h)(i)(A)-(B) and/or (ii) above 

shall not be netted or offset, except to the extent such netting or offset may be 

permitted by Applicable Law (including CFTC regulation or interpretation 

thereof).

(i) The Clearing House will not accept the deposit of FCM/BD Swap Customer Collateral 

from an FCM/BD Clearing Member in respect of Contracts or Open Contract Positions 

recorded in a Swap Customer Account in excess of the amount required by the Clearing 

House, within the meaning of CFTC Rule 22.13(c). For the avoidance of doubt, any

FCM/BD Swap Customer Collateral of an FCM/BD Clearing Member deposited with the 

Clearing House that subsequently exceeds the amount required by the Clearing House as 

a result of a change in the amount required or change in the market value of such 

FCM/BD Swap Customer Collateral will become available for withdrawal in accordance 

with Rules 302, 503 and 1605(h).

(j) Notwithstanding anything to the contrary in the Rules, if the Clearing House determines 

to call for Margin pursuant to Rule 1605(h) in respect of one or more Customer Swap 

Portfolio Initial Margin Call/Return Amounts or Mark-to-Market Margin requirements 

for a Swap Customer Account of an FCM/BD Clearing Member on an intra-day basis, 

the Clearing House may in lieu thereof increase the applicable Margin requirement for 

one or more Proprietary Accounts of such FCM/BD Clearing Member.

Rule 1606 Additional FCM/BD Clearing Membership Requirements

(a) Each FCM/BD Clearing Member that has a Customer Account shall execute and deliver 

to the Clearing House a Pledged Collateral Addendum to its Clearing Membership 

Agreement, in the form specified by the Clearing House.

(b) FCM/BD Customer Collateral in the form of USD cash that is transferred by an FCM/BD 

Clearing Member to the Clearing House pursuant to the Rules shall be invested by the 

Clearing House only in U.S. Treasury securities constituting permitted investments under 

Applicable Law in accordance with the Procedures (including through direct purchases or 

repurchase or reverse repurchase transactions). Each FCM/BD Clearing Member that has 

a Customer Account shall instruct the Clearing House, in a manner to be specified by the 

Clearing House, whether or not such FCM/BD Customer Collateral transferred by it to 

the Clearing House should be so invested, and if it so instructs (or is deemed to so 

instruct), then by its transfer to the Clearing House of any such FCM/BD Customer 

Collateral in the form of USD cash, the FCM/BD Clearing Member hereby acknowledges 

and consents to such investment. If the FCM/BD Clearing Member fails to provide any 

such instruction, it will be deemed to have instructed the Clearing House to so invest such 

FCM/BD Customer Collateral. If an FCM/BD Clearing Member instructs the Clearing 

House not to so invest, the FCM/BD Clearing Member acknowledges and agrees that any 

such FCM/BD Customer Collateral in the form of USD cash will not be invested by the 

Clearing House, to the extent permitted by Applicable Law, and may therefore be held in 
NYDOCS01/1643340.2 315

a bank deposit selected by the Clearing House, and may be subject to a cash management 

fee determined by the Clearing House from time to time.

Rule 1607 Additional FCM/BD Requirements for Customer Transactions

(a) The relationship between an FCM/BD Customer and an FCM/BD Clearing Member in 

respect of Open Contract Positions for that FCM/BD Customer shall be documented 

pursuant to and governed by a futures account agreement or clearing agreement (or 

equivalent document) agreed between such parties, subject to the applicable provisions of 

these Rules and provided that no such agreement may be inconsistent with these Rules or 

the Clearing Membership Agreement.

(b) The Clearing House shall have no duties or responsibilities with respect to any Clearing 

House FCM/BD Segregated Account except as expressly set forth in these Rules and 

Applicable Law. The Clearing House shall have no obligation to monitor any 

requirements set forth in any agreement between an FCM/BD Clearing Member and an 

FCM/BD Customer. The Clearing House shall have no responsibility for the compliance 

by any FCM/BD Clearing Member or FCM/BD Customer with its obligations under any 

such agreement. 

(c) Each FCM/BD Customer for which an FCM/BD Clearing Member clears a Swap must be 

an "eligible contract participant" as defined in the CEA.

(d) Each FCM/BD Customer whose transactions are cleared by an FCM/BD Clearing 

Member with the Clearing House will be deemed to have consented to:

(i) the Clearing House having the right to obtain information in relation to 

transactions from any Market, CDS Trade Execution/Processing Platform, FX 

Trade Execution/Processing Platform or Repository or Deriv/SERV so as to 

enable the Clearing House to identify which Contracts and Margin or Permitted 

Cover between the Clearing House and FCM/BD Clearing Member relate to such 

transactions; 

(ii) the FCM/BD Clearing Member making any disclosures in connection with 

FCM/BD Customer and transactions as are required by the Rules or CDS 

Procedures or as required by Applicable Law; 

(iii) disclosures to, use by and disclosures by the Clearing House of information 

relating to the FCM/BD Customer (including the Personal Data of its Data 

Subjects) pursuant to Rule 106;

(iv) submissions of and other actions relating to data concerning such transactions by 

the Clearing House pursuant to the Rules and the Procedures; and 

(v) the operation of Rule 1605(d)(ii).
NYDOCS01/1643340.2 316

(e) Each FCM/BD Customer whose transactions are cleared by an FCM/BD Clearing 

Member with the Clearing House will be deemed to have consented to its FCM/BD 

Clearing Member entering into Contracts arising under Rule 404(c)(i) on its behalf.

(f) Each FCM/BD Clearing Member shall be required to obtain the agreement of each 

FCM/BD Customer to the provisions of the Rules applicable to or otherwise referring to 

FCM/BD Customers (including Rule 111, Rule 1603(j), Rule 1604(c) and this Rule 1607) 

(which agreement may be obtained through a general obligation in a customer agreement 

to comply with applicable clearing organisation rules) and hereby represents and warrants 

to the Clearing House that it has obtained such agreement.

Rule 1608 Governing Law and Dispute Resolution

(a) Solely as between an FCM/BD Clearing Member and the Clearing House, those 

provisions of Parts 3, 5 and 16 of the Rules inasmuch as they relate solely to an issue or 

matter concerning:

(i) the pledging, transfer, holding, use and segregation of Pledged Collateral provided 

by an FCM/BD Clearing Member (or other property, excluding for the avoidance 

of doubt the Contracts themselves recorded in such an Account, recorded in a 

Customer Account or Proprietary Account that is designated as an account in 

respect of which Pledged Collateral may be provided by an FCM/BD Clearing 

Member); and/or

(ii) the application of any net sum owed in favour of the FCM/BD Clearing Member 

in respect of a Customer Account or Proprietary Account that is designated as an 

account in respect of which Pledged Collateral may be provided,

and, solely to the extent relevant to interpreting the foregoing provisions in such 

circumstances, relevant definitions and interpretative provisions in Part 1 of the Rules 

(such provisions, together or separately "Pledged Collateral Matters") shall be governed 

by and construed in accordance with the laws of the State of New York and, as 

applicable, the federal law of the United States of America.

(b) For the avoidance of doubt, Rule 1608(a) is an exception to Rule 102(s) which provides 

that the Rules and Contracts shall be governed by and construed in accordance with the 

laws of England and Wales. For the avoidance of doubt, without limitation and 

notwithstanding Rule 1608(a), the following are governed by and shall be construed in 

accordance with the laws of England and Wales in their entirety without any exception 

and shall in no circumstances constitute a Pledged Collateral Matter:

(i) all of the provisions of the Rules concerning the calculation and determination of 

any net sum (except to the extent expressly provided in Rule 1604(d)) and the 

other default rules of the Clearing House, including all the provisions of Parts 9 

and 11 of the Rules;

(ii) all of the provisions of the Rules relating to the Designated System, including all 

the provisions of Part 12 of the Rules;
NYDOCS01/1643340.2 317

(iii) any Dispute or issue arising as between a Non-FCM/BD Clearing Member or 

Sponsored Principal on the one hand and the Clearing House on the other hand;

(iv) any Dispute or issue arising in respect of a Customer Account or Proprietary 

Account that is not designated as an account in respect of which Pledged 

Collateral may be provided; 

(v) any matter relating to Pledged Collateral of a Non-FCM/BD Clearing Member or 

a Sponsored Principal;

(vi) any Pledged Collateral provided by an FCM/BD Clearing Member or Sponsored 

Principal pursuant to an English law Pledged Collateral Addendum; and

(vii) the Contract Terms of all Contracts.

(c) Where a dispute between an FCM/BD Clearing Member and the Clearing House relates 

to one or more Pledged Collateral Matters, notwithstanding the provisions of Rule 117, 

solely the allegations or claims relating to the Pledged Collateral Matters in such dispute 

shall be heard and determined exclusively in any New York federal court sitting in the 

Borough of Manhattan of the City of New York, provided, however, that if such federal 

court does not have jurisdiction over such allegations or claims, such allegations or 

claims shall be heard and determined exclusively in any New York state court sitting in 

the Borough of Manhattan of the City of New York (such Courts, together, "New York 

Courts"). Consistent with the preceding sentence, the Clearing House and each FCM/BD 

Clearing Member hereby:

(i) submits to the exclusive jurisdiction of the New York Courts solely in respect of 

allegations or claims relating to Pledged Collateral Matters; and

(ii) agrees that service of process will be validly effected by sending notice in 

accordance with Rule 113.

(d) All allegations or claims other than those over which the New York Courts have 

exclusive jurisdiction pursuant to Rule 1608(c) shall be finally and exclusively 

determined by way of arbitration pursuant to Rule 117. It is expressly recognised that for 

Disputes between an FCM/BD Clearing Member and the Clearing House containing both 

allegations or claims over which the New York Courts have exclusive jurisdiction 

pursuant to Rule 1608(c) and other allegations or claims, it may be necessary to have 

both New York Court proceedings and arbitral proceedings. The submission of a party to 

the jurisdiction of a New York Court and/or the taking of a step by a party in proceedings 

before a New York Court, where in any such instance the New York Court has exclusive 

jurisdiction pursuant to Rule 1608(c), does not amount to a waiver by that party of its 

right to commence or participate in arbitral proceedings in accordance with Rule 117. 

The submission of a party to arbitration under Rule 117 or in respect of any Dispute does 

not amount to a waiver by that party of its right to have allegations or claims in relation to 

which the New York Courts have exclusive jurisdiction pursuant to Rule 1608(c) heard in 

the New York Courts.
NYDOCS01/1643340.2 318

(e) Nothing in this Rule 1608 precludes the Clearing House from bringing an action to 

enforce a judgment from any New York Court or award of any arbitral tribunal in any 

court of competent jurisdiction.

(f) EACH CLEARING MEMBER AND THE CLEARING HOUSE HEREBY 

IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY 

APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH 

RESPECT TO ANY DISPUTE ARISING OUT OF, UNDER OR IN CONNECTION 

WITH THESE RULES OR ANY CONTRACT OR ANY MATTER CONTEMPLATED 

BY THEM. EACH CLEARING MEMBER AND THE CLEARING HOUSE HEREBY:

(i) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PERSON 

BOUND BY THESE RULES HAS REPRESENTED, EXPRESSLY OR 

OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE 

EVENT OF ANY SUCH DISPUTE, SEEK TO ENFORCE THE FOREGOING 

WAIVER; AND

(ii) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO 

THESE RULES, ALL CONTRACTS AND ALL OTHER TRANSACTIONS 

CONTEMPLATED BY THESE RULES, AS APPLICABLE, BY, AMONG 

OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN 

THIS Rule 1608(f).

Rule 1609 Modifications to Pledged Collateral Addendum

(a) The following provisions of each Pledged Collateral Addendum governed by New York 

and U.S. law have been amended pursuant to clause 4.2 thereof by virtue of the adoption 

of these provisions of the Rules:

(i) In clause 2.8, the deletion of the words: "(and to procure that any third party takes 

any action reasonably requested by the Clearing House)".

(ii) Clause 2.11, to the extent that any amendment may be regarded as necessary to 

give effect to Rule 1605(g).

(iii) In clause 3.5, the replacement of the words "the Clearing House" with the words 

"either party".

(iv) In clause 2.7, the definition of the term "Encumbrances" does not include 

retention of title.

(v) Any other provision of the Pledged Collateral Addendum to the extent that any 

amendment may be regarded as necessary to give effect to Rule 1603(i).
NYDOCS01/1643340.2 319

Part 17 Foreign Exchange

Part 17 of the Rules does not apply to F&O Contracts or CDS Contracts. References to any 

Account in this section are references only to an Account in which FX Contracts may be 

recorded and the terms 'Customer Margin Account', 'Customer Position Account', 'Proprietary 

Margin Account' and 'Proprietary Position Account' shall be construed accordingly. 

Rule 1701 Definitions

(a) The term "Currency Pair" means, in relation to an FX Contract or FX Trade Particulars 

submitted for Clearing, the Reference Currency and the Settlement Currency.

(b) The term "FX Default Committee" shall have the meaning given to that term in the FX 

Procedures. 

(c) The term "FX Default Management Policy" means the FX default management policy 

in the form approved by the Clearing House, as amended pursuant to processes 

established pursuant to documents governing the internal governance of the Clearing 

House and its committees.

(d) The term "FX Market Price" means, in relation to any Financially-Settled FX Contract, 

on any day, the price which the Clearing House determines is to be treated, for the 

purposes of these Rules and the Procedures as the value of such Financially-Settled FX 

Contract at the closing of such day, calculated in the FX MTM Currency for that 

Financially-Settled FX Contract.

(e) The term "FX MTM Currency" means, in relation to any FX Contract, the currency in 

which FX Mark-to-Market Margin will be payable in respect of that FX Contract.

(f) The term "FX Procedures" means the section of the Procedures of that name, which is 

relevant only to the Clearing of FX Contracts.

(g) The term "Reference Currency" means (a) in relation to a Financially-Settled FX 

Contract, the currency specified as the reference currency in the Clearing House's 

records, being the currency other than that in which cash settlement is to be made and (b) 

in relation to FX Trade Particulars submitted for Clearing, the currency specified as such 

in the relevant FX Confirmation.

(h) The term "Settlement Currency" means (a) in relation to a Financially-Settled FX 

Contract, the currency specified as such in the Clearing House's records, being the 

currency in which cash settlement is to be made on the FX Settlement Date and (b) in 

relation to FX Trade Particulars submitted for Clearing, the currency specified as such in 

the relevant FX Confirmation.

(i) The term "Settlement Rate" means in relation to a Financially-Settled FX Contract, for 

the relevant FX Settlement Date, the currency exchange rate, expressed as the amount of 

Reference Currency per one unit of Settlement Currency, determined by the Clearing 

House in accordance with the Rules and the Procedures as the settlement rate for the 
NYDOCS01/1643340.2 320

relevant Set of Financially-Settled FX Contracts which includes that Financially-Settled 

FX Contract.

(j) The term "Spot Price" means, for a Currency Pair, the notional foreign exchange rate 

between the two currencies in the Currency Pair for "spot" delivery having a cash 

settlement value of zero, as determined by the Clearing House by reference to the terms 

of the relevant Financially-Settled FX Contract.

(k) The term "Standard Maturities" means the specified standard maturities for the 

provision of pricing data relating to FX Contracts by Clearing Members, as specified by 

the Clearing House in a Circular, either in respect of particular Currency Pairs or 

generally.

(l) Any term used but not defined in this Part 17 or elsewhere in the Rules shall have the 

meaning given to that term in the FX Procedures.

Rule 1702 Financially-Settled FX Contracts

(a) Each Business Day, the Clearing House will determine or amend the FX Market Price for 

all Financially-Settled FX Contracts, per Currency Pair, for each maturity in respect of 

which it is party to one or more Financially-Settled FX Contracts in accordance with the 

Procedures. The Clearing House will also determine Settlement Rates for FinanciallySettled FX Contracts in accordance with the Contract Terms and the Procedures. 

(b) Each FX Clearing Member shall be obliged to provide, to the Clearing House on each 

Business Day, for all Currency Pairs, Spot Prices and forward points for all the Standard 

Maturities in respect of Financially-Settled FX Contracts. The Clearing House may 

consolidate price data from these and other sources to determine FX Market Prices for 

Financially-Settled FX Contracts and will determine such prices for Financially-Settled 

FX Contracts that do not then match a Standard Maturity by such interpolation 

methodology as the Clearing House shall consider appropriate. 

(c) The Clearing House shall be entitled in certain circumstances to amend or to postpone, 

defer, cancel, bring forward or suspend publication of any FX Market Price or Settlement 

Rate as set out in the Procedures.

Rule 1703 FX Mark-to-Market Interest

In relation to each Financially-Settled FX Contract, the FX Clearing Member party thereto will 

pay to the Clearing House or the Clearing House will pay to such FX Clearing Member an 

amount in respect of FX Mark-to-Market Interest.

Rule 1704 Separate treatment of FX Contracts for Proprietary Account and Customer 

Account

Settlement for a Set of FX Contracts shall occur separately, and separate payment and recordkeeping obligations shall accrue, in respect of a Clearing Member's:
NYDOCS01/1643340.2 321

(a) net positions in the relevant Set in respect of each of its Proprietary Accounts;

(b) Reference Currency Buyer positions in the relevant Set in respect of each of its Customer 

Accounts (if applicable);

(c) Reference Currency Seller positions in the relevant Set in respect of each of its Customer 

Accounts (if applicable);

(d) net position in the relevant Set in respect of each Individually Segregated Sponsored 

Account for which it acts as a Sponsor (if applicable).

Rule 1705 Settlement of Financially-Settled FX Contracts

(a) Either:

(i) the Reference Currency Buyer shall be liable to pay the amount due under any 

Financially-Settled FX Contract to the Reference Currency Seller; or

(ii) the Reference Currency Seller shall be liable to pay the amount due under the 

Financially-Settled FX Contract to the Reference Currency Buyer,

as required under the Contract Terms, on the FX Settlement Date, in accordance with 

Parts 3 and 5 of the Rules and the Finance Procedures. 

(b) Upon payment by the relevant party of the amount due in respect of a Financially-Settled 

FX Contract on the FX Settlement Date as referred to in (a) above, neither party to such 

Financially-Settled FX Contract shall have any further liability or obligation to the other 

party under such Financially-Settled FX Contract.

Rule 1706 [Not used.]

Rule 1707 FX Default Committee and FX Default Management Policy

(a) Rule 117 and Part 10 (and equivalent provisions of any Clearing Membership 

Agreement, Sponsored Principal Clearing Agreement or Sponsor Agreement) are hereby 

disapplied only to the extent that any matter is eligible for determination by an FX 

Default Committee in accordance with the FX Procedures. This Rule applies in respect 

of an FX Default Committee unless and until such committee resolves not to determine 

the matter concerned.

(b) Notwithstanding its rights set out in Part 9, or any other analogous Rule, following an 

Event of Default of a Person other than the Clearing House, the Clearing House shall 

follow the arrangements as set out in the FX Default Management Policy and the exercise 

of its rights pursuant to Part 9 shall be consistent with and in support of the FX Default 

Management Policy, except as set out in this provision. The Clearing House's rights 

under Part 9 of the Rules shall not be restricted by virtue of this provision to the extent 

that any action other than pursuant to the FX Default Management Policy is taken in 

accordance with Rule 1707(c).
NYDOCS01/1643340.2 322

(c) The Clearing House may from time to time override the implementation or application of 

the FX Default Management Policy to the Clearing House or as against some or all of the 

FX Clearing Members or in respect of one or more Defaulters, subject to prior 

consultation with the FX Default Committee unless Rule 109(b)(i) or (ii) would apply 

were the FX Default Management Policy to be Rules and were such overriding to have 

been effected pursuant to an amendment to the FX Default Management Policy. The 

override of the implementation or application of the FX Default Management Policy may 

only be brought into effect where the Clearing House deems it necessary to manage 

material risks of the Clearing House or the Clearing Members or any Market (where 

material risks are those which could materially adversely impact the ongoing financial 

soundness or the proper performance of the Clearing House or the Clearing Members or 

the proper functioning of any Market) or is otherwise required to meet the Clearing 

House's continuing legal or regulatory obligations under Applicable Law. Any 

determination by the Clearing House to override the implementation or application of the 

FX Default Management Policy shall be notified to FX Clearing Members.

Rule 1708 Clearing data relating to FX Contracts

(a) Notwithstanding Rule 102(j) or anything else to the contrary in the Rules, in no event will 

a Clearing Member be liable for any conduct of a Customer of such Clearing Member or 

such Customer's clients with respect to the use of, or other actions taken with respect to, 

clearing data in respect of FX Clearing at the Clearing House ("FX Data") by such 

Customer or such Customer's clients if, prior to sharing such FX Data with such 

Customer, the Customer has agreed that it:

(i) may reproduce, transmit, distribute or use FX Data (to the extent generated whilst 

the Clearing Member which has (or whose Affiliate has) ultimately provided it 

with FX Data remains an FX Clearing Member) solely and exclusively for 

internal purposes related directly to such Customer's, its Affiliates' and their 

clients', trading and clearing activity relating to FX Clearing at the Clearing House;

(ii) may license, sublicense, transfer, transmit, reproduce and/or distribute copies of 

the FX Data (to the extent generated whilst the Clearing Member which has (or 

whose Affiliate has) ultimately provided it with FX Data remains an FX Clearing 

Member) to its Affiliates and clients, which may in turn license, sublicense, 

transfer, transmit, reproduce and/or distribute such FX Data only to their direct 

and indirect clients (each Affiliate, client or client's direct or indirect client that 

receives such FX Data, a "Data Recipient", each client or client's direct or 

indirect client that distributes such FX Data, a "Data Distributer Client," and 

each Affiliate that distributes such FX Data, a "Data Distributer Affiliate"), 

solely and exclusively to the extent such FX Data is related directly to such Data 

Recipient's trading and clearing activity relating to FX Clearing at the Clearing 

House and provided that such Data Recipient has agreed that it may:

(A) license, sublicense, transfer, transmit, reproduce and/or distribute such FX 

Data solely to (x) an Affiliate of such Data Recipient or (y) a different 

Data Recipient (other than an Affiliate of such Data Recipient) that in 
NYDOCS01/1643340.2 323

either case has agreed with such Customer to comply with restrictions on 

similar terms to those set out in this Rule 1708 applying to it as such 

restrictions would apply to the Customer (including the Data Obligations) 

mutatis mutandis; or

(B) reproduce, transmit, distribute or use such FX Data only for its own 

internal use,

in either case solely for purposes related directly to trading and clearing activity 

relating to FX Clearing at the Clearing House;

(iii) shall satisfy its Data Obligations as and to the extent provided in this Rule 1708

(which shall be interpreted in the case of a licensor that is not a Customer as if 

such licensor were a Customer) (the "Permitted Use Agreement"), which 

Permitted Use Agreement may be in any form, including such Data Recipient's 

agreement to comply with these Rules, so long as such Permitted Use Agreement 

is legally binding; and

(iv) in each case that it becomes aware (from the Clearing House, a Clearing Member, 

one of their Affiliates, a client or otherwise) that any Data Recipient to which it 

has directly distributed FX Data is, or is reasonably suspected (as determined in 

its sole discretion) of being, in violation of the Permitted Use Agreement (or 

would be in breach of a Permitted Use Agreement, should such agreement have 

been in place), shall, to the extent permitted by Applicable Law (the following 

obligations in (A) to (C) below being the "Data Obligations"):

(A) promptly notify the Clearing House and the Person that provided it with 

the FX Data (if different) in writing of the name of such Data Recipient 

and provide a reasonably detailed explanation of the nature of such Data 

Recipient's violation, or the circumstances giving rise to the suspicion of a 

violation or would-be violation, of the Permitted Use Agreement;

(B) take such actions as the Clearing House, the Person that provided it with 

the FX Data (if different) or any of their Affiliates may reasonably request 

to cause such Data Recipient to cease violating the terms of the Permitted 

Use Agreement (or, if no Permitted Use Agreement is in place, to cease 

violating the terms of a Permitted Use Agreement should such agreement 

have been in place) including, among other things, ceasing the provision 

of FX Data to any Data Recipient with which it or one of its Affiliates has 

a direct relationship by which it provides FX Data or suspending such 

Data Recipient's direct or indirect use of FX Clearing at the Clearing 

House through such Customer, until the time as such Data Recipient is in 

compliance with the Permitted Use Agreement (or, if no Permitted Use 

Agreement is in place, in compliance with the terms of a Permitted Use 

Agreement should such agreement have been in place); and
NYDOCS01/1643340.2 324

(C) when requested by the Clearing House, the Person that provided it with 

the FX Data (if different) or any of their Affiliates pursuant to its other 

Data Obligations, cease the provision of FX Data to a Data Recipient if 

and when the Clearing House, the Person that provided it with the FX 

Data (if different) or any of their Affiliates reasonably suspects (as 

determined by the Clearing House, such Person or such Affiliate, as 

applicable, in its sole discretion) that such Data Recipient is in violation of 

the Permitted Use Agreement (or would be in violation of a Permitted Use 

Agreement, should such agreement have been in place).

(b) Nothing in this Rule 1708 shall impose any obligation on any Clearing Member, 

Customer or any of their Affiliates to monitor their Customers' or clients' use of FX Data 

or to independently investigate actual or suspected breaches of the Permitted Use 

Agreement, subject as set out in Rule 1708(a)(iv)(C).

(c) Nothing in this Rule 1708 shall prevent or restrict any Person from:

(i) using its own data relating to its own trading developed by such Person 

independently of, and without reference to, any FX Data; or

(ii) providing any FX Data to any Governmental Authority as necessary to comply 

with any Applicable Law (including, for the avoidance of doubt, any request of a 

Governmental Authority).

(d) It is intended that a Customer or any other Person may agree to the application of the 

restrictions and obligations set out in this Rule 1708 by agreeing with a Person that 

provides FX Data to such Customer or Person that the Rules are applicable to or 

contractually bind such Customer or Person (and, for the avoidance of doubt, it is 

intended that by so agreeing, the Customer or such Person thereby affirmatively agrees to 

comply with subsections (i) through (iv) of paragraph (a) hereof).
NYDOCS01/1643340.2 325

Part 18 Transition Rules for LIFFE in 2013

Rule 1801 Introduction

(a) These Transitional Rules deal with certain matters occurring at and around the Novation 

Time. These Transitional Rules form part of the Rules and are intended to be interpreted 

together with the Rules. All terms used but not defined in these Transitional Rules have 

the meaning given to them elsewhere in the Rules. In the event of any conflict between 

the Rules and these Transitional Rules in relation to any matter to which these 

Transitional Rules relate, these Transitional Rules shall prevail.

(b) These Transitional Rules will cease to apply on a date notified by the Clearing House to 

Clearing Members in a Circular, following such consultation with LIFFE and LCH as has 

been agreed to take place as between the Clearing House, LIFFE and LCH.

Rule 1802 Additional Definitions

(a) The term "Cash Collateral Transfer Form" means a form provided by a Cash 

Transferring Member to the Clearing House and accepted by the Clearing House, the 

form of which is set out in the annex to Clearing Member Cash Instructions, including 

details of the amounts of Transferring Cash for that Cash Transferring Member.

(b) The term "Cash Transferring Member" means a LIFFE Clearing Member that has duly 

executed Clearing Member Cash Instructions, has provided the Clearing House with a 

Cash Collateral Transfer Form and has duly executed and delivered a Deed of Novation.

(c) The term "Clearing Member Cash Instructions" means an agreement duly executed by 

a Cash Transferring Member, LCH, LIFFE and the Clearing House relating to 

Transferring Cash, in the form specified by the Clearing House.

(d) The term "Clearing Member Instructions" means Clearing Member Cash Instructions 

or Clearing Member Securities Instructions.

(e) The term "Clearing Member Securities Instructions" means an agreement in the form 

of a deed duly executed and delivered by a Securities Transferring Member, LCH, LIFFE 

and the Clearing House relating to Transferring Securities, in the form specified by the 

Clearing House.

(f) The term "Collateral Transfer Form" means a Cash Collateral Transfer Form or a 

Securities Collateral Transfer Form.

(g) The term "Deed of Novation" means a deed duly executed and delivered by a LIFFE 

Clearing Member, LIFFE, LCH and the Clearing House in respect of the Novation.

(h) The term "Delivery Contract" means, in respect of any 'Registered Exchange Contract' 

(as the same is defined in the LIFFE Clearing Membership Agreement), the set of 

payment and delivery rights and obligations arising as between a LIFFE Clearing 

Member and LCH pursuant to clause 6.7 of a LIFFE Clearing Membership Agreement 
NYDOCS01/1643340.2 326

which, at the Novation Time, has not been cash settled or otherwise performed, 

discharged or closed out, void, voided, terminated or rescinded in full, and includes any 

such Delivery Contract to the extent the same has, as at the Novation Time, been novated 

from LCH to ICE Clear pursuant to a Deed of Novation; and for the avoidance of doubt, 

Delivery Contracts include such rights, liabilities and obligations as exist between a 

LIFFE Clearing Member and LCH in respect of the Northern Rock Contracts at the 

Novation Time.

(i) The term "LCH" means LCH.Clearnet Limited, whose registered office is at Aldgate 

House, 33 Aldgate High Street, London EC3N 1EA.

(j) The term "LCH Delivery Procedures" means those published procedures governing the 

performance of delivery obligations, and in relation to deliveries of securities, payment 

obligations, in relation to Delivery Contracts, being LCH's NYSE Liffe Clearing 

Procedures (section 2H of the LCH procedures) as published by LCH on its website as at 

the Novation Time, which in turn reference LIFFE Rules.

(k) The term "LCH Regulations" means the rules, regulations, default rules and published 

procedures of LCH relating to the clearing of LIFFE, as amended from time to time.

(l) The term "LIFFE Clearing Membership Agreement" means a clearing membership 

agreement between a LIFFE Clearing Member, LCH and LIFFE (including, after the 

Novation Time, such agreement to the extent still applicable as between a LIFFE 

Clearing Member and LIFFE).

(m) The term "LIFFE Rules" means the rules, regulations, default rules and procedures for 

trading and related clearing on the LIFFE Markets, including, without limitation, book I 

(Harmonised Rules) (to the extent applicable to LIFFE) and book II (Rules Specific to 

LIFFE) in each case as amended or supplemented from time to time

(n) The term "Lodgement Instructions" means instructions of that name provided by a 

LIFFE Clearing Member to the Clearing House, the form of which is established pursuant 

to the Rules.

(o) The term "Northern Rock Contracts" means the rights, obligations and liabilities 

arising out of the LIFFE Northern Rock individual equity options contracts where LIFFE 

Clearing Members hold positions under such contracts as a 'Registered Exchange 

Contract' (as defined in the LIFFE Clearing Membership Agreement) immediately prior 

to the Novation Time.

(p) The term "Novating Contract" means an Open Contract or a Delivery Contract.

(q) The term "Novation" means the novation of Novating Contracts pursuant to the Deeds of 

Novation and these Transitional Rules and other matters that occur at the Novation Time 

pursuant to the Deeds of Novation, Clearing Member Instructions and Collateral Transfer 

Forms.
NYDOCS01/1643340.2 327

(r) The term "Novation Time" means the novation time that is determined in accordance 

with the Deeds of Novation, which will be communicated to LIFFE Clearing Members 

by the Clearing House.

(s) The term "Open Contract" means a contract between a LIFFE Clearing Member and 

LIFFE made in accordance with the LIFFE Rules as a result of trading or otherwise, 

which is open immediately prior to the Novation Time and which has not, as at the 

Novation Time, been cash settled or otherwise performed, discharged or closed out, void, 

voided, terminated or rescinded in full, and includes all obligations, rights and liabilities 

as between LIFFE Clearing Members and LIFFE under contracts which have given rise 

to settlement obligations to the extent that such obligations, rights and liabilities have not 

been modified and discharged pursuant to clause 6.7 of a LIFFE Clearing Membership 

Agreement; and for the avoidance of doubt, Open Contracts include such rights, liabilities 

and obligations as exist between LIFFE and a LIFFE Clearing Member in respect of the 

Northern Rock Contracts at the Novation Time.

(t) The term "Securities Collateral Transfer Form" means a form provided by a Securities 

Transferring Member to the Clearing House and accepted by the Clearing House, the 

form of which is set out in the annex to Clearing Member Securities Instructions, 

including details of the Transferring Securities for that Securities Transferring Member.

(u) The term "Securities Transferring Member" means a LIFFE Clearing Member that has 

duly executed and delivered Clearing Member Securities Instructions and a Deed of 

Novation and has provided the Clearing House with a Securities Collateral Transfer Form 

and Lodgement Instructions.

(v) The term "Transitional Cash Collateral Deadline" means 11:00 a.m. on the Friday 

immediately following the Novation Time.

(w) The term "Transitional Rules" means these transitional rules.

(x) The term "Transitional Securities Collateral Deadline" means 11:00 a.m. on the 

Tuesday immediately following the Novation Time.

(y) The term "Transferring Cash" means all cash in the form of Permitted Cover identified 

in Cash Collateral Transfer Forms in accordance with Clearing Member Cash 

Instructions, including all rights, interests and titles in, to, or under the same.

(z) The term "Transferring Securities" means all Permitted Cover other than cash identified 

in Securities Collateral Transfer Forms in accordance with Clearing Member Securities 

Instructions, including all rights, interests and titles in, to, or under the same.

Rule 1803 Contracts

(a) Notwithstanding Rule 401(a) and Rule 401(b), any Contract that would otherwise arise 

pursuant to Rule 401(a) or Rule 401(b) prior to the Novation Time due to trading on or 

reporting to LIFFE prior to the Novation Time shall not arise unless it is subject to the 
NYDOCS01/1643340.2 328

Novation, in which case it shall arise at the Novation Time in accordance with 

Rule 1803(b), subject to Rule 1806.

(b) At the Novation Time, pursuant to and in the manner specified in the Deeds of Novation: 

(i) the Clearing House (in place of LIFFE) and each LIFFE Clearing Member that has 

executed and delivered a Deed of Novation will become party to a replacement LIFFE 

Contract on the terms set out in these Rules in respect of each Open Contract to which 

that LIFFE Clearing Member is a party; and (ii) the Clearing House (in place of LCH) 

and each LIFFE Clearing Member that has executed a Deed of Novation will become 

party to a replacement LIFFE Contract that is subject to delivery obligations on the terms 

set out in these Rules in respect of each Delivery Contract to which that LIFFE Clearing 

Member is a party.

(c) The status of a Transaction or Contract as void ab initio under Rule 403 shall apply 

equally to any Novating Contract in respect of which incomplete or conflicting details are 

received by the Clearing House from LCH, LIFFE and/or the relevant LIFFE Clearing 

Member.

Rule 1804 Margin

(a) Each LIFFE Clearing Member shall have satisfied applicable Original Margin obligations 

at, immediately prior to, and after the Novation Time in respect of Novating Contracts to 

which it is a party.

(b) To the extent that any cash is received in cleared funds into an account at a Concentration 

Bank by the Clearing House from LCH in respect of a LIFFE Clearing Member (which 

extent, in respect of any LIFFE Clearing Member, is determined in accordance with the 

Cash Collateral Transfer Form), the LIFFE Clearing Member will be deemed to have 

deposited Permitted Cover in the form of cash with the Clearing House in accordance 

with the applicable Clearing Membership Agreement (regardless of the status of 

Transferring Cash prior to such time). To the extent that any securities equivalent to 

Transferring Securities are received by the Clearing House free from all Encumbrances 

from LCH in respect of a LIFFE Clearing Member, the LIFFE Clearing Member will be 

deemed to have transferred Permitted Cover in the form of securities fungible with the 

Transferring Securities with the Clearing House in accordance with the applicable 

Clearing Membership Agreement (regardless of the status of Transferring Securities 

prior to such time).

(i) Subject to Rule 1804(d), the following shall also amount to Permitted Cover:

(A) for Cash Transferring Members only: from the Novation Time until the 

Transitional Cash Collateral Deadline, the amount of Transferring Cash 

identified in Cash Collateral Transfer Forms to the extent that the same is 

not received by the Clearing House in cleared funds into its account at a 

Concentration Bank and LCH holds equivalent assets on trust for the 

benefit of the Clearing House in accordance with the Clearing Member 

Cash Instructions; and
NYDOCS01/1643340.2 329

(B) for Securities Transferring Members only: from the Novation Time until 

the Transitional Securities Collateral Deadline, securities fungible with the 

Transferring Securities identified in Securities Collateral Transfer Forms 

to the extent that the same are held in accounts of LCH for the benefit of

the Clearing House in accordance with the Clearing Member Securities 

Instructions. 

(c) The first sentence of Rule 502(b) shall not apply in relation to Transferring Securities 

described in Rule 1804(b).

(d) If the Clearing House:

(i) does not receive, in cleared funds into its account at a Concentration Bank, all the 

Transferring Cash from LCH at or prior to the Transitional Cash Collateral 

Deadline;

(ii) does not receive Permitted Cover fungible with all the Transferring Securities in 

respect of any Securities Transferring Member at or prior to the Transitional 

Securities Collateral Deadline in its normal custody accounts as specified 

pursuant to the Finance Procedures; or

(iii) determines at its discretion (which determination may be made prior to the 

Transitional Cash Collateral Deadline or Transitional Securities Collateral 

Deadline, as applicable) that it is unlikely to receive cash equal to any amount of 

Transferring Cash or Permitted Cover fungible with any Transferring Securities at 

or prior to the Transitional Cash Collateral Deadline or the Transitional Securities 

Collateral Deadline respectively,

the Clearing House shall be entitled to disapply Rule 1804(b)(i) in respect of a particular 

LIFFE Clearing Member or particular Permitted Cover or all or some LIFFE Clearing 

Members or Permitted Cover, as applicable. In such circumstances, any affected LIFFE 

Clearing Member shall be liable to pay the Clearing House such amounts in respect of 

Margin and other liabilities as are due pursuant to the Rules without taking into account 

any value attributed to Transferring Cash or Transferring Securities held in the manner 

described in Rule 1804(b)(i). The Clearing House will either issue a Circular whenever 

this Rule 1804(d) applies, if a number of LIFFE Clearing Members are affected, or 

otherwise shall notify any LIFFE Clearing Member affected, LIFFE and LCH.

(e) In the event of any conflict, the provisions of the Rules and Procedures relating to interest 

or collateral charges do not apply to the extent that the same are inconsistent with the 

provisions of the Deed of Novation, Clearing Member Cash Instructions or Clearing 

Member Securities Instructions. 

(f) Interest or collateral charges due to or from a Clearing Member on Transferring Cash in 

respect of the period until close of business on the day of the Novation Time will be 

payable to or by such Clearing Member by or to LCH (in relation to any transferred 

Transferring Cash and any interest payable by LCH only to the extent that LCH receives 

interest payments from the Clearing House). Interest or collateral charges due to or from 
NYDOCS01/1643340.2 330

a Clearing Member on Transferring Cash in respect of the period after close of business 

on the day of the Novation Time will be payable to or by a Clearing Member by or to the 

Clearing House (in relation to any interest payable by the Clearing House or any 

untransferred Transferring Cash only to the extent that the Clearing House receives 

interest payments from LCH). Any interest or collateral charges in respect of 

Transferring Cash which is held by LCH shall be due or charged at LCH's published 

rates. Any interest or collateral charges in respect of Transferring Cash which has been 

received by the Clearing House shall be due or charged at the Clearing House's published 

rates. Clearing Members shall pay the Clearing House or LCH interest or collateral 

charges on Transferring Cash as notified by either the Clearing House or LCH or may be 

paid interest on Transferring Cash by either the Clearing House or LCH, including in 

respect of amounts which pursuant to Clearing Member Cash Instructions would be 

payable by or to the other clearing house, where, for reasons of administrative 

convenience, the Clearing House or LCH agree to act as collection or paying agent on 

behalf of the other.

(g) In relation to securities representing the Transferring Securities only: 

(i) any income or redemption amounts due to LIFFE Clearing Members on securities 

representing Transferring Securities received by LCH after the Novation Time 

shall be payable by LCH to LIFFE Clearing Members:

(A) to the extent the same relates to the period prior to the Novation Time, 

calculated on the basis of the rates, fee schedules, charges and 

arrangements for the passing-on of income or redemption amounts of LCH 

for its clearing members in respect of the LIFFE Markets on securities 

provided as 'cover' (as that term is used in the LCH Regulations) as at the 

Novation Time; and 

(B) to the extent that LCH receives an equivalent amount from the issuer or its 

agent after the Novation Time but such amount relates in whole or in part 

to a payment that relates to the period after the Novation Time, as agent 

for the Clearing House, and calculated on the basis of the rates, fee 

schedules, charges and arrangements for the passing-on of income or 

redemption amounts of the Clearing House for LIFFE Clearing Members 

on securities provided as Permitted Cover as at Novation Time and such 

payment shall discharge any liability of the Clearing House and LCH to 

pay such income or redemption amounts to LIFFE Clearing Members; and

(ii) any income or redemption amounts due to LIFFE Clearing Members on securities 

representing Transferring Securities received by the Clearing House, regardless of 

the time of receipt, shall be payable by the Clearing House to LIFFE Clearing 

Members in accordance with the Rules calculated on the basis of the rates, fee 

schedules and charges levied by the Clearing House on LIFFE Clearing Members 

for income or redemption amounts on securities provided as Permitted Cover as at 

Novation Time. To the extent any such income or redemption amount relates to 
NYDOCS01/1643340.2 331

the time prior to the Novation Time, such payment shall discharge any liability of 

LCH to pay such income or redemption amounts to LIFFE Clearing Members. 

(h) In relation to securities representing the Transferring Securities and cash, to the extent 

these:

(i) are not transferred to the account of the Clearing House, LIFFE Clearing 

Members shall to pay to LCH any fees and charges levied by LCH calculated on 

the basis of the fees and charges levied by LCH to its clearing members in respect 

of the LIFFE Markets as at the Novation Time; and

(ii) are transferred to the account of the Clearing House, LIFFE Clearing Members 

shall pay to the Clearing House any fees and charges levied by the Clearing 

House calculated on the basis of the fees and charges levied by the Clearing 

House to LIFFE Clearing Members as at the Novation Time.

(i) For FCM Clearing Members that have executed Clearing Member Cash Instructions, cash 

margin will not be treated as subject to the Pledged Collateral Addendum until such time 

as cash is actually received in the Clearing House's Concentration Account from LCH 

and credited in the name of the relevant FCM Clearing Member, and the representation 

and warranty provided by such FCM Clearing Member pursuant to Clause 2.2(vi) of the 

applicable Clearing Member Cash Instructions shall cease to have effect at such time. 

For FCM Clearing Members that have executed Clearing Member Securities Instructions, 

securities will not be treated as subject to the Pledged Collateral Addendum until such 

time as relevant securities are received in the Clearing House's account (other than at 

LCH) and credited in the name of the relevant FCM Clearing Member, and the 

representation and warranty provided by such FCM Clearing Member pursuant to Clause 

2.2(viii) of the applicable Clearing Member Securities Instructions shall cease to have 

effect at such time. Prior to such time, such securities shall be treated as if provided 

under a title transfer arrangement, pursuant to the Clearing Member Securities 

Instructions.

Rule 1805 Delivery Contracts

(a) LCH and LIFFE have each agreed to administer certain deliveries of Deliverables 

pursuant to Delivery Contracts as agent for the Clearing House.

(b) Satisfaction of the relevant provisions of the Delivery Procedures, LCH Regulations and 

LIFFE Rules applicable to: (i) the making and taking of physical deliveries; (ii) the 

delivery and receipt of notices and forms in respect of deliveries; (iii) in respect of 

securities deliveries, making and receiving corresponding cash payments; and (iv) in 

respect of deliveries other than securities deliveries, the making of cash payments to a 

LIFFE Clearing Member acting as Seller to a relevant Delivery Contract where, prior to 

the Novation Time payment was due or has been received by LCH from the LIFFE 

Clearing Member that is the Buyer in the corresponding Delivery Contract, in all cases at 

the times and in the manners required pursuant to the Delivery Procedures, LCH 

Regulations and LIFFE Rules, shall constitute due performance for the purposes of the 
NYDOCS01/1643340.2 332

Rules in relation to Delivery Contracts and performance in such circumstances by the 

LIFFE Clearing Member to LCH or by LCH to the LIFFE Clearing Member shall 

constitute good performance to or by the Clearing House respectively.

(c) Subject to Rule 1805(d) below, any arbitration, dispute or alternative delivery procedure 

arising in connection with a Delivery Contract (other than in relation to any payment) 

shall be governed by and subject to the terms of the LCH Regulations and LIFFE Rules. 

The relevant provisions of the LCH Regulations and LIFFE Rules, as the LCH 

Regulations and LIFFE Rules apply to LCH and LIFFE respectively, will apply equally 

to the Clearing House solely for such purposes. All the provisions of the LCH 

Regulations and LIFFE Rules relating to deliveries (and definitions used therein, which 

shall prevail over any definitions in the Rules for the purposes of this Rule 1805 only) 

shall be deemed to be set out herein in full for the purposes of this Rule 1805 only. 

(d) The Clearing House shall have the same right as LIFFE and/or LCH to take such action 

against a LIFFE Clearing Member under the Rules in relation to obligations which are 

not fully performed or completed or which are only partially performed or completed at 

the Novation Time, regardless of whether any matter or event occurred or circumstance 

arose or relevant action or omission took place prior to the Novation Time.

(e) Rule 1805(b) does not affect the applicability of the Rules or Procedures relating to 

original or variation margin, interim variation margin, contingent variation margin, 

settlement amounts, delivery value or any similar payments under a Delivery Contract 

(except for the payments set out in Rule 1805(b)), howsoever described arising in 

connection with Delivery Contracts. For the avoidance of doubt, all payments and 

transfers of or in respect of Margin or Guaranty Fund Contributions relating to Delivery 

Contracts must be made to the Clearing House in the normal way, in accordance with the 

Rules and Procedures.

Rule 1806 Guaranty Fund Contributions

(a) Each LIFFE Clearing Member shall have deposited the required F&O Guaranty Fund 

Contributions (including any increase to previous F&O Guaranty Fund Contributions) 

with the Clearing House at least five Business Days prior to the scheduled Novation 

Time.
NYDOCS01/1643340.2 333

Part 19 Sponsored Principals

Rule 1901 Attaining status of a Sponsored Principal

(a) Sponsors must be Clearing Members and must meet the Clearing House's membership 

criteria and other obligations in relation to Customers as set out in Part 2 of the Rules in 

the same way as a Clearing Member would be required to do so in relation to a Customer 

that is not a Sponsored Principal. 

(b) In order to attain and maintain the status of a Sponsored Principal, a Person must, at a 

minimum, as from the date on which it is proposed that it become a Sponsored Principal:

(i) have paid the Clearing House's (non-refundable) application fee for Sponsored 

Principals and provided completed application forms;

(ii) be a user of or otherwise have access to at least one Repository (if any) for the 

Contracts it proposes to clear;

(iii) (if proposing to become a Sponsored Principal in relation to CDS Contracts), if 

any CDS Trade Particulars are submitted for Clearing which relate to a Bilateral 

CDS Transaction registered at Deriv/SERV in the name of an Affiliate of the 

Sponsored Principal, have provided an executed authority, in a form acceptable to 

the Clearing House, from the relevant Affiliate, pursuant to which the Clearing 

House is authorised to terminate the records in Deriv/SERV in respect of Bilateral 

CDS Transactions to which the Affiliate is party;

(iv) (if proposing to become a Sponsored Principal in relation to FX Contracts) be a 

settlement member of, or have an Affiliate (through which it can settle FX 

transactions) which is a settlement member of, an FX Settlement Facility;

(v) have nominated a Person, satisfactory to the Clearing House, who is (A) a 

director, general partner, trustee or officer of the applicant (or Person occupying a 

similar status or performing similar functions), (B) responsible for the clearing 

operations of the applicant and (C) authorised to act on behalf of the applicant in 

all transactions with or involving the Clearing House, and, unless the Sponsored 

Principal is an individual or a sole trader, have nominated a second Person who 

meets the requirements of (A) above and is authorised to act on behalf of the 

applicant in the event of the death, incapacity or other inability of the first Person 

to so act;

(vi) unless it is an individual or sole trader, maintain and, where applicable, procure 

that all of its Designated Controllers maintain, the minimum amount of Capital 

required by the Clearing House or (if it is a collective investment scheme, 

individual or sole trader) assets or net assets (as defined in article 49(2)(A), article 

49(6) or schedule 5 of the Financial Services and Markets Act 2000 (Financial 

Promotion) Order 2005, as applicable) of the same amount;
NYDOCS01/1643340.2 334

(vii) where a Controller Guarantee is or is to be provided by a Designated Controller, 

procure that the Controller Guarantee is executed in such form and delivered in 

such manner as the Clearing House may prescribe from time to time;

(viii) be party to a Sponsored Principal Clearing Agreement;

(ix) have been designated as a Sponsored Principal in writing to the Clearing House 

by a Sponsor that is not a Defaulter, pursuant to a Sponsor Agreement;

(x) not be subject to an Insolvency;

(xi) hold a Nominated Bank Account or Accounts in its name (or, in the alternative, 

the Sponsor's name) at an Approved Financial Institution or Institutions in relation 

to each of which a direct debit mandate has been established in favour of the 

Clearing House;

(xii) have pre-funded a minimum amount of Margin specified by the Clearing House to 

a Nominated Bank Account, which amount will be transferred to a Clearing 

House Account prior to the date of attaining Sponsored Principal status;

(xiii) if non-cash assets are to be used as Permitted Cover, have executed all necessary 

documentation relating to the transfer of such assets and not be in dispute with the 

Clearing House in relation to the ownership over or rights relating to such 

non-cash assets;

(xiv) be incorporated or registered in and access the Clearing House from only 

jurisdictions whose Applicable Laws relating to insolvency, the regulation of 

clearing houses, Markets or central counterparties, the enforceability of Contracts 

and the Rules and such other matters as the Clearing House specifies are 

acceptable to the Clearing House (and an applicant may be required to supply a 

legal opinion of external counsel, addressed to the Clearing House, addressing 

such issues, at its cost); and comply with any additional restrictions or 

requirements imposed by the Clearing House as a result of activities in any such 

jurisdictions; 

(xv) be an "eligible contract participant", as defined in Section 1a of the U.S. 

Commodity Exchange Act;

(xvi) if it is not incorporated in England and Wales, have appointed an agent for the 

service of process pursuant to Rule 1901(n); and

(xvii) not be subject to statutory disqualification under Applicable Law.

(c) Where a Sponsored Principal is a fund, some or all of the criteria in Rule 1901(b) may, at 

the discretion of the Clearing House, be met by the fund manager.

(d) A Sponsored Principal must at the time of application and on a continuing basis 

thereafter, comply with the following further requirements (and a Sponsored Principal 
NYDOCS01/1643340.2 335

shall verify to its Sponsor's satisfaction at the time of application or any transfer to a new 

Sponsor that such Sponsored Principal):

(i) has in place all necessary regulatory authorisations, licences, permissions and 

approvals in its country of origin, the UK and any other jurisdiction in which it 

conducts business;

(ii) is fit and proper, has sufficient qualities of financial responsibility, operational 

capacity, business integrity, reputation and competence;

(iii) has such facilities, equipment, operational capability, personnel, hardware and 

software systems as are capable of supporting the proper performance of its 

business as a Sponsored Principal, including such IT links to the Clearing House 

and Sponsor and software as are necessary;

(iv) has in place business continuity procedures that satisfy the Clearing House's 

minimum requirements applicable to Clearing Members;

(v) has a sufficient level of knowledge about the types of Contracts that it intends to 

clear and any risks involved in relation to the same;

(vi) is either a Person that is not a natural person or a Person that is subject to business 

taxation for the purposes of Council Directive 2003/48/EC on the taxation of 

savings income in the form of interest payments;

(vii) is not subject to any circumstances pursuant to which an Event of Default could 

be declared were the Sponsored Principal to be a Clearing Member;

(viii) has provided details of an office which is staffed during normal business hours 

and sufficient for its proposed activities as a Sponsored Principal under the direct 

supervision and responsibility of an executive officer of the Sponsored Principal 

(who need not be physically located at such office) to which all notices, orders 

and other communications from the Clearing House may be transmitted or 

delivered;

(ix) if it is to clear CDS, is a member of, or has access to, at least one physical 

settlement system that is customary for the settlement of all potentially applicable 

Deliverable Obligations under all CDS Contracts of all Sets which it is authorised 

to enter into, where such a physical settlement system exists;

(x) is an eligible contract participant, as defined in Section 1a of the Commodity 

Exchange Act;

(xi) has officers, directors and Controllers that would each meet the requirements for 

an 'approved person' (for individuals) or 'controller' (for partnerships, companies 

and other bodies corporate) under applicable FCA Rules and PRA Rules;
NYDOCS01/1643340.2 336

(xii) either (A) is a Person in respect of whom 'simplified due diligence' may be 

applied pursuant to the Money Laundering Regulations 2007; or (B) has been 

subject to customer due diligence measures by the Sponsor under the Money 

Laundering Regulations 2007; and

(xiii) is not prevented from entering into any Contract or using the Clearing House (nor 

is the Sponsor prevented from servicing the Individually Segregated Sponsored 

Account) as a result of any sanctions administered or imposed by the European 

Union, H.M. Treasury, the Office of Foreign Assets Control of the U.S. 

Department of the Treasury, the United Nations Security Council or any other 

relevant Governmental Authority affecting the Sponsored Principal, the Sponsor 

or any of their assets.

(e) Some or all of the criteria in Rule 1901(b) (except those set out in paragraphs (v), (vi), 

(x), (xi), (xii) or (xiii)) shall, at the discretion of the Sponsor, be deemed to be met on the 

part of the Sponsored Principal by the Sponsor, to the extent that the Sponsor takes on 

responsibility for servicing the Individually Segregated Sponsored Account or related 

Nominated Account. If the Sponsored Principal is a fund, some or all of the criteria in 

Rule 1901(b) (except those set out in paragraphs (v), (vi), (x), (xi), (xii) or (xiii)) may, at 

the discretion of the Sponsor, be deemed to be met on the part of the Sponsored Principal 

by the fund manager to the extent that the fund manager takes on responsibility for 

servicing the Individually Segregated Sponsored Account or related Nominated Account.

(f) The Clearing House may at its discretion attach further objective conditions to any 

application for Sponsored Principal status prior to such status being granted. The 

Clearing House may grant approval to an applicant conditional upon satisfying certain 

requirements, provided that the applicant has expressed its intention to meet such 

requirements and provided evidence of its ability to do so.

(g) Applicants for Sponsored Principal status must provide information or documentation to 

the Clearing House evidencing compliance (or lack thereof) with each of the criteria set 

out in or required pursuant to Rule 1901(b). Applicants for Sponsored Principal status 

must provide information or documentation to their Sponsor (who shall, on request, be 

obliged to transfer on any of the same to the Clearing House) evidencing compliance (or 

lack thereof) with each of the criteria set out in or required pursuant to Rule 1901(d). 

Failure to supply such information or documentation to the Clearing House may result in 

an application being rejected or Sponsored Principal status being revoked.

(h) If the Clearing House determines that an application for Sponsored Principal status 

should be denied, the applicant will be given notice of such denial. In such an event, the 

applicant may request an opportunity to be heard by the Clearing House's Board (or an 

appropriately constituted sub-committee of the Board) in relation to the matter and to 

present evidence as to why its application should not be denied or may raise a complaint 

which the Clearing House will deal with in the same way as if Part 10 applied to such 

complaint (notwithstanding that the Rules do not apply to the complaint).
NYDOCS01/1643340.2 337

(i) Sponsored Principal status does not entitle any Sponsored Principal to any shareholding 

or other similar interest in the Clearing House or any of the Clearing House's Affiliates. 

(j) Sponsored Principals shall be deemed to represent and warrant to the Clearing House, 

upon their first date of holding such status and on each subsequent date that they are a 

Sponsored Principal, that they meet all of the criteria set out in Rule 1901(b) and (d) and 

are in compliance with all of their obligations under these Rules.

(k) Part 2 does not apply to Sponsored Principals except for Rule 202(a)(i), (ii), (iii), (iv), (v), 

(vi), (vii), (viii), (x), (xi), (xiii), (xiv), (xv), (xvi) and (xix), Rule 203, Rule 204, Rule 206, 

Rule 207(a)-(d), 207(f), 208, 209 (a) to (c) and the first sentence of Rule 209(d), which 

apply to Sponsored Principals in the same way as they apply to Clearing Members 

mutatis mutandis, except that: (i) for purposes of Rule 202(a)(xi) and Rule 207(d), 

Sponsored Principals shall only be entitled to have a single Account at the Clearing 

House and are therefore required only to have a single Nominated Bank Account for each 

Eligible Currency; (ii) for purposes of Rule 202(a)(iv) and 202(a)(vi) the relevant 

standards are the criteria for Sponsored Principal status and the Capital or net asset 

requirements applicable to Sponsored Principals; and (iii) references to obligations with 

respect to Guaranty Fund Contributions, Assessment Contributions and participation in 

Default Auctions in Rule 908 (as incorporated by reference in Rule 209) shall not apply. 

The Membership Procedures shall be construed accordingly.

(l) A Clearing Member that has been authorised by the Clearing House to be a Sponsor may 

act in such capacity for any number of Sponsored Principals, subject to execution of a 

Sponsor Agreement and nomination of each such Sponsored Principal in accordance with 

the Sponsor Agreement and to meeting any additional Margin and Guaranty Fund

Contribution requirements resulting from so acting. No Sponsored Principal may have 

more than one Individually Segregated Sponsored Account. An Individually Segregated 

Sponsored Account can only have one Sponsor at any given time.

(m) The Sponsor must be a Clearing Member that is a credit institution or financial institution 

(as defined in the Money Laundering Directive) or otherwise be a person falling under 

article 17(2) of the Money Laundering Regulations 2007 (or the equivalent provision 

implementing the Money Laundering Directive in a member state other than the UK). In 

addition to the consent and reliance agreed to pursuant to Rule 202(a)(xii), the Sponsor 

consents to the Clearing House continually relying in respect of each open Individually 

Segregated Sponsored Account for which it acts as Sponsor upon the Sponsor's due 

diligence in relation to each of its Sponsored Principals and all "beneficial owners" 

(within the meaning of article 3(6) of the Money Laundering Directive) of such 

Sponsored Principals. The Sponsor will provide any supporting documentation relating 

to such due diligence to the Clearing House immediately on request and may be subject 

to audit requests by the Clearing House or requests for documentation from the Clearing 

House in respect of customer due diligence relating to Sponsored Principals, with which 

it must comply.

(n) Each Sponsored Principal that is not incorporated or registered in England and Wales 

shall appoint and maintain an agent in England and Wales to act as its agent to accept 
NYDOCS01/1643340.2 338

service of process issued out of the courts of England and Wales in relation to any 

arbitration commenced pursuant to Rule 117 or the Sponsored Principal Clearing 

Agreement and shall deliver to the Clearing House an agreement substantially in the form

specified by the Clearing House relating to such appointment countersigned by such 

agent. No Sponsored Principal shall give any notice of revocation to, or otherwise 

terminate the appointment of, any such agent unless prior to such termination it has 

validly appointed a replacement agent in England and Wales reasonably acceptable to the 

Clearing House to accept service of process issued out of the courts of England and 

Wales in relation to any arbitration commenced pursuant to Rule 117 or the Sponsored 

Principal Clearing Agreement and has delivered to the Clearing House a copy of that 

agent's acceptance of that appointment substantially in the form specified by the Clearing 

House countersigned by such agent. If for any reason any agent appointed under 

Rule 113(e) ceases to be such an agent, the Sponsored Principal shall forthwith appoint a 

replacement agent in England and Wales and deliver to the Clearing House a copy of the 

new agent's acceptance of that appointment substantially in the form specified by the 

Clearing House countersigned by such agent within 10 Business Days of such 

appointment. Nothing in these Rules, the Procedures, a Sponsored Principal Clearing 

Agreement or any Contract shall affect the right of the Clearing House to serve process in 

any other manner permitted by law.

(o) Sponsors are responsible for ensuring satisfaction by Sponsored Principals of the 

requirements of Rule 1901(b) and (d) and for ensuring that Sponsored Principals comply 

with their obligations with respect to clearing at the Clearing House.

Rule 1902 Rights and liabilities of Sponsored Principals and Sponsors

(a) The relevant Sponsored Principal and Sponsor shall each be jointly and severally liable, 

with one another, in each case as principal and without limitation, to the Clearing House 

in respect of all obligations and liabilities arising in connection with the Individually 

Segregated Sponsored Account and all Contracts recorded in it. 

(b) A Sponsor may be subject to increased Guaranty Fund Contribution requirements as a 

result of acting as Sponsor for Individually Segregated Sponsored Accounts, and the 

amount by which its Guaranty Fund is increased as a result of acting as Sponsor for each 

of its Individually Segregated Sponsored Accounts will be reported upon by the Clearing 

House to the Sponsor. This calculation shall not restrict the liability of the Sponsor in 

respect of its entire Guaranty Fund Contributions (and not solely any increase related to a 

particular Account) in respect of each and every Individually Segregated Sponsored 

Account. (This Rule 1902(b) is without prejudice to the rights of the Clearing House 

under Rule 901(d), Rule 904, Rule 906, Rule 1902(a) and otherwise to apply other assets 

to an Individually Segregated Sponsored Account following an Event of Default affecting 

the Sponsor.) For the avoidance of doubt, there will be no call of Assessment 

Contributions from the Sponsor following an Event of Default of a Sponsored Principal, 

unless Assessment Contributions are called from other Clearing Members contributing 

relevant Guaranty Funds under Part 9 and 11 of the Rules, in which case the Sponsor 

shall be liable on a similar basis to other Clearing Members. The absence of any status of 

"Representative" of the Sponsored Principal for the Sponsor in any circumstances shall 
NYDOCS01/1643340.2 339

not affect the liability of the Sponsor under these Rules, the Individually Segregated 

Sponsored Account or any Contract. 

(c) The Clearing House will make payments and performance to the Sponsored Principal 

(and the Sponsored Principal shall be solely entitled itself to receive all performance from 

the Clearing House) in respect of an Individually Segregated Sponsored Account except 

to the extent that any different arrangements for a Sponsor are established in accordance 

with Part 9, this Rule 1902(c) or Rule 1902(e) with the consent of or on the initiative of 

the Clearing House, in which case the relevant payment or performance will be made to 

the Sponsor or such other Person to whom payment is due under Part 9. In the absence of 

any arrangements with the Clearing House to the contrary, the Sponsored Principal must 

therefore establish an account in its own name at an Approved Financial Institution 

(which Approved Financial Institution may be, or may be an Affiliate of, its Sponsor) for 

the making of payments to and receiving of payments from, the Clearing House. The

Sponsored Principal and Sponsor may arrange for the Sponsor instead to be operationally 

responsible for meeting Margin and other calls relating to an Individually Segregated 

Sponsored Account from one of the Sponsor's own accounts at an Approved Financial 

Institution.

(d) To the extent permitted by Applicable Laws, the Clearing House will make any payment 

or perform any other obligation to the Sponsor (or another Person nominated by the 

Sponsored Principal for purposes of receiving performance to the account or to the order 

of the Sponsor or Sponsored Principal) in respect of an Individually Segregated 

Sponsored Account, if the Sponsored Principal and Sponsor so request jointly in writing 

and this request is accepted by the Clearing House or as permitted under Part 9. This 

may occur, for example, where delivery obligations under an F&O Contract are 

performed to a Transferee (which may be the Sponsor) or, in respect of payments, if the 

Sponsor is the account holder of the Nominated Bank Account linked to the Individually 

Segregated Sponsored Account. In such circumstances, the Sponsor or other Person will 

act as the Sponsored Principal's Representative. Whether the Clearing House makes any 

payment or performs any other obligation in connection with an Individually Segregated 

Sponsored Account or Contract to the Sponsor or the Sponsored Principal or otherwise to 

the account or to the order of the Sponsored Principal in accordance with Rule 1902(c) 

and this Rule 1902(d): (i) such payment or performance to the extent made shall satisfy 

and discharge the obligations of the Clearing House to the Sponsored Principal and any 

obligations of the Clearing House to the Sponsor; and (ii) where payment or performance 

is made to the Sponsored Principal (or to its account or order, other than to the account of 

the Sponsor), such payment or performance to the extent made shall be deemed to be in 

satisfaction and discharge of any related payment or performance obligation of the 

Sponsor pursuant to the related Customer-CM Transaction. 

(e) To the extent permitted by Applicable Laws, a Sponsored Principal may (provided that it 

requests to do so in writing and this request is accepted by the Clearing House), outsource 

performance of any of its obligations under the Rules to a Sponsor or other Person who 

agrees to such arrangements, but will remain fully liable to the Clearing House for such 

performance notwithstanding the outsourcing. This may occur, for example, where 

delivery obligations under an F&O Contract are performed by a Transferor (which may 
NYDOCS01/1643340.2 340

be the Sponsor) or, in respect of payments, if the Sponsor is the account holder of the 

Nominated Bank Account linked to the Individually Segregated Sponsored Account. In 

such circumstances, the Sponsor or other Person will act as the Sponsored Principal's 

Representative. Whether the Sponsor or Sponsored Principal makes any payment or 

performs any other obligation in connection with an Individually Segregated Sponsored 

Account or Contract to the Clearing House: (i) such payment or performance to the extent 

made shall satisfy and discharge the obligations of both the Sponsor and the Sponsored 

Principal to the Clearing House; and (ii) where payment or performance is made by the 

Sponsored Principal, such payment or performance to the extent made shall be deemed to 

be in satisfaction and discharge of any related payment or performance obligation of the 

Sponsored Principal pursuant to the related Customer-CM Transaction.

(f) The Clearing House shall be entitled to receive and act upon instructions, notifications, 

notices and forms (whether in electronic or paper format) in respect of an Individually 

Segregated Sponsored Account from either the Sponsor or the Sponsored Principal 

without further reference to any other party, including in relation to the entry into, 

modification, exercise, netting and termination of Contracts, the making and receipt of 

payments and other transfers of Permitted Cover and the giving and receipt of notices 

under Contracts or the Rules. Each of the Sponsor and Sponsored Principal shall be 

entitled as joint holders of the Individually Segregated Sponsored Account to give such 

instructions, notifications, notices and forms and hereby shall be deemed to authorise the 

other to give such instructions, notifications and notices and forms in respect of the 

Individually Segregated Sponsored Account for such purposes, subject to Rule 901(d) 

and 904(q)-(s). A Sponsor and a Sponsored Principal may agree among themselves how 

such rights may be exercised in practice. No arrangement between a Sponsor and 

Sponsored Principal established under Rule 1902(d) or Rule 1902(e) may be revoked or 

cancelled without the prior written consent of each of the Clearing House, Sponsor and 

Sponsored Principal concerned, unless it takes place pursuant to Rule 901(d) or 

904(q)-(s). Notwithstanding the foregoing provisions of this Rule 1902(f), the Clearing 

House will not act on any instruction, notification, notice or form from a Sponsored 

Principal (and a Sponsored Principal shall not be entitled to deliver the same to the 

Clearing House): (i) if and as from the time that the Sponsor makes a notification to the 

Clearing House of a default under an agreement between the Sponsored Principal and the 

Sponsor under Rule 901(d), until any such time as the Sponsor notifies the Clearing 

House in writing that the default in question has been cured; or (ii) if any instruction, 

notification, notice or form delivered by a Sponsored Principal conflicts with any 

instruction, notification, notice or form delivered by a Sponsor. For the avoidance of 

doubt, nothing in this Rule 1902(f) is intended to over-ride or disapply the requirements 

of Rule 401(g), Rule 504, Part 9, any other default rule or any other provision of these 

Rules or the Procedures prescribing any operational or legal process or requirement 

relating to any instruction, notification, notice, form, Contract, modification, exercise, 

netting, termination, payment transfer or other matter, which shall apply in addition to the 

requirements of this Rule 1902(f).

(g) A Customer-CM Transaction shall arise between each Sponsor (acting for such purposes 

as if it were the Clearing Member) and the Sponsored Principal (acting for such purposes 

as if it were the Customer) in respect of each Contract recorded in an Individually 
NYDOCS01/1643340.2 341

Segregated Sponsored Account, at the same times and in the same manner as CustomerCM Transactions would arise pursuant to Rule 401(m)-(n) and the applicable Standard 

Terms in respect of a Contract recorded in any other Customer Account. 

Notwithstanding the Standard Terms, the terms of each Customer-CM Transaction 

relating to a Contract recorded in an Individually Segregated Sponsored Account shall be 

construed such that:

(i) the Sponsor is obliged and liable to perform to the Sponsored Principal under the 

Customer-CM Transaction, subject to terms of the Cleared Transactions Master 

Agreement, solely to the extent that the Clearing House performs to the Sponsor 

in respect of the Individually Segregated Sponsored Account (including if the 

Nominated Bank Account linked to the Individually Segregated Sponsored 

Account is in the name of the Sponsor, the Sponsor is appointed as the Sponsored 

Principal's Transferee or the Sponsored Principal otherwise specifies that 

performance of any of the Clearing House's obligations should be made instead to 

the Sponsor pursuant to Rule 1902(d));

(ii) the Sponsored Principal is obliged and liable to perform to the Sponsor (and the 

Sponsor is obliged and liable to perform to the Sponsored Principal) under the 

Customer-CM Transaction solely to the extent that: (A) the Sponsor is approved 

as being operationally responsible for meeting or receiving Margin calls and other 

transfers of Permitted Cover relating to an Individually Segregated Sponsored 

Account in accordance with Rule 1902(c) (and in such circumstances, the Sponsor 

will not act as agent of the Sponsored Principal in receiving or paying any 

amounts but instead shall act for its own account as principal with an obligation 

pursuant to the Customer-CM Transaction to account to the Sponsored Principal 

for a similar amount or asset to each amount or asset received from the Clearing 

House and with rights pursuant to the Customer-CM Transaction to receive from 

the Sponsored Principal similar amounts to those paid to the Clearing House or 

similar assets to those transferred to the Clearing House, in each case subject to 

the terms of the applicable Customer-Clearing Member Agreement); (B) the 

Sponsor performs to the Clearing House in respect of the Individually Segregated 

Sponsored Account (including if the Nominated Bank Account linked to the 

Individually Segregated Sponsored Account is in the name of the Sponsor, the 

Sponsor is appointed as the Sponsored Principal's Transferor, performance of any 

of the Sponsored Principal's obligations is outsourced pursuant to Rule 1902(e) or 

pursuant to Part 9); (C) the Sponsor's Guaranty Fund Contributions, Surplus 

Collateral or other assets are applied by the Clearing House to meet a loss or 

shortfall on the Individually Segregated Sponsored Account upon an Event of 

Default occurring with respect to the Sponsor or Sponsored Principal, in which 

case the Sponsored Principal shall be liable to the Sponsor to pay an amount equal 

to the amount of so applied Guaranty Fund Contributions, Surplus Collateral or 

other assets; or (D) there is an Event of Default in relation to a Sponsored 

Principal, in which case: (1) the Sponsored Principal will be liable in full to the 

Sponsor for the close-out value of replacement Contracts and such other amounts 

as fall due under the Standard Terms and Customer-Clearing Member Agreement 

as if the Customer-CM Transaction had been originally recorded in a Customer 
NYDOCS01/1643340.2 342

Account other than an Individually Segregated Sponsored Account; and (2) 

without prejudice to the generality of the indemnities in Rule 111 and 301, but 

without duplication of any other obligation under these Rules, the Sponsored 

Principal, acting solely for its own account as principal, shall indemnify, hold 

harmless and be liable to the Sponsor and the Clearing House in respect of all of 

their losses, unpaid fees, liabilities, damages, injuries, taxes, costs and expenses 

(including, without limitation, legal, accountancy or other professional services 

expenses and disbursements, the costs of close-out, termination or Transfer of 

Contracts or Margin, amounts payable by such Persons to Approved Financial 

Institutions or custodians and any amount payable by such Persons to any other 

Person in respect of tax in connection with the Sponsored Principal or its 

Contracts, Margin, obligations or the Event of Default), incurred or suffered by 

such Person or any of their officers or employees or those of their Affiliates 

arising out of the Defaulter's conduct (whether such conduct took place prior to or 

after declaration of the Event of Default) or in connection with the Event of 

Default;

(iii) the Sponsor may set, change and enforce such position limits and other risk 

controls in respect of the Individually Segregated Sponsored Account as apply 

pursuant to the relevant Customer-Clearing Member Agreement; 

(iv) nothing in the Rules precludes a Sponsor and Sponsored Principal from agreeing 

contractually to any event of default or breach or similar event affecting the 

Sponsored Principal nor precludes the Sponsor from itself declaring a Sponsored 

Principal to be in default or breach of contract or taking any action consequent on 

the same, pursuant to Rule 1902(f) or otherwise (subject, if the Clearing House 

has declared an Event of Default in respect of the Sponsored Principal, to Part 9 

of the Rules);

(v) pursuant to the applicable Standard Terms Annex, the terms of the Customer-CM 

Transaction correspond to and shall be identical (save as expressly provided in 

this Part 19) to the terms of the equivalent Contract and the terms of the 

Customer-CM Transaction may be modified only pursuant to or in accordance 

with the Standard Terms Annex;

(vi) each Customer-CM Transaction gives rise to contractually binding rights and 

obligations ab initio, which rights and obligations are not contingent upon any 

circumstances, event, contract, obligation or performance (except as set out in 

Rule 401(m) or (n), as applicable); and

(vii) nothing in these Rules shall restrict any right of the Sponsor in a Cleared 

Transactions Master Agreement to call the Sponsored Principal for Customer-CM 

Collateral or to apply such Customer-CM Collateral against liabilities of the 

Sponsored Principal, nor any right of the Sponsored Principal under a Cleared 

Transactions Master Agreement to the return of any collateral.
NYDOCS01/1643340.2 343

(h) Unless the Clearing House agrees otherwise in respect of any particular Account, only a 

single Person may act as a Sponsored Principal in respect of an Individually Segregated 

Sponsored Account. A Sponsored Principal may only clear for its own account and may 

not carry out clearing for any Customer or Affiliate, but nothing in these Rules shall 

prevent a Sponsor and Sponsored Principal from being Affiliates of one another. 

Notwithstanding the foregoing, where the same fund manager or fund managers that are 

Affiliates act for multiple funds, all such funds may to the extent permitted under 

Applicable Laws have positions and Margin recorded in the same Individually 

Segregated Sponsored Account and use the same Nominated Bank Account at the choice 

of the fund manager. In addition, other multiple Persons (including groups of indirect 

clients of the same client of a Clearing Member) may to the extent permitted under 

Applicable Laws apply all to become Sponsored Principals in respect of the same 

Individually Segregated Sponsored Account in which positions and Margin relating to all 

such Persons are recorded and the same Nominated Bank Account is used. In any 

circumstances in which there is more than one Sponsored Principal in respect of the same 

Individually Segregated Sponsored Account:

(i) Open Contract Positions will be held on a net basis in respect of each Sponsored 

Principal but gross basis as between Sponsored Principals, but only a single 

aggregated payment to the Clearing House and a single aggregated payment from 

the Clearing House will be made on the Individually Segregated Sponsored 

Account across all Sponsored Principals at each time when payments are 

instructed pursuant to Part 3;

(ii) the Individually Segregated Sponsored Account will be gross margined across 

Sponsored Principals;

(iii) only a single net sum will be declared on any Individually Segregated Sponsored 

Account and accordingly each Sponsored Principal consents to mutualised 

Sponsored Principal risk and to set off as between all relevant rights, assets and 

liabilities in the Individually Segregated Sponsored Account, regardless of the 

Sponsored Principal to which such rights, assets or liabilities relate; and 

(iv) an Event of Default declared in respect of one Sponsored Principal using the 

Individually Segregated Sponsored Account is deemed to be, and may be declared 

by the Clearing House as, an Event of Default of any or all other Sponsored 

Principals interested in the Individually Segregated Sponsored Account.

(i) For the avoidance of doubt, Individually Segregated Sponsored Accounts are available to 

indirect clients (as defined in EMIR) which are Sponsored Principals, provided that a 

Sponsor (that is a Clearing Member and not a client of a Clearing Member) agrees to act 

as such and nominates, pursuant to the Sponsor Agreement, such indirect client as a 

Sponsored Principal. In such a situation, the related Customer-CM Transaction will 

instead be a transaction between the Clearing Member and its client and a further 

transaction equivalent to a Customer-CM Transaction shall arise as between the client 

and the Sponsored Principal. Nothing in these Rules shall prevent the establishment of 

any other provisions regarding liability as between a Sponsor, Sponsored Principal or 
NYDOCS01/1643340.2 344

client in connection with indirect clearing arrangements provided that a Sponsor and 

Sponsored Principal shall remain fully liable for their obligations under these Rules, the 

Sponsor Agreement and the Sponsored Principal Clearing Agreement notwithstanding 

the existence of any client or the position of a Sponsored Principal as an indirect client 

(as opposed to a client).

(j) A Sponsored Principal shall provide its Sponsor with such information as that Sponsor 

may reasonably request in connection with it acting as Sponsor, including, without 

limitation, position and Margin data, at such times and frequencies as the Sponsor directs. 

(k) If:

(i) the Clearing House is due to make or receive any performance or take any step in 

relation to Contracts or in respect of Clearing Members or an event occurs or 

circumstances arise (in any case including but not limited to any change in 

Applicable Law or any action taken by any Regulatory Authority pursuant to 

Applicable Law) affecting Contracts or Clearing Members;

(ii) the same performance, step or action cannot under Applicable Laws or due to the 

circumstances reasonably be taken in relation to a Contract to which a Sponsored 

Principal is party or in respect of or by a Sponsored Principal or Sponsor in the 

same way as would be the case were a Clearing Member to have been the only 

counterparty in question; and

(iii) the Sponsor does not agree to receive any relevant performance or perform any 

relevant obligation instead of the Sponsored Principal,

then the Clearing House, at its option and discretion, shall be entitled to take equivalent 

action (or, if it cannot take equivalent action, it is not advisable to do so or equivalent 

action would not deal with the matter in hand, other appropriate action) in good faith and in 

a commercially reasonable manner, in relation to a Contract to which the Sponsored 

Principal is party or with respect to such Sponsored Principal or Sponsor, including but not 

limited to terminating, or modifying the non-economic terms of a Contract or making 

adjustments to any determination of amounts paid or payable under a Contract or these 

Rules.

Rule 1903 General modifications to the Rules for Sponsored Principals, Sponsors and 

Individually Segregated Accounts

Notwithstanding any provision of these Rules (other than any provision of this Part 19) or the 

Procedures to the contrary (except to the extent that any provision of the Rules or Procedures 

expressly provides for a particular treatment for an Individual Segregated Sponsored Account, 

Sponsor or Sponsored Principal), in relation to an Individually Segregated Sponsored Account 

and subject to Rule 1902:

(a) a Sponsored Principal shall have no obligation to transfer or replenish any Guaranty Fund 

Contribution or to transfer any Assessment Contribution to the Clearing House and no 

right to return, recovery or reimbursement of the same; 
NYDOCS01/1643340.2 345

(b) the Sponsored Principal shall have no entitlement in respect of the Guaranty Fund 

Contributions made by the Sponsor, but this is without prejudice to the right of the 

Clearing House to apply such Guaranty Fund Contributions against any loss or shortfall 

on an Individually Segregated Sponsored Account;

(c) Sponsored Principals will not be responsible for the submission of any pricing data to the 

Clearing House nor will be required to enter into any Contract as a result of any such 

submission;

(d) Sponsored Principals may (but will not be obliged to) participate in default auctions but 

will not be treated as a Defaulter or subject to allocation of Contracts under Part 9 of the 

Rules in the event of a failed auction;

(e) disputes arising in connection with Sponsored Principals and Sponsored Principal 

Clearing Agreements between a Sponsored Principal and the Clearing House will be 

subject to the same procedures, jurisdiction, choice of law, forum and other requirements 

as Disputes;

(f) disputes arising in connection with Sponsors and Sponsor Agreements between a Sponsor 

and the Clearing House will be subject to the same procedures, jurisdiction, choice of 

law, forum and other requirements as Disputes;

(g) a Sponsored Principal may make complaints under Part 10 and the Complaint Resolution 

Procedures and be subject to investigations and sanctions under Part 10, in each case in 

the same way as a Clearing Member;

(h) the Business Continuity Procedures, Complaint Resolution Procedures, General Contract 

Terms Procedures, Delivery Procedures and Market Rules apply to a Sponsored Principal 

in the same way as they apply to a Clearing Member;

(i) the Standard Terms and terms of Customer-CM Transactions between a Sponsor and 

Sponsored Principal shall be interpreted always subject to Rule 1902(g); and

(j) each Sponsored Principal is deemed to agree and undertake that: (i) in addition to the 

application of Market Rules to Sponsored Principals pursuant to Rule 1903(h), the 

Market Rules (of each Market that allows trading in Contracts to which the Sponsored 

Principal is a party) shall apply to Sponsored Principals in accordance with their terms; 

(ii) any choice of jurisdiction, disciplinary, enforcement, dispute resolution and 

arbitration provisions set out in any Market Rules shall apply to Sponsored Principals as 

if such Sponsored Principals were members of the relevant Market, notwithstanding that 

a Sponsored Principal may not be a member of the relevant Market, except to the extent 

that the relevant Market Rules provide otherwise; and (iii) to the extent provided for in 

the relevant Market Rules, each Sponsored Principal shall be deemed to have waived any 

rights it might otherwise have to object to any choice of law or jurisdiction, proceedings, 

disciplinary, enforcement, dispute resolution or arbitration provisions in relevant Market 

Rules on the basis of forum non conveniens, statutory immunity, that the governing law 

or chosen forum is not specified in these Rules or otherwise; accordingly, each Market is 

entitled to rely upon and enjoy the benefit of the agreements and obligations of the 
NYDOCS01/1643340.2 346

Sponsored Principal under Rule 1903(h) and this Rule 1903(j) and shall have the right to 

enforce such, agreements and obligations against a Sponsored Principal under the 

Contracts (Rights of Third Parties) Act 1999,

and the Rules and Procedures shall be construed accordingly.

Rule 1904 Termination of relationship between Sponsor and Sponsored Principal

(a) Rule 209 shall not apply to termination by a Sponsor or Sponsored Principal of their 

relationship. Neither the Sponsor nor the Sponsored Principal shall have any right to 

terminate their relationship with the other party except as expressly provided in this Rule 

1904.

(b) A Sponsored Principal may terminate its Sponsor on notice (copied to the Clearing 

House) or a Sponsor may terminate its Sponsored Principal on notice (copied to the 

Clearing House), in either case only if there is no Open Contract Position (i.e. zero open 

Contracts) in all Sets in the relevant Individually Segregated Sponsored Account. 

Following service of any such notice, neither the Sponsored Principal nor the Sponsor 

may enter into or cause the entry into of any further Contract on the Individually 

Segregated Sponsored Account and the Clearing House shall be entitled to close the 

Individually Segregated Sponsored Account.

(c) A Sponsored Principal may change its Sponsor (or a Sponsor may change its Sponsored 

Principal) in respect of an Individually Segregated Sponsored Account only if a new 

Sponsor is accepted to act for the Sponsored Principal by the Clearing House, is party to 

a Sponsor Agreement and has duly nominated the Sponsored Principal pursuant to the 

relevant Sponsor Agreement. In such circumstances, the new Sponsor shall be deemed to 

make all the representations of a Sponsor of an applicant for Sponsored Principal status 

and Sponsor, as set out in Rule 1901. The Clearing House will specify the date on which 

the new Sponsor's appointment becomes effective, on which date the new Sponsor shall 

become responsible for and entitled in respect of the Individually Segregated Sponsored 

Account and the old Sponsor will hereby cease to have and be released from any right, 

liability or obligation in respect of the Individually Segregated Sponsored Account, 

provided that none of the old Sponsor, new Sponsor or Sponsored Principal has become a 

Defaulter prior to such date.

Rule 1905 Provisions Inapplicable to FCM/BD Clearing Members

Notwithstanding anything to the contrary in these Rules, FCM/BD Clearing Members shall not 

be permitted to act as Sponsors of Individually Segregated Sponsored Accounts.

Rule 1906 Provisions Inapplicable to ICE Endex UK Contracts and ICE Natural Gas

Continental Spot Contracts

Part 19 of the Rules does not apply to ICE Endex UK Contracts or ICE Natural Gas Continental 

Spot Contracts. References to 'Contracts' in Part 19 exclude ICE Endex UK Contracts and ICE 

Natural Gas Continental Spot Contracts, and the term 'Open Contract Position' shall be construed 

accordingly. References to 'Sponsor', 'Sponsored Principal', and 'Individually Segregated 
NYDOCS01/1643340.2 347

Sponsored Account' in this Part 19 are only references in relation to Contracts excluding ICE 

Endex UK Contracts and ICE Natural Gas Continental Spot Contracts. References to 'Customers' 

in this Part 19 are solely to Customers of Clearing Members in relation to Contracts excluding 

ICE Endex UK Contracts and ICE Natural Gas Continental Spot Contracts and the terms 

'Customer-CM Transaction' and 'Customer-CM Collateral' shall be construed accordingly.
NYDOCS01/1643340.2 348

Part 20 Transition Rules for ICE Endex in 2013

Rule 2001 Introduction

(a) These Endex Transitional Rules deal with certain matters occurring at and around the 

Endex Novation Time. These Endex Transitional Rules form part of the Rules and are 

intended to be interpreted together with the Rules. All terms used but not defined in 

these Endex Transitional Rules have the meaning given to them elsewhere in the Rules. 

In the event of any conflict between the Rules and these Endex Transitional Rules in 

relation to any matter to which these Endex Transitional Rules relate, these Endex 

Transitional Rules shall prevail.

(b) These Endex Transitional Rules will cease to apply on a date notified by the Clearing 

House to Clearing Members in a Circular, following such consultation with ICE Endex as 

has been agreed to take place as between the Clearing House and ICE Endex.

Rule 2002 Additional Definitions

(a) The term "CM Deed of Novation" means a deed duly executed and delivered by an ECC 

Clearing Member as transferor, a Clearing Member as transferee and the Clearing House 

in respect of an Endex Novating Contract.

(b) The term "Delivery Contract" means a contract between an ECC Clearing Member and 

ECC made in accordance with the ICE Endex and ECC Rules as a result of trading or 

otherwise, which is, immediately prior to the Endex Novation Time, subject to delivery, 

which has not, as at the Endex Novation Time, been cash settled or otherwise performed, 

discharged or closed out, void, voided, terminated or rescinded in full and which, for the 

avoidance of doubt, is not an Endex Novating Contract.

(c) The term "ECC" means European Commodity Clearing A.G., a stock incorporation 

(Aktiengesellschaft) incorporated under German law with company number HRB 22362, 

registered with the Local Court of Leipzig, whose registered office is at Augustusplatz 9, 

04109 Leipzig, Germany.

(d) The term "ECC Clearing Membership Agreement" means a clearing membership 

agreement between an ECC Clearing Member and ECC.

(e) The term "ECC Regulations" means the rules, regulations, default rules and published 

procedures of ECC relating to the clearing of ICE Endex, as amended from time to time.

(f) The term "Endex Deed of Novation" means a deed duly executed and delivered by an 

ECC Clearing Member, ECC, and the Clearing House in respect of the Endex Novation, 

which deed European Energy Exchange A.G. may be a party to for the purposes of 

consenting to such Endex Novation.

(g) The term "Endex Novating Contract" means a contract between an ECC Clearing 

Member and ECC made in accordance with the ICE Endex and ECC Rules as a result of 

trading or otherwise, which is open immediately prior to the Endex Novation Time and 
NYDOCS01/1643340.2 349

which has not, as at the Novation Time, been cash settled or otherwise performed, 

discharged or closed out, void, voided, terminated or rescinded in full and which is not a 

Delivery Contract.

(h) The term "Endex Novation" means the novation of Endex Novating Contracts pursuant 

to the Endex Deeds of Novation and these Endex Transitional Rules and other matters 

that occur at the Endex Novation Time pursuant to the Endex Deeds of Novation.

(i) The term "Endex Novation Time" means the novation time that is determined in 

accordance with the Endex Deeds of Novation, which will be communicated to ECC 

Clearing Members by the Clearing House.

(j) The term "Endex Transitional Rules" means these transitional rules.

Rule 2003 Contracts

(a) Notwithstanding Rule 401(a) and Rule 401(b), any Contract that would otherwise arise 

pursuant to Rule 401(a) or Rule 401(b) prior to the Endex Novation Time due to trading 

on or reporting to ICE Endex prior to the Endex Novation Time shall not arise unless it is 

subject to the Endex Novation, in which case it shall arise at the Endex Novation Time in 

accordance with Rule 2003(b), subject to Rule 2005.

(b) At the Endex Novation Time, pursuant to and in the manner specified in the Endex Deeds 

of Novation, the Clearing House (in place of ECC) and: (i) each ECC Clearing Member 

that has executed and delivered an Endex Deed of Novation; or (ii) if, in respect of any 

Endex Novating Contract, a CM Deed of Novation exists, such Clearing Member acting 

as transferee, will become party to a replacement ICE Endex Contract on the terms set 

out in these Rules in respect of each Endex Novating Contract to which that ECC 

Clearing Member is a party.

(c) The status of a Transaction or Contract as void ab initio under Rule 403 shall apply 

equally to any Endex Novating Contract in respect of which incomplete or conflicting 

details are received by the Clearing House from ECC, ICE Endex, the ECC Clearing 

Member that is a party to the relevant Endex Deed of Novation and/or any Clearing 

Member that is a party to a CM Deed of Novation. 

Rule 2004 Redesignation of ICE Futures Europe Contracts

(a) The Clearing House may, with effect from the Endex Novation Time, redesignate ICE 

Futures Europe Contracts as ICE Endex Contracts for the purposes of the Rules. Any 

such redesignated Contract shall remain in full force and effect as between the relevant 

Clearing Member and the Clearing House provided that, from the Endex Novation Time, 

the Rules shall apply to such Contract which was previously an ICE Futures Europe 

Contract as an ICE Endex Contract. The Contract Terms shall be amended and restated 

at the Endex Novation Time accordingly. 
NYDOCS01/1643340.2 350

Rule 2005 Guaranty Fund Contributions and Margin

(a) Each ECC Clearing Member shall have deposited the required F&O Guaranty Fund 

Contributions (including any increase to previous F&O Guaranty Fund Contributions) 

with the Clearing House at least five Business Days prior to the scheduled Endex 

Novation Time. 

(b) Each ECC Clearing Member and each Clearing Member that is a transferee pursuant to a 

CM Deed of Novation shall have satisfied applicable Original Margin obligations at, 

immediately prior to, and after the Endex Novation Time in respect of Endex Novating 

Contracts or ICE Endex Contracts to which it is a party or becomes a party to pursuant to 

Rule 2003(b) or Rule 2004. ECC Clearing Members and Clearing Members that are 

transferees pursuant to a CM Deed of Novation shall pre-fund Margin in respect of 

expected Endex Novating Contracts prior to the scheduled Endex Novation Time at the 

time specified by the Clearing House.
NYDOCS01/1643340.2 351

Part 21 Transition Rules for LIFFE in 2014

Rule 2101 Introduction

(a) These LIFFE Transition Rules deal with certain matters occurring at and around each 

Transition Time. These LIFFE Transition Rules form part of the Rules and are intended 

to be interpreted together with the Rules. All terms used but not defined in these LIFFE 

Transition Rules have the meaning given to them elsewhere in the Rules. In the event of 

any conflict between the Rules and these LIFFE Transition Rules in relation to any matter 

to which these LIFFE Transition Rules relate, these LIFFE Transition Rules shall prevail.

(b) These LIFFE Transition Rules will cease to apply on a date notified by the Clearing 

House to Clearing Members in a Circular, following such consultation with LIFFE and 

the Clearing House as has been agreed to take place as between LIFFE, ICE Futures 

Europe and the Clearing House.

Rule 2102 Additional Definitions

(a) The term "1m Eonia" means One Month EONIA Indexed Futures Contracts.

(b) The term "3m Eonia" means Three Month EONIA Swap Index Futures Contracts.

(c) The term "1st Transition Time" means 29 September 2014 or such later date to which 

the first transition time is deferred (which will be communicated to Clearing Members by 

the Clearing House) for Soft Commodities Contracts and such other contracts as specified 

by ICE Futures Europe.

(d) The term "1st Transition Time Contracts" means the contracts transferring at the 1st

Transition Time.

(e) The term "2nd Transition Time" means 6 October 2014 or such later date to which the 

second transition time is deferred (which will be communicated to Clearing Members by 

the Clearing House) for Euroswiss, 1m Eonia, Bond Contracts (excluding Long Gilts and 

Ultra Long Gilts), Swapnote® Contracts and such other contracts as specified by ICE 

Futures Europe to the extent not transitioned during the 1st Transition Time. 

(f) The term "2nd Transition Time Contracts" means the contracts transferring at the 2nd

Transition Time.

(g) The term "3rd Transition Time" means 20 October 2014 or such later date to which the 

third transition time is deferred (which will be communicated to Clearing Members by 

the Clearing House) for Sterling, Long Gilts, Ultra Long Gilts and such other contracts as 

specified by ICE Futures Europe to the extent not transitioned during the 2nd Transition 

Time.

(h) The term "3rd Transition Time Contracts" means the contracts transferring on the 3rd

Transition Time.
NYDOCS01/1643340.2 352

(i) The term "4th Transition Time" means 3 November 2014 or such later date to which the 

fourth transition time is deferred (which will be communicated to Clearing Members by 

the Clearing House) for Euribor, 3m Eonia, Euribor/Eonia Spread and such other 

contracts as specified by ICE Futures Europe to the extent not transitioned during the 3rd

Transition Time.

(j) The term "4th Transition Time Contracts" means the contracts transferring on the 4th

Transition Time.

(k) The term "5th Transition Time" means 17 November 2014 or such later date to which 

the fifth transition time is deferred (which will be communicated to Clearing Members by 

the Clearing House) for Securities Contracts (excluding Bond Contracts) and such other 

contracts as specified by ICE Futures Europe to the extent not transitioned during the 4th

Transition Time.

(l) The term "5th Transition Time Contracts" means the contracts transferring on the 5th

Transition Time.

(m) The term "Bond Contracts" means Gilt Contracts, Eurobond Government Contracts and 

Swiss Confederation Bond Contracts.

(n) The term "Euribor" means Three Month Euro Futures Contracts, Options on Three 

Month Euro Futures Contracts, One Year Mid-Curve Options on Three Month Euro 

Futures Contracts, Two Year Mid-Curve Options on Three Month Euro Futures 

Contracts, Three Year Mid-Curve Options on Three Month Euro Futures Contracts and 

Four Year Mid-Curve Options on Three Month Euro Futures Contracts.

(o) The term "Euribor/Eonia Spread" means the Inter-contract Spread strategy between 

Three Month Euro Futures Contracts and 3m Eonia.

(p) The term "Eurobond Government Contracts" means German Government Bond 

Contracts, Italian Government Bond Contracts and Spanish Government Bond Contracts.

(q) The term "Euroswiss" means Three Month Euro Swiss Franc Futures Contracts and 

Options on Three Month Euro Swiss Franc Futures Contracts.

(r) The term "German Government Bond Contracts" means Short Bund Futures

Contracts, Medium Bund Futures Contracts, Long Bund Futures Contracts and Ultra 

Long Bund Futures Contracts.

(s) The term "Gilt Contracts" means Short Gilts, Medium Gilts, Long Gilts and Ultra Long 

Gilts.

(t) The term "Italian Government Bond Contracts" means Short BTP Futures Contracts, 

Medium BTP Futures Contracts and Long BTP Futures Contracts.

(u) The term "LIFFE Transition Rules" means these transitional rules.
NYDOCS01/1643340.2 353

(v) The term "Long Gilts" means Long Gilt Futures Contracts and Options on Long Gilt 

Futures Contracts.

(w) The term "Medium Gilts" means Medium Gilt Futures Contracts.

(x) The term "Securities Contract" means a Future or Option containing the terms set out in 

any of Sections IIIII to PPPPPP of the ICE Futures Europe Rules, a Bond Contract,

and/or any other contract determined to be a Securities Contract by the directors of ICE 

Futures Europe from time to time.

(y) The term "Short Gilts" means Short Gilt Futures Contracts.

(z) The term "Soft Commodities Contract" means a Future or Option containing the terms 

set out in any of Sections EEEE to MMMM of the ICE Futures Europe Rules and/or any 

other contract determined to be a Soft Commodities Contract by the directors of ICE 

Futures Europe from time to time.

(aa) The term "Spanish Government Bond Contracts" means Short Spanish Government 

Bond Futures Contracts, Medium Spanish Government Bond Futures Contracts and Long 

Spanish Government Bond Futures Contracts.

(bb) The term "Sterling" means Three Month Sterling Futures Contracts, Options on Three 

Month Sterling Futures Contracts, One Year Mid-Curve Options on Three Month 

Sterling Futures Contracts, Two Year Mid-Curve Options on Three Month Sterling 

Futures Contracts, Three Year Mid-Curve Options on Three Month Sterling Futures 

Contracts and Four Year Mid-Curve Options on Three Month Sterling Futures Contracts.

(cc) The term "Swapnote® Contract" means a Future or Option containing the terms set out 

in any of Sections XXXX to EEEEE, and Section FFFFF as it relates to a Swapnote®, of 

the ICE Futures Europe Rules and/or any other contract determined to be a Swapnote® 

Contract by the directors of ICE Futures Europe from time to time.

(dd) The term "Swiss Confederation Bond Contracts" means Medium Swiss Confederation 

Bond Futures Contracts and Long Swiss Confederation Bond Futures Contracts.

(ee) The term "Transitioning Contracts" means the 1st Transition Time Contracts, the 2nd

Transition Time Contracts, the 3rd Transition Time Contracts, the 4th Transition Time 

Contracts and the 5th Transition Time Contracts.

(ff) The term "Transition Time" means each of the 1st Transition Time, 2nd Transition Time, 

3rd Transition Time, 4th Transition Time or 5th Transition Time, which will be 

communicated to Clearing Members by the Clearing House.

(gg) The term "Ultra Long Gilts" means Ultra Long Gilt Futures Contracts.
NYDOCS01/1643340.2 354

Rule 2103 Exchange Transition

(a) At each relevant Transition Time, the trading of relevant Transitioning Contracts will 

transfer from LIFFE to ICE Futures Europe.

Rule 2104 Redesignation of Transitioning Contracts

(a) With effect from the 1st Transition Time, open 1st Transition Time Contracts shall be 

automatically redesignated, without need for any further step or notices, as Financials & 

Softs Contracts for the purposes of the Rules. Any such redesignated Contract shall 

remain in full force and effect as between the relevant Clearing Member and the Clearing 

House provided that, from the 1st Transition Time, the Rules shall apply to such Contract 

which was previously a 1st Transition Time Contract as a Financials & Softs Contract. 

The Contract Terms of affected 1st Transition Time Contracts shall be amended and 

restated at the 1st Transition Time accordingly.

(b) With effect from the 2nd Transition Time, open 2nd Transition Time Contracts shall be 

automatically redesignated, without need for any further step or notices, as Financials & 

Softs Contracts for the purposes of the Rules. Any such redesignated Contract shall 

remain in full force and effect as between the relevant Clearing Member and the Clearing 

House provided that, from the 2nd Transition Time, the Rules shall apply to such Contract 

which was previously a 2nd Transition Time Contract as a Financials & Softs Contract. 

The Contract Terms of affected 2nd Transition Time Contracts shall be amended and 

restated at the 2nd Transition Time accordingly.

(c) With effect from the 3rd Transition Time, open 3rd Transition Time Contracts shall be 

automatically redesignated, without need for any further step or notices, as Financials & 

Softs Contracts for the purposes of the Rules. Any such redesignated Contract shall 

remain in full force and effect as between the relevant Clearing Member and the Clearing 

House provided that, from the 3rd Transition Time, the Rules shall apply to such Contract 

which was previously a 3rd Transition Time Contract as a Financials & Softs Contract. 

The Contract Terms of affected 3rd Transition Time Contracts shall be amended and 

restated at the 3rd Transition Time accordingly.

(d) With effect from the 4th Transition Time, open 4th Transition Time Contracts shall be 

automatically redesignated, without need for any further step or notices, as Financials & 

Softs Contracts for the purposes of the Rules. Any such redesignated Contract shall 

remain in full force and effect as between the relevant Clearing Member and the Clearing 

House provided that, from the 4th Transition Time, the Rules shall apply to such Contract 

which was previously a 4th Transition Time Contract as a Financials & Softs Contract. 

The Contract Terms of affected 4th Transition Time Contracts shall be amended and 

restated at the 4th Transition Time accordingly.

(e) With effect from the 5th Transition Time, open 5th Transition Time Contracts shall be 

automatically redesignated, without need for any further step or notices, as Financials & 

Softs Contracts for the purposes of the Rules. Any such redesignated Contract shall 

remain in full force and effect as between the relevant Clearing Member and the Clearing 
NYDOCS01/1643340.2 355

House provided that, from the 5th Transition Time, the Rules shall apply to such Contract 

which was previously a 5th Transition Time Contract as a Financials & Softs Contract. 

The Contract Terms of affected 5th Transition Time Contracts shall be amended and 

restated at the 5th Transition Time accordingly.
NYDOCS01/1643340.2 356

Part 22 Launch Rules for ICE Endex UK and ICE Endex Continental in 2015

Rule 2201 Introduction

(a) These Launch Rules (as defined in Rule 2202) deal with certain matters occurring at and 

around the Launch Time (as such term is defined in Rule 2202). These Launch Rules

form part of the Rules and are intended to be interpreted together with the Rules. All 

terms used but not defined in these Launch Rules have the meaning given to them 

elsewhere in the Rules. In the event of any conflict between the Rules and these Launch 

Rules in relation to any matter to which these Launch Rules relate, these Launch Rules

shall prevail.

(b) These Launch Rules will cease to apply on a date notified by the Clearing House to 

Clearing Members in a Circular, following such consultation with ICE Endex UK and 

ICE Endex Continental, as applicable, as has been agreed to take place as between the 

Clearing House, ICE Endex UK and ICE Endex Continental.

Rule 2202 Additional Definitions

(a) The term "APX Continental" means APX Clearing B.V., a private limited liability 

company (besloten vennootschap met beperkte aansprakelijkheid) incorporated under 

Dutch law, registered with the trade register of the chamber of commerce in Amsterdam, 

the Netherlands, under number 50969404 0000.

(b) The term "APX Continental Clearing Member" has the meaning as given to the term 

"Clearing Member" under the APX Continental Rules.

(c) The term "APX Continental Rules" means the rules and regulations and published 

procedures of APX Continental, as amended from time to time.

(d) The term "APX UK" means APX Commodities Limited, a company incorporated in 

England and Wales with registration number 03751681.

(e) The term "APX UK Clearing Member" has the meaning as that given to the term "Gas 

Clearing Member" under the APX UK Rules.

(f) The term "APX UK Rules" means the rules and regulations and published procedures of 

APX UK relating to the clearing of ICE Endex UK, as amended from time to time.

(g) The term "Launch Rules" means these launch rules.

(h) The term "Launch Time" means 14 July 2015 or such later date to which the launch time

for Clearing by the Clearing House of:

(i) ICE Endex UK Contracts; and

(ii) Contracts that are of Relevant ICE Endex Continental Products,
NYDOCS01/1643340.2 357

is deferred (which shall be communicated to Clearing Members by the Clearing House). 

(i) The term "Relevant ICE Endex Continental Products" means the "Cleared Products"

(as such term is defined in the ICE Endex Continental Rules) offered for trading on ICE 

Endex Continental.

Rule 2203 Clearing Launch

(a) At the Launch Time:

(i) APX UK will cease clearing new transactions occurring on ICE Endex UK and 

the Clearing House will commence clearing ICE Endex UK Transactions; and

(ii) APX Continental will cease clearing new transactions in TTF Instruments 

(excluding Gas CUR Instruments) and ZTP Instruments (as such terms are 

defined in the APX Continental Rules) occurring on ICE Endex Continental, and 

the Clearing House will commence clearing transactions in Relevant ICE Endex 

Continental Products occurring on ICE Endex Continental.

(b) Each APX UK Clearing Member shall, to the extent that it wishes to be a Clearing 

Member in relation to any ICE Endex UK Contract, ensure that immediately prior to the 

Launch Time, it is an ICE Endex UK Clearing Member

(c) Each APX Continental Clearing Member shall, to the extent that it wishes to be a 

Clearing Member in relation to any Contract that is of a Relevant ICE Endex Continental 

Product, ensure that immediately prior to the Launch Time, it is an ICE Endex 

Continental Clearing Member. 

(d) Nothing in this Part 22 is intended to affect the performance, delivery or any other 

obligation of any party under any transaction or contract that has arisen with APX UK or 

APX Continental, as applicable, prior to the Launch Time, which shall, notwithstanding 

this Part 22, remain transactions or contracts with APX UK and governed by the APX 

UK Rules or APX Continental and governed by the APX Continental Rules, as 

applicable.

Rule 2204 Contracts

Notwithstanding Rule 401(a) and Rule 401(b), no Contract shall arise pursuant to Rule 401(a) or 

Rule 401(b) as a result of trading on or the reporting of any transaction to:

(i) ICE Endex UK; or

(ii) ICE Endex Continental

prior to the Launch Time.
NYDOCS01/1643340.2 358

Rule 2205 Guaranty Fund Contributions and Margin

(a) Each new Clearing Member proposing to be an ICE Endex UK Clearing Member or ICE 

Endex Continental Clearing Member by the Launch Time, shall have deposited the 

required F&O Guaranty Fund Contributions (including any increase to previous F&O 

Guaranty Fund Contributions) with the Clearing House at least five Business Days prior 

to the scheduled Launch Time.

(b) Each ICE Endex UK Clearing Member and ICE Endex Continental Clearing Member 

shall have satisfied applicable Original Margin obligations at, immediately prior to, and 

after the Launch Time, including in respect of the ICE Endex UK Contracts and 

Contracts that are of Relevant ICE Endex Continental Products.

Rule 2206 Claims etc.

(a) Nothing in this Part 22 is intended to affect any complaints, claims, demands, arbitration 

or appeals made, or to be made by any person who is subject to the APX UK Rules 

against APX UK or the APX Continental Rules against APX Continental, in relation to 

any matter or event occurring or circumstance arising prior to the Launch Time. The 

Clearing House shall not become liable for any such matters at the Launch Time or 

otherwise.

(b) Subject to Rule 2206(c), nothing in this Part 22 is intended to affect:

(i) any disciplinary, legal or other proceedings commenced against any person who is 

subject to the APX UK Rules by APX UK or to the APX Continental Rules by 

APX Continental, prior to the Launch Time; 

(ii) the right of APX UK or APX Continental to bring disciplinary, legal or other 

proceedings against any person who is subject to the APX UK Rules or APX 

Continental Rules, arising from such person's actions or omissions prior to the 

Launch Time; 

(iii) any complaint, claim, demand or appeal that has been made or may be made by 

APX UK or APX Continental, against any person who is subject to the APX UK 

Rules or APX Continental Rules, arising from such person's actions or omissions 

prior to the Launch Time. 

The Clearing House shall not be responsible for the matters set out in Rule 2206(b)(i) –

(iii).

(c) The Clearing House shall additionally be entitled to take action against any person who is 

subject to the APX UK Rules or the APX Continental Rules in respect of the same 

circumstances referred to in Rule 2206(b) under these Rules in relation to any matter or 

event occurring or circumstance arising prior to the Launch Time, or in relation to 

obligations which are not fully performed or completed or which are only partially 

performed or completed, regardless of whether any matter or event occurred or 

circumstance arose or relevant action or omission took place prior to the Launch Time. 
EXHIBIT 1

ICE CLEAR EUROPE LIMITED

CUSTOMER-CM CDS TRANSACTIONS STANDARD TERMS 

BACKGROUND:

In respect of a Non-FCM/BD Clearing Member and Customer using a Customer Account other 

than an Individually Segregated Sponsored Account:

(1) Clearing Member is a Non-FCM/BD Clearing Member, as defined in the rules (together 

with the procedures, as interpreted in accordance with guidance and circulars thereunder, 

the "Rules") of ICE Clear Europe Limited (the "Clearing House") and is thereby 

permitted to submit certain CDS Trade Particulars which, if an Acceptance Notice is 

issued, will result in a cleared CDS Contract arising in accordance with the Rules and the 

CDS Procedures of the Clearing House.

(2) Clearing Member and Customer are or intend to become party to one or more CustomerCM Transactions, where related cleared CDS Contracts are requested or are to be 

requested by the CDS Clearing Member to be recorded in a Customer Position Account 

in which CDS Contracts may be recorded. They further desire to agree to the operation 

of the Rules and the Procedures in relation to any Customer-CM CDS Transactions that 

may arise following the submission of the related CDS Trade Particulars, as further 

provided for in these Customer-CM CDS Transactions Standard Terms (these "CDS

Standard Terms").

(3) Clearing Member and Customer have established a "master" futures account, clearing 

agreement or other master agreement (the "Cleared Transactions Master Agreement", 

as amended from time to time) and, if applicable, a related collateral arrangement, 

whether contained in the same or another agreement with respect to cleared transactions, 

including such Customer-CM CDS Transactions (which Cleared Transactions Master 

Agreement may be supplemented by a cleared derivatives addendum, or similar 

document, as agreed by Clearing Member and Customer (together, the "CustomerClearing Member Agreement") and as amended and supplemented by these CDS 

Standard Terms).

In respect of a Non-FCM/BD Clearing Member and Customer using an Individually Segregated 

Sponsored Account:

(4) Clearing Member is a Non-FCM/BD Clearing Member and Customer is a Sponsored 

Principal, in each case as defined in the Rules, and each of them is thereby permitted to 

submit certain CDS Trade Particulars which, if an Acceptance Notice is issued, will 

result in a cleared CDS Contract governed by Part 19 arising in accordance with the 

Rules and the CDS Procedures of the Clearing House.

(5) Clearing Member and Customer are or intend to become party to one or more CustomerCM Transactions on the terms set out in these CDS Standard Terms as modified pursuant 
to Part 19, where related cleared CDS Contracts are requested or are to be requested by 

the CDS Clearing Member or Customer to be recorded in a Position Account linked to an 

Individually Segregated Sponsored Account in which CDS Contracts are recorded. They 

further desire to agree to the operation of the Rules and the Procedures in relation to any 

Customer-CM CDS Transactions that may arise following the submission of the related 

CDS Trade Particulars, as further provided for in these CDS Standard Terms.

(6) Clearing Member and Customer have established a Cleared Transactions Master 

Agreement and, if applicable, a related collateral arrangement, whether contained in the 

same or another agreement with respect to cleared transactions, including such CustomerCM CDS Transactions (which Cleared Transactions Master Agreement may be 

supplemented by a cleared derivatives addendum, or similar document, as agreed by 

Clearing Member and Customer and as amended and supplemented by these CDS 

Standard Terms).

(7) These CDS Standard Terms shall apply equally to the Sponsored Principal as they apply 

to a Customer and to the Clearing Member as they apply to a Sponsor, subject to such 

amendments and modifications as are set out in the Rules (including Part 19 of the Rules) 

and Procedures, the Sponsored Principal Clearing Agreement, the Sponsor Agreement 

and section 13 hereof.

CDS STANDARD TERMS:

1. Defined Terms. Terms used but not otherwise defined in these CDS Standard Terms 

shall have the meaning set forth in the Rules or the Procedures, as applicable.

2. Exhibit to Rules. These CDS Standard Terms are published by the Clearing House as an 

Exhibit to the Rules but do not form part of the Rules. Clearing Member and Customer 

agree that any amendments, modifications, restatements or supplements in respect of 

such Exhibit to the Rules (including the withdrawal of any part of these CDS Standard 

Terms) may be effective if made by the Clearing House pursuant to the provisions of 

Rule 109 as if the Exhibit were Rules and as if Rule 109 applied to Customers in addition 

to, and in the same way as it applies to, Clearing Members. At the request of Clearing 

Member or the Clearing House, Customer will enter into a written confirmation of the 

terms of any such amendment, modification, supplement or restatement.

3. Cleared Transactions.

(a) Clearing Member may designate, by specifying that certain CDS Trade 

Particulars submitted to the Clearing House are to be recorded in a Customer 

Position Account, that certain transactions between Clearing Member and 

Customer shall arise at the same time as related CDS Contracts and shall 

constitute Customer-CM CDS Transactions.

(b) Clearing Member and Customer agree that a Customer-CM CDS Transaction 

shall arise automatically and without further action on the part of Clearing 

Member or Customer at the Acceptance Time in respect of the related CDS 

Contract.
(c) The terms of any Customer-CM CDS Transaction shall, save as contemplated by 

these CDS Standard Terms, be identical to those of the related CDS Contract 

between Clearing Member and the Clearing House (as such CDS Contract may be 

amended from time to time in accordance with the Rules and/or CDS Procedures), 

except that:

(i) if the Clearing Member is the protection seller under the CDS Contract it 

shall be the protection buyer under the Customer-CM CDS Transaction 

and vice versa;

(ii) Customer's recourse against Clearing Member shall be limited and 

Clearing Member's obligations to Customer shall be conditional as 

provided for in Section 8(c) below;

(iii) Customer-CM CDS Transactions shall also be subject to these CDS 

Standard Terms and the terms of the Customer-Clearing Member 

Agreement; and

(iv) except where the Settlement and Notices Terms or a Customer-Clearing 

Member Agreement provide for specific timings in respect of the 

performance of obligations:

(1) any obligation of the Clearing Member to the Customer shall not 

be required to be performed until a reasonable period has passed 

after the Clearing Member has received equivalent performance 

from the Clearing House; and

(2) any obligation of the Customer to the Clearing Member may be 

required by the Clearing Member to be performed a reasonable 

period in advance of the Clearing Member becoming obliged to the 

Clearing House in respect of an equivalent obligation.

(d) If any Customer-CM CDS Transactions are governed by a Customer-Clearing 

Member Agreement which is not a separate agreement from any master 

agreement applicable to transactions between Clearing Member and Customer 

other than Customer-CM CDS Transactions ("Non-Cleared Transactions"), 

Clearing Member and Customer shall distinguish in their books and records 

Customer-CM CDS Transactions from Non-Cleared Transactions to the extent 

required to enable them to comply with the Rules, the Procedures and these CDS 

Standard Terms.

(e) For purposes of the Customer-Clearing Member Agreement, in the event of any 

inconsistency among or between the Customer-Clearing Member Agreement, 

these CDS Standard Terms, the Rules and the Procedures with respect to 

Customer-CM CDS Transactions the following provisions shall prevail in the 

following order: (i) first, the Rules from time to time; (ii) second, subject to (m) 

below, the Procedures from time to time; (iii) third, these CDS Standard Terms 

from time to time; and (iv) fourth, the Customer-Clearing Member Agreement.
(f) Customer agrees with Clearing Member that Customer-CM CDS Transactions 

shall be subject to the provisions of the Rules and the Procedures applicable to 

Customer-CM CDS Transactions as such Rules or Procedures are amended, 

modified, supplemented or restated from time to time. In particular but without 

limitation, Customer hereby agrees that it shall be bound by, shall comply with 

and shall facilitate compliance by Clearing Member with the terms and conditions 

set forth in Parts 5 and 9 of the Rules and Rule 202 in so far as they relate to 

Customer-CM CDS Transactions. 

(g) Customer agrees that publication of a Circular by the Clearing House shall 

constitute valid notice by the Clearing House of any matter under or relating to 

the Rules, the Procedures, Customer-CM CDS Transactions or these CDS 

Standard Terms.

(h) Clearing Member and Customer agree that, save in the circumstances 

contemplated by these CDS Standard Terms and as provided for in any CustomerClearing Member Agreement or other agreement between Clearing Member and 

Customer, each Customer-CM CDS Transaction is intended to reflect exactly the 

operation of the related CDS Contract. In any circumstances in which a CDS 

Contract is netted (in whole or in part), terminated or voided under the Rules, the 

related Customer-CM CDS Transaction will also be netted (in whole or in part), 

terminate or be voided by reference to the same price as the CDS Contract is so 

netted, terminated or voided and a payment in respect of such price may be 

payable between Customer and Clearing Member pursuant to the CustomerClearing Member Agreement or as determined by the Clearing Member. 

Thereupon, Customer and Clearing Member shall have no further rights and be 

under no further liability with respect to such Customer-CM CDS Transaction(s) 

(or, if applicable, part thereof) other than in respect of any unpaid payments under 

such Customer-CM CDS Transactions (which shall be payable as and when 

originally payable). Clearing Member may, at its discretion, elect to continue an 

equivalent transaction with Customer as a Non-Cleared Transaction. 

(i) In addition, without limiting any rights that Clearing Member may have under the 

Customer-Clearing Member Agreement, if the Clearing House takes any step, 

including but not limited to the following events or actions, or any such event or 

action otherwise occurs (in each case including but not limited to any change in 

Applicable Law or any action taken by any Regulatory Authority pursuant to 

Applicable Law) in relation to a CDS Contract, Clearing Member, at its option 

and discretion, shall be entitled to take equivalent action (or, if it cannot take 

equivalent action, it is not advisable to do so or equivalent action would not deal 

with the matter in hand, other appropriate action) in good faith and in a 

commercially reasonable manner, in relation to the related Customer-CM CDS 

Transaction and/or against Customer, including but not limited to terminating, 

and/or modifying the non-economic terms of, such Customer-CM CDS 

Transaction and/or making adjustments to any determination of amounts paid or 

payable under the Customer-Clearing Member Agreement:
(i) imposition of a fine or disgorgement payment pursuant to Part 10, any 

arbitral award or any other payment obligation arising other than pursuant 

to the Contract Terms or Parts 5 or 11 of the Rules, where the conduct in 

question is caused by, or in any way due to, the Customer and/or under the 

Customer-CM CDS Transaction;

(ii) any other event or action the effect of which is to create a material 

mismatch between the rights, obligations or exposures as between 

Clearing Member and the Clearing House pursuant to a CDS Contract on 

the one hand and the rights, obligations or exposures as between Clearing 

Member and Customer, including without limitation pursuant to the 

related Customer-CM CDS Transaction, on the other hand; and

(iii) any other event or action the effect of which is to result in any loss, 

liability, cost, claim, damages or expenses being incurred by Clearing 

Member in connection with a CDS Contract where such event or action 

does not form part of the CDS Contract (and so is not reflected in the 

related Customer-CM CDS Transaction). 

(j) Notwithstanding Section 3(c), Clearing Member and Customer may agree 

different settlement arrangements between Clearing Member and Customer so as 

to accommodate any particular requirements of Clearing Member or Customer. 

(k) Any price or rate determined by the Clearing House as Calculation Agent or 

otherwise under the Rules in relation to a CDS Contract shall be used as the same 

price or rate by the Clearing Member in relation to the related Customer-CM CDS 

Transaction(s).

(l) Customer shall not be entitled to serve any type of notice under a Customer-CM 

CDS Transaction in circumstances in which or by means that the Clearing 

Member would not, by virtue of the Rules or CDS Procedures, be entitled to serve 

a corresponding notice on the Clearing House in relation to the corresponding 

CDS Contract. Clearing Member and the Clearing House shall be entitled to treat 

any service of a notice in breach of this provision as invalid.

(m) Clearing Member may, but (subject as otherwise agreed, including but not limited 

to pursuant to the Settlement and Notices Terms) is not obliged to, deliver any 

Electronic Notices in relation to Customer-CM CDS Transactions at the times 

allowed under the Rules and Procedures.

(n) These CDS Standard Terms may, pursuant to the process provided for in 

paragraph 2 of these CDS Standard Terms, from time to time, incorporate 

additional standard terms published by the Clearing House so as to establish 

mechanics for dealing with the relationship between CDS Contracts and 

Customer-CM CDS Transactions until such time as market infrastructure 

solutions are available to address the relevant operational issues. Such additional 

standard terms shall form part of these CDS Standard Terms, may (if so specified) 
prevail over the applicable Procedures in respect of Customer-CM CDS 

Transactions and may be amended and/or withdrawn only as provided for in 

paragraph 2 of these CDS Standard Terms. Initially, such additional standard 

terms are the Settlement and Notices Terms as published by the Clearing House 

as an Exhibit to the Rules.

(o) On each date on which the Customer has any open Customer-CM CDS 

Transaction, the Customer shall represent that the Clearing House is not prevented 

from entering into any Contract nor is the Clearing Member prevented from 

entering into any Customer-CM CDS Transaction as a result of any sanctions 

administered or imposed by the European Union, H.M. Treasury, the Office of 

Foreign Assets Control of the U.S. Department of the Treasury, the United 

Nations Security Council or any other relevant Governmental Authority affecting 

the Customer or any of its assets.

4. Margin Requirements.

(a) Subject as agreed otherwise in the Customer-Clearing Member Agreement, 

Clearing Member shall be entitled to require each of its Customers in respect of 

CDS Contracts to provide margin (or permitted cover in respect thereof) in an 

amount no less than the amount of Margin of each relevant type required on a 

gross basis by the Clearing House with respect to the relevant Open Contract 

Position(s), separately for each of its Customer Accounts. For this purpose, 

"gross basis" shall mean that the margin requirement will be determined giving 

effect to any offset permitted under the Rules of such Open Contract Positions 

against Open Contract Positions relating to the same Set and Customer in the 

same Customer Account, but without giving effect to any offset or permitted 

offset of such Open Contract Positions against Open Contract Positions relating to 

a different Customer.

(b) Customer agrees that Clearing Member may use any margin provided by 

Customer under the Customer-Clearing Member Agreement to satisfy Clearing 

Member's obligations to the Clearing House under Rule 504 and Rule 505 or 

Part 11. Customer shall not be entitled to assert any equitable or other claim to 

any such collateral and/or Permitted Cover that has been transferred to the 

Clearing House.

5. Events of Default and Termination. 

(a) In the event of the declaration by the Clearing House of an Event of Default (as 

defined in the Rules) with respect to Clearing Member (such an event being an 

"ICE-Declared Default"), whether or not any other default (howsoever defined 

or described) has also occurred under the Customer-Clearing Member Agreement 

or otherwise, Customer shall not be entitled to exercise any remedies with respect 

to Customer-CM CDS Transactions pursuant to the Customer-Clearing Member 

Agreement or otherwise, except as provided herein (and any other remedies being 
exercised at the time of the declaration of such ICE-Declared Default shall cease 

and be superseded by the applicable provisions of these CDS Standard Terms).

(b) If an ICE-Declared Default occurs at a time when Clearing Member has not 

already terminated the relevant Customer-CM CDS Transactions by reason of the 

occurrence of an event of default or termination event relating to Customer, 

Clearing Member may not take any action against Customer that may interfere 

with the Default Portability Rule resulting in Customer discharging its obligations 

to Clearing Member as provided for in Section 6(e) below. Save for such 

restriction, nothing in these CDS Standard Terms will limit Clearing Member's 

remedies under the Customer-Clearing Member Agreement in respect of 

Customer-CM CDS Transactions if an event of default or termination event (or 

similar concept) with respect to Customer occurs under the Customer-Clearing 

Member Agreement. 

6. Post-default Portability; Termination and Valuation of Cleared Transactions.

(a) Customer shall indicate to Clearing Member in such manner as the Clearing 

House may direct:

(i) Customer's preference as to whether, in the event of an ICE-Declared 

Default, it would prefer the Clearing House to apply the Default 

Portability Rules and related processes to the Customer's Customer-CM 

CDS Transactions and related CDS Contracts; and 

(ii) its Default Portability Preference.

Any Default Portability Preference notified by Customer must apply to all 

Customer-CM CDS Transactions with Clearing Member. Any such Default 

Portability Preference by Customer may be amended by notice to Clearing 

Member (who will, in turn, notify the Clearing House in accordance with the 

Rules and the Procedures), at any time prior to the occurrence of an ICE-Declared 

Default in respect of Clearing Member or, at the discretion of the Clearing House, 

by notice directly to the Clearing House in accordance with the Rules and the 

Procedures, following the occurrence of such an ICE-Declared Default. 

(b) Unless it has notified the Clearing Member and Clearing House in writing to the 

contrary, Customer hereby consents and agrees that, in the event of an ICEDeclared Default, whether or not Customer has specified a Default Portability 

Preference, the Clearing House shall be entitled (but shall not be obliged) to apply 

the Default Portability Rules with respect to CDS Contracts to which Clearing 

Member and Customer's Customer-CM CDS Transactions relate, including by 

taking any of the following steps:

(i) transferring, assigning, selling or novating Customer-CM CDS

Transactions (and related CDS Contracts) to any Transferee Clearing 

Member;
(ii) terminating Customer-CM CDS Transactions (and related CDS Contracts) 

and arranging for the entry into of new replacement Customer-CM CDS

Transactions (and related CDS Contracts) with any Transferee Clearing 

Member (by way of novation or otherwise); and/or

(iii) transferring Margin (in such amount as the Clearing House may 

determine) credited to the Customer Margin Account of Clearing Member 

to the Customer Margin Account of the Transferee Clearing Member and, 

if such a transfer occurs, Clearing Member's obligations to Customer in 

respect of the transferred Margin shall be fully discharged.

(c) In the event that the Clearing House arranges for a replacement CDS Contract and 

related Customer-CM CDS Transaction pursuant to Section 6(b)(ii), the 

Customer-CM CDS Transaction with the Transferor Clearing Member shall be 

deemed terminated at the same time that the replacement CDS Contract and 

related Customer-CM CDS Transaction is entered into. Customer shall take no 

action, including but not limited to attempting to obtain a court order, that could 

interfere with the ability of the Clearing House to take action contemplated by 

Part 9 of the Rules, including, without limitation, the Transfer of CDS Contracts 

and Customer-CM CDS Transactions, the transfer of any related Margin or other 

collateral or cover (or contingent cover) for the same or the imposition of the 

Transferee Clearing Member's form of Customer-Clearing Member Agreement 

where so permitted under the Default Portability Rules. 

(d) Customer hereby appoints the Clearing House as its lawful agent and attorney-infact to take such actions on behalf of the Customer as the Clearing House 

determines necessary or appropriate in order to effect the Default Portability 

Rules with respect to Customer's Customer-CM CDS Transactions and the 

Customer Margin Account, including executing any document or instrument with 

respect to the Transfer or replacement of the Customer-CM CDS Transaction 

and/or exercising rights and remedies to terminate or Transfer Customer-CM CDS

Transactions, including (without limitation) the execution of any Transfer, or the 

exercise of any termination notice or the transfer of amounts recorded in the 

Customer Margin Account. Such appointment shall not be revoked by Customer. 

Customer shall take such actions as the Clearing House and/or a Transferee 

Clearing Member may request to give full effect to the Default Portability Rules, 

including without limitation execution of documentation confirming or agreeing 

to any terms specified by Transferee Clearing Member pursuant to Rule 904(j).

(e) In connection with any Transfer of Customer-CM CDS Transactions pursuant to 

the Default Portability Rules, any termination payments owed between Customer 

and Clearing Member in respect of the relevant Customer-CM CDS Transactions 

(determined in accordance with the Rules and the provisions of the CustomerClearing Member Agreement), any termination payments owed between Clearing 

Member and the Clearing House in respect of the related CDS Contracts (which 

in each case shall be determined by the Clearing House pursuant to its default 

rules), any upfront Mark-to-Market Margin payments owed between Customer 
and the Transferee Clearing Member with respect to the initiation of the 

replacement cleared transactions and any upfront Mark-to-Market Margin 

payments owed between such Transferee Clearing Member and the Clearing 

House with respect to the initiation of replacement CDS Contracts shall be equal. 

(f) In the event of an ICE-Declared Default: 

(i) There will be a minimum period, after issuance by the Clearing House of a 

Circular including a Default Notice naming a Clearing Member, for 

Customers and their Transferee Clearing Members to notify the Clearing 

House of their agreement that Contracts and/or Margin can be Transferred 

to a Transferee Clearing Member pursuant to the Default Portability Rules 

("Porting Notice"). For Customers other than Sponsored Principals, a 

Porting Notice must be received by the Clearing House within 4 hours of 

the Default Notice being published in order to be assured of being acted 

upon, subject to the below. For Sponsored Principals, the minimum 

period for receipt of Porting Notices is specified in Rule 904. Any Porting 

Notice, in order to be valid, must:

(A) be in writing;

(B) concern and be duly authorised and executed by a Customer who would 

not, if it were a Clearing Member, be capable of being declared a 

Defaulter;

(C) concern and be duly authorised and executed by a Transferee Clearing 

Member who is not a Defaulter;

(D) be delivered to the Clearing House electronically in the form and to the 

address specified by the Clearing House;

(E) concern positions which have not already been closed out or Transferred; 

and

(F) otherwise comply with the requirements of Part 9 of the Rules.

In the case of an Individually Segregated Margin-flow Co-mingled Account or 

Individually Segregated Sponsored Account, a Porting Notice must be in respect 

of the single Customer interested in the Account in order to be valid. In the case 

of a Customer Account that is neither an Individually Segregated Margin-flow 

Co-mingled Account nor an Individually Segregated Sponsored Account, the 

Porting Notice must be in respect of and executed by all Customers interested in 

the Account in order to be valid.

Subject to Rule 904(c), the Clearing House will act upon Porting Notices received 

by it within the 4 hour period specified above. The Clearing House may also act 

upon other Porting Notices received by it after the end of such period, at its 

discretion. However, Customers and Transferee Clearing Members acknowledge 
that due to operational constraints and depending on market conditions, it may not 

be possible for the Clearing House to process all Porting Notices (whether 

received within the 4 hour period or thereafter) within a reasonable period of time. 

Porting Notices received within the initial 4 hour period will be prioritised over 

any other notice. The Clearing House may select Porting Notices to be dealt with 

in such order as it sees fit, based on such criteria as it determines are relevant, 

including completeness and due execution of Default Notices, legibility, time of 

receipt, size of positions, lawfulness of porting, Customer jurisdiction of 

incorporation or place of business, whether risk increasing or risk decreasing and 

satisfaction of the requirements of Part 9 of the Rules. The Clearing House will 

not be obliged to comply with any Porting Notice which has not been acted upon 

by it:

(A) if the Default Notice was issued before 13:00 hrs on a Business Day prior 

to the close of business on the same Business Day;

(B) if the Default Notice was issued on a day which is not a Business Day 

prior to close of business on the next following Business Day; or

(C) if the Default Notice is issued after 13:00 hrs on a Business Day prior to 

noon of the next following Business Day.

At the end of this period, the Clearing House may, at its sole discretion, terminate 

any open Contracts and related assets of the Defaulter or undertake other 

Transfers under consents provided for in the Rules and these Standard Terms. 

The deadlines for the delivery of prioritised Porting Notices or for the Clearing 

House to act upon any Porting Notices may be extended at the Clearing House's 

discretion by Circular. If, as of the end of the period for acting upon Default 

Notices, any Customer-CM CDS Transactions have not been Transferred pursuant 

to the Default Portability Rules, such Customer-CM CDS Transactions shall be 

deemed terminated, and in such case an early termination date (or similar 

concept) in respect of the Customer-CM CDS Transactions shall occur under the 

Customer-Clearing Member Agreement, on the applicable date on which the 

Clearing House terminates the related CDS Contracts pursuant to Part 9 of the 

Rules. 

(ii) Notwithstanding anything to the contrary in the Customer-Clearing 

Member Agreement or any other agreement or arrangement between 

Clearing Member and Customer, the amount payable pursuant to the 

Customer-Clearing Member Agreement in respect of the termination of 

the Customer-CM CDS Transactions shall be determined on the basis of 

the termination value calculated by the Clearing House for the 

corresponding CDS Contracts pursuant to Part 9 of the Rules but subject 

always, in the case of amounts due from Clearing Member, to Section 8(c) 

below. Customer hereby agrees and acknowledges that any determination 

made by the Clearing House with respect to the termination value of a 

CDS Contract or a Customer-CM CDS Transaction shall be conclusive 
and binding upon Customer for this purpose to the same extent that any 

'net sum' declared by the Clearing House is conclusive and binding on 

Clearing Member. The obligation of a Clearing Member to a Customer 

under a Customer-CM CDS Transaction shall be discharged to the extent 

that the Clearing House makes payment of any net sum or any part thereof 

direct to the Customer.

(iii) Customer acknowledges and agrees that the allocation and, subject to 

Applicable Law, return of available amounts in the relevant Customer 

Margin Account shall be governed by Part 9 of the Rules, which may 

reduce or defer Clearing Member's obligations to Customer.

(g) For the avoidance of doubt, nothing in these CDS Standard Terms shall prevent 

other amounts being due and payable between Clearing Member and Customer as 

provided for in the Customer-Clearing Member Agreement. 

7. Consents to Disclosure. 

Customer hereby consents to:

(i) the Clearing House having the right to obtain information in relation to the 

Customer-CM CDS Transactions from any CDS Trade Execution/Processing 

Platform, Repository or Deriv/SERV so as to enable the Clearing House to 

identify which CDS Contracts and Margin or Permitted Cover between the 

Clearing House and Clearing Member relate to such Customer-CM CDS 

Transactions;

(ii) Clearing Member making any disclosures in connection with Customer and 

Customer-CM CDS Transactions as are required by the Rules and/or Procedures 

or as are required by Applicable Law;

(iii) disclosures to, use by and disclosures by the Clearing House of information 

relating to Customer (including the Personal Data of its Data Subjects) pursuant to

Rule 106; and

(iv) submissions of and other actions relating to data concerning Customer-CM CDS 

Transactions by the Clearing House pursuant to Section 12, the Rules and the 

Procedures. 

8. Certain Limitations. 

(a) Customer agrees and acknowledges for the benefit of the Clearing House and 

Clearing Member that: (i) the liability of the Clearing House to Customer shall be 

excluded and limited as set forth in Rule 111 and specifically that the Clearing 

House shall have no liability or obligation to Customer in respect of a CustomerCM CDS Transaction or otherwise nor shall it have any duty of care directly to 

Customer, in any case whether in tort, contract, restitution, in respect of any 

Contract, pursuant to the Rules, pursuant to a Clearing Membership Agreement, 
pursuant to these CDS Standard Terms or otherwise, save for any liability which by 

law may not be excluded, (ii) in no event shall Customer attempt to interfere with 

the ability of the Clearing House to exercise its rights hereunder or as set forth in 

the Rules, the Procedures or any Clearing Membership Agreement, and (iii) it is not 

entitled to, and will not, petition a court or take any action or commence any 

proceedings against the Clearing House, directly or indirectly and will if any such 

action is taken fully indemnify the Clearing House against any costs, losses or other 

consequences of Customer taking any such action. Customer agrees that Clearing 

Member acts as principal at all times in all its Contracts with the Clearing House.

(b) The Clearing House shall have no responsibility for the compliance by Clearing 

Member or Customer with its obligations under a Customer-Clearing Member 

Agreement. The Clearing House shall be under no obligation to enquire into, and 

shall be fully protected in relying on, any instructions or directions with respect to a 

Customer Account or the assets recorded therein or transferred thereto or therefrom 

under the Rules received from a Person that the Clearing House believes to be 

authorised to act on behalf of Clearing Member.

(c) Customer agrees and acknowledges that the performance and payment obligations 

of Clearing Member to Customer are limited by and contingent on the actual 

performance or payment by the Clearing House under the related CDS Contract and 

that Clearing Member shall have no responsibility for the compliance by the 

Clearing House (or any person other than that Clearing Member) with its 

obligations, including without limitation, under any CDS Contract, the Rules or the 

Procedures. In the event that the Clearing House defaults in or defers or varies the 

payment or performance of any obligation otherwise owed by it in respect of a CDS 

Contract corresponding to a Customer-CM CDS Transaction (including, without 

limitation, any shortfall in repayment of Permitted Cover or any recovery of less 

than 100% of amounts owed by the Clearing House or property provided to the 

Clearing House in circumstances in which Rule 912 applies), Clearing Member 

will be entitled to make a corresponding deduction, withholding or other reduction

from, or tolling or deferring of, any payment or performance otherwise owed by it 

under such corresponding Customer-CM CDS Transactions and/or to make its 

performance under such Customer-CM CDS Transactions conditional on 

performance by the Clearing House under the related CDS Contract (and where any 

such deduction may be attributable to both Customer-CM CDS Transactions and to 

Customer Account Contracts of other Customers, Clearing Member shall allocate 

such deduction among such contracts on a pro rata basis) provided that if such 

defaulted or delayed payment or performance is subsequently obtained by Clearing 

Member from the Clearing House (in whole or in apart), Clearing Member shall 

thereupon make the corresponding payment or performance (or portion thereof) to 

Customer.

9. Certain Tax Matters. 

Subject always, and without prejudice, to any provisions of a Customer-Clearing Member 

Agreement: (i) if Clearing Member is required to pay to Clearing House any additional 
amount under Rule 301(j) or the Contract Terms with respect to a CDS Contract

corresponding to a Customer-CM CDS Transaction, Customer shall be obliged to pay to 

Clearing Member an amount equal to such additional amount (or the applicable portion 

thereof), but without duplication of any additional amount payable by Customer under 

any relevant provision of the Customer-Clearing Member Agreement, (ii) for the 

avoidance of doubt, and without prejudice to the above, if Clearing House deducts or 

withholds any amount otherwise payable to Clearing Member on a CDS Contract

pursuant to Rule 301 or the Contract Terms, Clearing Member shall be entitled to make a 

corresponding deduction from any amount otherwise payable by Clearing Member to 

Customer under a corresponding Customer-CM CDS Transaction, and (iii) where such 

additional amount or deduction may be attributable to both Customer-CM CDS

Transactions and to Customer-CM CDS Transactions of other customers, Clearing 

Member shall allocate such additional amount or deduction among such contracts on a 

pro rata basis. 

10. Reliance on CDS Trade Particulars and submissions to Deriv/SERVor etc.

The Clearing House shall be entitled to assume, without enquiry, that (i) at each 

Acceptance Time at which a Customer-CM CDS Transaction arises, the respective 

obligations of Clearing Member and Customer under such Customer-CM CDS 

Transaction constitutes its legal, valid and binding obligations enforceable in accordance 

with their respective terms, subject to applicable bankruptcy, reorganisation, insolvency, 

moratorium or similar laws affecting creditors' rights generally and subject, as to 

enforceability, to equitable principles in general application (regardless of whether 

enforcement is sought in a proceeding in equity or at law); (ii) where Customer or 

Clearing Member are acting out of an office in the United States of America, each of 

Clearing Member and Customer represents to the other and to the Clearing House that it 

is an "eligible contract participant" as defined in the US Commodity Exchange Act, as 

amended and (iii) that the Clearing House is duly authorised by Clearing Member and 

Customer to submit, in accordance with the Rules and the Procedures, details of any CDS 

Trade Particulars or Customer-CM CDS Transaction to Deriv/SERV and to amend or 

delete such records from time to time in accordance with the Rules and the Procedures, in 

each case subject to Applicable Law. For the avoidance of doubt, Clearing Member shall 

not take any actions in Deriv/SERV of a nature specified in this paragraph and neither the 

Clearing House nor Clearing Member will be liable to Customer for any action or 

omission of the Clearing House as a result of having made such submissions. The sole 

remedy of Customer in the case of any error shall be to request that Clearing Member 

request the Clearing House to amend or correct any error pursuant to the Rules or 

Procedures.

11. Third Party Rights. 

The Clearing House shall be entitled to rely upon and enjoy the benefit of the 

representations, warranties, agreements, obligations and covenants of the Customer under 

these CDS Standard Terms and shall have the right to enforce such representations, 

warranties, agreements, obligations and covenants against the parties under the Contracts 

(Rights of Third Parties) Act 1999. Other than as set out in this Section 11, no persons 
other than Clearing Member and Customer shall have the right to enforce any provision 

of these CDS Standard Terms under the Contracts (Rights of Third Parties) Act 1999 or 

otherwise.

12. Miscellaneous.

(a) Entire Agreement. These CDS Standard Terms (together with the CustomerClearing Member Agreement and the Rules and the Procedures incorporated by 

reference herein) constitutes the entire agreement and understanding of Customer 

and Clearing Member with respect to its subject matter and supersedes all oral 

communication and prior writings (except as otherwise provided herein) with 

respect thereto.

(b) Headings. The headings used in these CDS Standard Terms are for convenience of 

reference only and are not to affect the construction of or to be taken into 

consideration in interpreting these CDS Standard Terms.

(c) Governing Law. Any contractual or non-contractual disputes arising out of or in 

connection with the Customer-Clearing Member Agreement are governed by and shall be 

construed in accordance with the law specified in the Customer-Clearing Member 

Agreement and subject to the non-exclusive jurisdiction of the courts specified in the 

Cleared Transactions Master Agreement provided that: (i) Sections 6(d) and 11 of these 

CDS Standard Terms shall be governed by and shall be construed in accordance with the 

laws of England and Wales and are subject to arbitration under Rule 117 as if such 

provisions of these CDS Standard Terms were Rules and the parties were bound thereby 

as if they were both Clearing Members, notwithstanding any choice of law or jurisdiction 

in the Cleared Transactions Master Agreement; and (ii) each provision of the Rules and 

the Procedures incorporated by reference herein or in the Customer-Clearing Member 

Agreement shall be governed by and construed in accordance with the laws of England 

and Wales, as set forth in the relevant governing law provision of such document (it 

being understood that no Pledged Collateral Matters are of relevance to Non-FCM/BD 

Clearing Members). Clearing Member and Customer hereby waive any right to object to 

any such proceedings on the basis of forum non conveniens or otherwise. 

13. Modifications where Clearing Member is a Sponsor and Customer is a Sponsored 

Principal.

(a) This paragraph 13 shall apply only in respect of an Individually Segregated Sponsored 

Account, notwithstanding any other provisions of these CDS Standard Terms to the 

contrary.

(b) The Sponsored Principal and Sponsor agree that, save in the circumstances contemplated 

by these CDS Standard Terms and as provided for in any Customer-Clearing Member 

Agreement or other agreement between Sponsored Principal and Sponsor, each 

Customer-CM CDS Transaction is intended to reflect exactly the obligations of the 

Clearing Member in respect of the related CDS Contract in the manner set forth in Part 

19 of the Rules. Any reference to a CDS Contract or Customer-CM CDS Transaction or 
the relationship between a Sponsored Principal and Sponsor shall be construed in 

accordance with recitals 4 to 8, Part 19 of the Rules, the Sponsored Principal Clearing 

Agreement and the Sponsor Agreement.

(c) The following provisions of these CDS Standard Terms shall be modified as set out 

below in connection with an Individually Segregated Sponsored Account:

(i) paragraph 4(a) shall not apply if the Nominated Bank Account used for the 

Individually Segregated Sponsored Account is an account of the Sponsored 

Principal;

(ii) the second sentence of paragraph 4(b) shall not apply; and the rights of the 

Sponsored Principal to the assets recorded in the Individually Segregated 

Sponsored Account shall be as set out in the Rules;

(iii) paragraphs 6(b)-(e) shall be construed as being modified to the extent that the 

Default Portability Rules and default rules are modified for Sponsors and 

Sponsored Principals pursuant to Rule 904 and in particular for purposes of 

paragraph 6(b)(iii) the Clearing House shall in addition be entitled to accept the 

appointment of a new Sponsor pursuant to Rule 904; and

(iv) paragraphs 8(a)(i) and (iii) and the provisions of the Rules shall instead apply to 

determine the liability of the Clearing House to the Sponsored Principal.

(d) The Sponsored Principal shall be deemed to represent and warrant to the Sponsor, upon 

their first date of its holding such status and on each subsequent date that it is a 

Sponsored Principal with such Sponsor, that it meets all of the criteria set out in Rule 

1901(b) and (d) and is in compliance with all of its obligations under these Rules.

(e) Any asset received by the Sponsor from the Clearing House in respect of an Individually 

Segregated Sponsored Account shall be treated by the Sponsor and Sponsored Principal 

as if it had been received by the Sponsor from the Sponsored Principal as collateral (or 

cover for collateral) pursuant to the Cleared Transactions Master Agreement and these 

CDS Standard Terms.
NYDOCS01/1643340.2 374

EXHIBIT 2

ICE CLEAR EUROPE LIMITED

CUSTOMER-CM F&O TRANSACTIONS STANDARD TERMS 

BACKGROUND:

In respect of a Non-FCM/BD Clearing Member and Customer using a Customer Account other 

than an Individually Segregated Sponsored Account:

(1) Clearing Member is a Non-FCM/BD Clearing Member, as defined in the rules (together 

with the procedures, as interpreted in accordance with guidance and circulars thereunder, 

the "Rules") of ICE Clear Europe Limited (the "Clearing House") and is thereby 

permitted to submit certain F&O Transactions which result in a cleared F&O Contract 

arising in accordance with the Rules and the Procedures of the Clearing House.

(2) Clearing Member and Customer are or intend to become party to one or more CustomerCM Transactions, where related cleared F&O Contracts are requested or are to be 

requested by the F&O Clearing Member to be recorded in a Customer Position Account 

in which F&O Contracts may be recorded. They further desire to agree to the operation 

of the Rules and the Procedures in relation to any Customer-CM F&O Transactions that 

may arise following the submission of the related F&O Transactions, as further provided 

for in these Customer-CM F&O Transactions Standard Terms (these "F&O Standard 

Terms").

(3) Clearing Member and Customer have established a "master" futures account, clearing 

agreement or other master agreement (the "Cleared Transactions Master Agreement", 

as amended from time to time) and, if applicable, a related collateral arrangement, 

whether contained in the same or another agreement with respect to cleared transactions, 

including such Customer-CM F&O Transactions (which Cleared Transactions Master 

Agreement may be supplemented by a cleared derivatives addendum, or similar 

document, as agreed by Clearing Member and Customer (together, the "CustomerClearing Member Agreement") and as amended and supplemented by these F&O 

Standard Terms).

In respect of a Non-FCM/BD Clearing Member and Customer using an Individually Segregated 

Sponsored Account:

(4) Clearing Member is a Non-FCM/BD Clearing Member and Customer is a Sponsored 

Principal, in each case as defined in the Rules, and each of them is thereby permitted to 

submit certain F&O Transactions which will result in a cleared F&O Contract, governed 

by Part 19 arising in accordance with the Rules of the Clearing House.

(5) Clearing Member and Customer are or intend to become party to one or more CustomerCM Transactions on the terms set out in these F&O Standard Terms as modified pursuant 
NYDOCS01/1643340.2 375

to Part 19, where related cleared F&O Contracts are requested or are to be requested by 

the F&O Clearing Member or Customer to be recorded in a Position Account linked to an 

Individually Segregated Sponsored Account in which F&O Contracts are recorded. They 

further desire to agree to the operation of the Rules and the Procedures in relation to any 

Customer-CM F&O Transactions that may arise following the submission of the related 

F&O Transaction, as further provided for in these F&O Standard Terms.

(6) Clearing Member and Customer have established a Cleared Transactions Master 

Agreement and, if applicable, a related collateral arrangement, whether contained in the 

same or another agreement with respect to cleared transactions, including such CustomerCM F&O Transactions (which Cleared Transactions Master Agreement may be 

supplemented by a cleared derivatives addendum, or similar document, as agreed by 

Clearing Member and Customer and as amended and supplemented by these F&O 

Standard Terms).

(7) These F&O Standard Terms shall apply equally to the Sponsored Principal as they apply 

to a Customer and to the Clearing Member as they apply to a Sponsor, subject to such 

amendments and modifications as are set out in the Rules (including Part 19 of the Rules) 

and Procedures, the Sponsored Principal Clearing Agreement, the Sponsor Agreement 

and section 13 hereof.

F&O STANDARD TERMS:

1. Defined Terms. Terms used but not otherwise defined in these F&O Standard Terms 

shall have the meaning set forth in the Rules or the Procedures, as applicable.

2. Exhibit to Rules. These F&O Standard Terms are published by the Clearing House as 

an Exhibit to the Rules but do not form part of the Rules. Clearing Member and 

Customer agree that any amendments, modifications, restatements or supplements in 

respect of such Exhibit to the Rules (including the withdrawal of any part of these F&O 

Standard Terms) may be effective if made by the Clearing House pursuant to the 

provisions of Rule 109 as if the Exhibit were Rules and as if Rule 109 applied to 

Customers in addition to, and in the same way as it applies to, Clearing Members. At the 

request of Clearing Member or the Clearing House, Customer will enter into a written 

confirmation of the terms of any such amendment, modification, supplement or 

restatement.

3. Cleared Transactions.

(a) Clearing Member may designate, by specifying that certain F&O Transactions

submitted to the Clearing House are to be recorded in a Customer Position 

Account, that certain transactions between Clearing Member and Customer shall 

arise at the same time as related F&O Contracts and shall constitute CustomerCM F&O Transactions.

(b) Clearing Member and Customer agree that a Customer-CM F&O Transaction 

shall arise automatically and without further action on the part of Clearing 
NYDOCS01/1643340.2 376

Member or Customer at the Acceptance Time in respect of the related F&O

Contract.

(c) The terms of any Customer-CM F&O Transaction shall, save as contemplated by 

these F&O Standard Terms, be identical to those of the related F&O Contract 

between Clearing Member and the Clearing House (as such F&O Contract may be 

amended from time to time in accordance with the Rules and/or Procedures), 

except that:

(i) if the Clearing Member is the seller under the F&O Contract it shall be the 

buyer under the Customer-CM F&O Transaction and vice versa;

(ii) Customer's recourse against Clearing Member shall be limited and 

Clearing Member's obligations to Customer shall be conditional as 

provided for in Section 8(c) below; 

(iii) Customer-CM F&O Transactions shall also be subject to these F&O 

Standard Terms and the terms of the Customer-Clearing Member 

Agreement; and

(iv) except where the Settlement and Notices Terms or a Customer-Clearing

Member Agreement provide for specific timings in respect of the 

performance of obligations:

(1) any obligation of the Clearing Member to the Customer shall not 

be required to be performed until a reasonable period has passed 

after the Clearing Member has received equivalent performance 

from the Clearing House; and

(2) any obligation of the Customer to the Clearing Member may be 

required by the Clearing Member to be performed a reasonable 

period in advance of the Clearing Member becoming obliged to the 

Clearing House in respect of an equivalent obligation.

(d) If any Customer-CM F&O Transactions are governed by a Customer-Clearing 

Member Agreement which is not a separate agreement from any master 

agreement applicable to transactions between Clearing Member and Customer 

other than Customer-CM F&O Transactions ("Non-Cleared Transactions"), 

Clearing Member and Customer shall distinguish in their books and records 

Customer-CM F&O Transactions from Non-Cleared Transactions to the extent 

required to enable them to comply with the Rules, the Procedures and these F&O 

Standard Terms.

(e) For purposes of the Customer-Clearing Member Agreement, in the event of any 

inconsistency among or between the Customer-Clearing Member Agreement, 

these F&O Standard Terms, the Rules and the Procedures with respect to 

Customer-CM F&O Transactions the following provisions shall prevail in the 

following order: (i) first, the Rules from time to time; (ii) second, subject to (m) 
NYDOCS01/1643340.2 377

below, the Procedures from time to time; (iii) third, these F&O Standard Terms 

from time to time; and (iv) fourth, the Customer-Clearing Member Agreement.

(f) Customer agrees with Clearing Member that Customer-CM F&O Transactions 

shall be subject to the provisions of the Rules and the Procedures applicable to 

Customer-CM F&O Transactions as such Rules or Procedures are amended, 

modified, supplemented or restated from time to time. In particular but without 

limitation, Customer hereby agrees that it shall be bound by, shall comply with 

and shall facilitate compliance by Clearing Member with the terms and conditions 

set forth in Parts 5 and 9 of the Rules and Rule 202 in so far as they relate to 

Customer-CM F&O Transactions. 

(g) Customer agrees that publication of a Circular by the Clearing House shall 

constitute valid notice by the Clearing House of any matter under or relating to 

the Rules, the Procedures, Customer-CM F&O Transactions or these F&O 

Standard Terms.

(h) Clearing Member and Customer agree that, save in the circumstances 

contemplated by these F&O Standard Terms and as provided for in any 

Customer-Clearing Member Agreement or other agreement between Clearing 

Member and Customer, each Customer-CM F&O Transaction is intended to 

reflect exactly the operation of the related F&O Contract. In any circumstances in 

which an F&O Contract is netted (in whole or in part), terminated or voided under 

the Rules, the related Customer-CM F&O Transaction will also be netted (in 

whole or in part), terminate or be voided by reference to the same price as the 

F&O Contract is so netted, terminated or voided and a payment in respect of such 

price may be payable between Customer and Clearing Member pursuant to the 

Customer-Clearing Member Agreement or as determined by the Clearing 

Member. Thereupon, Customer and Clearing Member shall have no further rights 

and be under no further liability with respect to such Customer-CM F&O

Transaction(s) (or, if applicable, part thereof) other than in respect of any unpaid 

payments under such Customer-CM F&O Transactions (which shall be payable as 

and when originally payable). Clearing Member may, at its discretion, elect to 

continue an equivalent transaction with Customer as a Non-Cleared Transaction. 

(i) In addition, without limiting any rights that Clearing Member may have under the 

Customer-Clearing Member Agreement, if the Clearing House takes any step, 

including but not limited to the following events or actions, or any such event or 

action otherwise occurs (in each case including but not limited to any change in 

Applicable Law or any action taken by any Regulatory Authority pursuant to 

Applicable Law) in relation to an F&O Contract, Clearing Member, at its option 

and discretion, shall be entitled to take equivalent action (or, if it cannot take 

equivalent action, it is not advisable to do so or equivalent action would not deal 

with the matter in hand, other appropriate action) in good faith and in a 

commercially reasonable manner, in relation to the related Customer-CM F&O

Transaction and/or against Customer, including but not limited to terminating, 

and/or modifying the non-economic terms of, such Customer-CM F&O
NYDOCS01/1643340.2 378

Transaction and/or making adjustments to any determination of amounts paid or 

payable under the Customer-Clearing Member Agreement:

(i) imposition of a fine or disgorgement payment pursuant to Part 10, any 

arbitral award or any other payment obligation arising other than pursuant 

to the Contract Terms or Parts 5 or 11 of the Rules, where the conduct in 

question is caused by, or in any way due to, the Customer and/or under the 

Customer-CM F&O Transaction;

(ii) any other event or action the effect of which is to create a material 

mismatch between the rights, obligations or exposures as between 

Clearing Member and the Clearing House pursuant to an F&O Contract on 

the one hand and the rights, obligations or exposures as between Clearing 

Member and Customer, including without limitation pursuant to the 

related Customer-CM F&O Transaction, on the other hand; and

(iii) any other event or action the effect of which is to result in any loss, 

liability, cost, claim, damages or expenses being incurred by Clearing 

Member in connection with an F&O Contract where such event or action 

does not form part of the F&O Contract (and so is not reflected in the 

related Customer-CM F&O Transaction). 

(j) Notwithstanding Section 3(c), Clearing Member and Customer may agree 

different settlement arrangements between Clearing Member and Customer so as 

to accommodate any particular requirements of Clearing Member or Customer. 

(k) Any price or rate determined by the Clearing House under the Rules in relation to 

an F&O Contract shall be used as the same price or rate by the Clearing Member 

in relation to the related Customer-CM F&O Transaction(s).

(l) Customer shall not be entitled to serve any type of notice under a Customer-CM 

F&O Transaction in circumstances in which or by means that the Clearing 

Member would not, by virtue of the Rules or Procedures, be entitled to serve a 

corresponding notice on the Clearing House in relation to the corresponding F&O

Contract. Clearing Member and the Clearing House shall be entitled to treat any 

service of a notice in breach of this provision as invalid.

(m) Clearing Member may, but (subject as otherwise agreed) is not obliged to, deliver 

any electronic notices in relation to Customer-CM F&O Transactions at the times 

allowed under the Rules and Procedures.

(n) These F&O Standard Terms may, pursuant to the process provided for in 

paragraph 2 of these F&O Standard Terms, from time to time, incorporate 

additional standard terms published by the Clearing House so as to establish 

mechanics for dealing with the relationship between F&O Contracts and 

Customer-CM F&O Transactions until such time as market infrastructure 

solutions are available to address the relevant operational issues. Such additional 

standard terms shall form part of these F&O Standard Terms, may (if so 
NYDOCS01/1643340.2 379

specified) prevail over the applicable Procedures in respect of Customer-CM 

F&O Transactions and may be amended and/or withdrawn only as provided for in 

paragraph 2 of these F&O Standard Terms.

(o) On each date on which the Customer has any open Customer-CM F&O

Transaction, the Customer shall represent that the Clearing House is not prevented 

from entering into any Contract nor is the Clearing Member prevented from 

entering into any Customer-CM F&O Transaction as a result of any sanctions 

administered or imposed by the European Union, H.M. Treasury, the Office of 

Foreign Assets Control of the U.S. Department of the Treasury, the United 

Nations Security Council or any other relevant Governmental Authority affecting 

the Customer or any of its assets.

(p) Solely where National Grid is the Customer, these F&O Standard Terms shall be 

without prejudice to the Network Code, and National Grid shall not be stopped 

from relying upon or enforcing the provisions set out in the Network Code or 

exercising any remedy pursuant thereto, by virtue of either its status as a 

Customer or being bound by these F&O Standard Terms and the Rules.

4. Margin Requirements.

(a) Subject as agreed otherwise in the Customer-Clearing Member Agreement, 

Clearing Member shall be entitled to require each of its Customers in respect of 

F&O Contracts to provide margin (or permitted cover in respect thereof) in an 

amount no less than the amount of Margin of each relevant type required on a 

gross basis by the Clearing House with respect to the relevant Open Contract 

Position(s), separately for each of its Customer Accounts. For this purpose, 

"gross basis" shall mean that the margin requirement will be determined giving 

effect to any offset permitted under the Rules of such Open Contract Positions 

against Open Contract Positions relating to the same Set and Customer in the 

same Customer Account, but without giving effect to any offset or permitted 

offset of such Open Contract Positions against Open Contract Positions relating to 

a different Customer.

(b) Customer agrees that Clearing Member may use any margin provided by 

Customer under the Customer-Clearing Member Agreement to satisfy Clearing 

Member's obligations to the Clearing House under Rule 504 and Rule 505 or Part 

11. Customer shall not be entitled to assert any equitable or other claim to any 

such collateral and/or Permitted Cover that has been transferred to the Clearing 

House.

5. Events of Default and Termination. 

(a) In the event of the declaration by the Clearing House of an Event of Default (as 

defined in the Rules) with respect to Clearing Member (such an event being an 

"ICE-Declared Default"), whether or not any other default (howsoever defined 

or described) has also occurred under the Customer-Clearing Member Agreement 
NYDOCS01/1643340.2 380

or otherwise, Customer shall not be entitled to exercise any remedies with respect 

to Customer-CM F&O Transactions pursuant to the Customer-Clearing Member 

Agreement or otherwise, except as provided herein (and any other remedies being 

exercised at the time of the declaration of such ICE-Declared Default shall cease 

and be superseded by the applicable provisions of these F&O Standard Terms).

(b) If an ICE-Declared Default occurs at a time when Clearing Member has not 

already terminated the relevant Customer-CM F&O Transactions by reason of the 

occurrence of an event of default or termination event relating to Customer, 

Clearing Member may not take any action against Customer that may interfere 

with the Default Portability Rule resulting in Customer discharging its obligations 

to Clearing Member as provided for in Section 6(e) below. Save for such 

restriction, nothing in these F&O Standard Terms will limit Clearing Member's 

remedies under the Customer-Clearing Member Agreement in respect of 

Customer-CM F&O Transactions if an event of default or termination event (or 

similar concept) with respect to Customer occurs under the Customer-Clearing 

Member Agreement. 

6. Post-default Portability; Termination and Valuation of Cleared Transactions.

(a) Customer shall indicate to Clearing Member in such manner as the Clearing 

House may direct:

(i) Customer's preference as to whether, in the event of an ICE-Declared 

Default, it would prefer the Clearing House to apply the Default 

Portability Rules and related processes to the Customer's Customer-CM 

F&O Transactions and related F&O Contracts; and 

(ii) its Default Portability Preference.

Any Default Portability Preference notified by Customer must apply to all 

Customer-CM F&O Transactions with Clearing Member. Any such Default 

Portability Preference by Customer may be amended by notice to Clearing 

Member (who will, in turn, notify the Clearing House in accordance with the 

Rules and the Procedures), at any time prior to the occurrence of an ICE-Declared 

Default in respect of Clearing Member or, at the discretion of the Clearing House, 

by notice directly to the Clearing House in accordance with the Rules and the 

Procedures, following the occurrence of such an ICE-Declared Default. 

(b) Unless it has notified the Clearing Member and Clearing House in writing to the 

contrary, Customer hereby consents and agrees that, in the event of an ICEDeclared Default, whether or not Customer has specified a Default Portability 

Preference, the Clearing House shall be entitled (but shall not be obliged) to 

apply the Default Portability Rules with respect to F&O Contracts to which 

Clearing Member and Customer's Customer-CM F&O Transactions relate, 

including by taking any of the following steps:
NYDOCS01/1643340.2 381

(i) transferring, assigning, selling or novating Customer-CM F&O

Transactions (and related F&O Contracts) to any Transferee Clearing 

Member;

(ii) terminating Customer-CM F&O Transactions (and related F&O

Contracts) and arranging for the entry into of new replacement CustomerCM F&O Transactions (and related F&O Contracts) with any Transferee 

Clearing Member (by way of novation or otherwise); and/or

(iii) transferring Margin (in such amount as the Clearing House may 

determine) credited to the Customer Margin Account of Clearing Member 

to the Customer Margin Account of the Transferee Clearing Member and, 

if such a transfer occurs, Clearing Member's obligations to Customer in 

respect of the transferred Margin shall be fully discharged.

(c) In the event that the Clearing House arranges for a replacement F&O Contract 

and related Customer-CM F&O Transaction pursuant to Section 6(b)(ii), the 

Customer-CM F&O Transaction with the Transferor Clearing Member shall be 

deemed terminated at the same time that the replacement F&O Contract and 

related Customer-CM F&O Transaction is entered into. Customer shall take no 

action, including but not limited to attempting to obtain a court order, that could 

interfere with the ability of the Clearing House to take action contemplated by 

Part 9 of the Rules, including, without limitation, the Transfer of F&O Contracts 

and Customer-CM F&O Transactions, the transfer of any related Margin or other 

collateral or cover (or contingent cover) for the same or the imposition of the 

Transferee Clearing Member's form of Customer-Clearing Member Agreement 

where so permitted under the Default Portability Rules. 

(d) Customer hereby appoints the Clearing House as its lawful agent and attorney-infact to take such actions on behalf of the Customer as the Clearing House 

determines necessary or appropriate in order to effect the Default Portability 

Rules with respect to Customer's Customer-CM F&O Transactions and the 

Customer Margin Account, including executing any document or instrument with 

respect to the Transfer or replacement of the Customer-CM F&O Transaction 

and/or exercising rights and remedies to terminate or Transfer Customer-CM 

F&O Transactions, including (without limitation) the execution of any Transfer, 

or the exercise of any termination notice or the transfer of amounts recorded in the 

Customer Margin Account. Such appointment shall not be revoked by Customer. 

Customer shall take such actions as the Clearing House and/or a Transferee 

Clearing Member may request to give full effect to the Default Portability Rules, 

including without limitation execution of documentation confirming or agreeing 

to any terms specified by Transferee Clearing Member pursuant to Rule 904(j).

(e) In connection with any Transfer of Customer-CM F&O Transactions pursuant to 

the Default Portability Rules, any termination payments owed between Customer 

and Clearing Member in respect of the relevant Customer-CM F&O Transactions 

(determined in accordance with the Rules and the provisions of the Customer-
NYDOCS01/1643340.2 382

Clearing Member Agreement), any termination payments owed between Clearing 

Member and the Clearing House in respect of the related F&O Contracts (which 

in each case shall be determined by the Clearing House pursuant to its default 

rules), any upfront variation margin payments owed between Customer and the 

Transferee Clearing Member with respect to the initiation of the replacement 

cleared transactions and any upfront Variation Margin payments owed between 

such Transferee Clearing Member and the Clearing House with respect to the 

initiation of replacement F&O Contracts shall be equal. 

(f) In the event of an ICE-Declared Default: 

(i) There will be a minimum period, after issuance by the Clearing House of a 

Circular including a Default Notice naming a Clearing Member, for 

Customers and their Transferee Clearing Members to notify the Clearing 

House of their agreement that Contracts and/or Margin can be Transferred 

to a Transferee Clearing Member pursuant to the Default Portability Rules 

("Porting Notice"). For Customers other than Sponsored Principals, a 

Porting Notice must be received by the Clearing House within 4 hours of 

the Default Notice being published in order to be assured of being acted 

upon, subject to the below. For Sponsored Principals, the minimum 

period for receipt of Porting Notices is specified in Rule 904. Any Porting 

Notice, in order to be valid, must:

(A) be in writing;

(B) concern and be duly authorised and executed by a Customer who would 

not, if it were a Clearing Member, be capable of being declared a 

Defaulter;

(C) concern and be duly authorised and executed by a Transferee Clearing 

Member who is not a Defaulter;

(D) be delivered to the Clearing House electronically in the form and to the 

address specified by the Clearing House;

(E) concern positions which have not already been closed out or Transferred; 

and

(F) otherwise comply with the requirements of Part 9 of the Rules.

In the case of an Individually Segregated Margin-flow Co-mingled Account or 

Individually Segregated Sponsored Account, a Porting Notice must be in respect 

of the single Customer interested in the Account in order to be valid. In the case 

of a Customer Account that is neither an Individually Segregated Margin-flow 

Co-mingled Account nor an Individually Segregated Sponsored Account, the 

Porting Notice must be in respect of and executed by all Customers interested in 

the Account in order to be valid.
NYDOCS01/1643340.2 383

Subject to Rule 904(c), the Clearing House will act upon Porting Notices received 

by it within the 4 hour period specified above. The Clearing House may also act 

upon other Porting Notices received by it after the end of such period, at its 

discretion. However, Customers and Transferee Clearing Members acknowledge 

that due to operational constraints and depending on market conditions, it may not 

be possible for the Clearing House to process all Porting Notices (whether 

received within the 4 hour period or thereafter) within a reasonable period of time. 

Porting Notices received within the initial 4 hour period will be prioritised over 

any other notice. The Clearing House may select Porting Notices to be dealt with 

in such order as it sees fit, based on such criteria as it determines are relevant, 

including completeness and due execution of Default Notices, legibility, time of 

receipt, size of positions, lawfulness of porting, Customer jurisdiction of 

incorporation or place of business, whether risk increasing or risk decreasing and 

satisfaction of the requirements of Part 9 of the Rules. The Clearing House will 

not be obliged to comply with any Porting Notice which has not been acted upon 

by it:

(A) if the Default Notice was issued before 13:00 hrs on a Business Day prior 

to the close of business on the same Business Day;

(B) if the Default Notice was issued on a day which is not a Business Day 

prior to close of business on the next following Business Day; or

(C) if the Default Notice is issued after 13:00 hrs on a Business Day prior to 

noon of the next following Business Day.

At the end of this period, the Clearing House may, at its sole discretion, terminate 

any open Contracts and related assets of the Defaulter or undertake other 

Transfers under consents provided for in the Rules and these Standard Terms. 

The deadlines for the delivery of prioritised Porting Notices or for the Clearing 

House to act upon any Porting Notices may be extended at the Clearing House's 

discretion by Circular. If, as of the end of the period for acting upon Default 

Notices, any Customer-CM F&O Transactions have not been Transferred 

pursuant to the Default Portability Rules, such Customer-CM F&O Transactions 

shall be deemed terminated, and in such case an early termination date (or similar 

concept) in respect of the Customer-CM F&O Transactions shall occur under the 

Customer-Clearing Member Agreement, on the applicable date on which the 

Clearing House terminates the related F&O Contracts pursuant to Part 9 of the 

Rules. 

(ii) Notwithstanding anything to the contrary in the Customer-Clearing 

Member Agreement or any other agreement or arrangement between 

Clearing Member and Customer, the amount payable pursuant to the 

Customer-Clearing Member Agreement in respect of the termination of 

the Customer-CM F&O Transactions shall be determined on the basis of 

the termination value calculated by the Clearing House for the 

corresponding F&O Contracts pursuant to Part 9 of the Rules but subject 
NYDOCS01/1643340.2 384

always, in the case of amounts due from Clearing Member, to Section 8(c) 

below. Customer hereby agrees and acknowledges that any determination 

made by the Clearing House with respect to the termination value of an 

F&O Contract or a Customer-CM F&O Transaction shall be conclusive 

and binding upon Customer for this purpose to the same extent that any 

'net sum' declared by the Clearing House is conclusive and binding on 

Clearing Member. The obligation of a Clearing Member to a Customer 

under a Customer-CM F&O Transaction shall be discharged to the extent 

that the Clearing House makes payment of any net sum or any part thereof 

direct to the Customer.

(iii) Customer acknowledges and agrees that the allocation and, subject to 

Applicable Law, return of available amounts in the relevant Customer 

Margin Account shall be governed by Part 9 of the Rules, which may 

reduce or defer Clearing Member's obligations to Customer.

(g) For the avoidance of doubt, nothing in these F&O Standard Terms shall prevent 

other amounts being due and payable between Clearing Member and Customer as 

provided for in the Customer-Clearing Member Agreement. 

7. Consents to Disclosure. 

Customer hereby consents to:

(i) the Clearing House having the right to obtain information in relation to the 

Customer-CM F&O Transactions from any Market or Repository so as to enable 

the Clearing House to identify which F&O Contracts and Margin or Permitted 

Cover between the Clearing House and Clearing Member relate to such 

Customer-CM F&O Transactions;

(ii) Clearing Member making any disclosures in connection with Customer and 

Customer-CM F&O Transactions as are required by the Rules and/or Procedures 

or as are required by Applicable Law;

(iii) disclosures to, use by and disclosures by the Clearing House of information 

relating to Customer (including the Personal Data of its Data Subjects) pursuant to

Rule 106; and

(iv) submissions of and other actions relating to data concerning Customer-CM F&O

Transactions by the Clearing House pursuant to Section 12, the Rules and the 

Procedures. 

8. Certain Limitations. 

(a) Customer agrees and acknowledges for the benefit of the Clearing House and 

Clearing Member that: (i) the liability of the Clearing House to Customer shall be 

excluded and limited as set forth in Rule 111 and specifically that the Clearing 

House shall have no liability or obligation to Customer in respect of a Customer-
NYDOCS01/1643340.2 385

CM F&O Transaction or otherwise nor shall it have any duty of care directly to 

Customer, in any case whether in tort, contract, restitution, in respect of any 

Contract, pursuant to the Rules, pursuant to a Clearing Membership Agreement, 

pursuant to these F&O Standard Terms or otherwise, save for any liability which 

by law may not be excluded, (ii) in no event shall Customer attempt to interfere 

with the ability of the Clearing House to exercise its rights hereunder or as set 

forth in the Rules, the Procedures or any Clearing Membership Agreement, and 

(iii) it is not entitled to, and will not, petition a court or take any action or 

commence any proceedings against the Clearing House, directly or indirectly and 

will if any such action is taken fully indemnify the Clearing House against any 

costs, losses or other consequences of Customer taking any such action. 

Customer agrees that Clearing Member acts as principal at all times in all its 

Contracts with the Clearing House.

(b) The Clearing House shall have no responsibility for the compliance by Clearing 

Member or Customer with its obligations under a Customer-Clearing Member 

Agreement. The Clearing House shall be under no obligation to enquire into, and 

shall be fully protected in relying on, any instructions or directions with respect to a 

Customer Account or the assets recorded therein or transferred thereto or therefrom 

under the Rules received from a Person that the Clearing House believes to be 

authorised to act on behalf of Clearing Member.

(c) Customer agrees and acknowledges that the performance and payment obligations 

of Clearing Member to Customer are limited by and contingent on the actual 

performance or payment by the Clearing House under the related F&O Contract and 

that Clearing Member shall have no responsibility for the compliance by the 

Clearing House (or any person other than that Clearing Member) with its 

obligations, including without limitation, under any F&O Contract, the Rules or the 

Procedures. In the event that the Clearing House defaults in or defers or varies the 

payment or performance of any obligation otherwise owed by it in respect of an 

F&O Contract corresponding to a Customer-CM F&O Transaction (including, 

without limitation, any shortfall in repayment of Permitted Cover or any recovery of 

less than 100% of amounts owed by the Clearing House or property provided to the 

Clearing House in circumstances in which Rule 912 applies), Clearing Member will 

be entitled to make a corresponding deduction, withholding or other reduction from, 

or tolling or deferring of, any payment or performance otherwise owed by it under 

such corresponding Customer-CM F&O Transactions and/or to make its 

performance under such Customer-CM F&O Transactions conditional on 

performance by the Clearing House under the related F&O Contract (and where any 

such deduction may be attributable to both Customer-CM F&O Transactions and to 

Customer Account Contracts of other Customers, Clearing Member shall allocate 

such deduction among such contracts on a pro rata basis) provided that if such 

defaulted or delayed payment or performance is subsequently obtained by Clearing 

Member from the Clearing House (in whole or in apart), Clearing Member shall 

thereupon make the corresponding payment or performance (or portion thereof) to 

Customer.
NYDOCS01/1643340.2 386

9. Certain Tax Matters. 

Subject always, and without prejudice, to any provisions of a Customer-Clearing Member 

Agreement: (i) if Clearing Member is required to pay to Clearing House any additional 

amount under Rule 301(j) or the Contract Terms with respect to an F&O Contract

corresponding to a Customer-CM F&O Transaction, Customer shall be obliged to pay to 

Clearing Member an amount equal to such additional amount (or the applicable portion 

thereof), but without duplication of any additional amount payable by Customer under 

any relevant provision of the Customer-Clearing Member Agreement, (ii) for the 

avoidance of doubt, and without prejudice to the above, if Clearing House deducts or 

withholds any amount otherwise payable to Clearing Member on an F&O Contract

pursuant to Rule 301 or the Contract Terms, Clearing Member shall be entitled to make a 

corresponding deduction from any amount otherwise payable by Clearing Member to 

Customer under a corresponding Customer-CM F&O Transaction, and (iii) where such 

additional amount or deduction may be attributable to both Customer-CM F&O

Transactions and to Customer-CM F&O Transactions of other customers, Clearing 

Member shall allocate such additional amount or deduction among such contracts on a 

pro rata basis. 

10. Reliance on F&O Transactions and submissions to Repositories etc.

The Clearing House shall be entitled to assume, without enquiry, that (i) at each 

Acceptance Time at which a Customer-CM F&O Transaction arises, the respective 

obligations of Clearing Member and Customer under such Customer-CM F&O

Transaction constitutes its legal, valid and binding obligations enforceable in accordance 

with their respective terms, subject to applicable bankruptcy, reorganisation, insolvency, 

moratorium or similar laws affecting creditors' rights generally and subject, as to 

enforceability, to equitable principles in general application (regardless of whether 

enforcement is sought in a proceeding in equity or at law); (ii) where Customer or 

Clearing Member are acting out of an office in the United States of America, each of 

Clearing Member and Customer represents to the other and to the Clearing House that it 

is an "eligible contract participant" as defined in the US Commodity Exchange Act, as 

amended and (iii) that the Clearing House is duly authorised by Clearing Member and 

Customer to submit, in accordance with the Rules and the Procedures, details of any F&O

Transactions or Customer-CM F&O Transaction to a Repository and to amend or delete 

such records from time to time in accordance with the Rules and the Procedures, in each 

case subject to Applicable Law. For the avoidance of doubt, Clearing Member shall not 

take any actions in any Repository of a nature specified in this paragraph and neither the 

Clearing House nor Clearing Member will be liable to Customer for any action or 

omission of the Clearing House as a result of having made such submissions. The sole 

remedy of Customer in the case of any error shall be to request that Clearing Member 

request the Clearing House to amend or correct any error pursuant to the Rules or 

Procedures.
NYDOCS01/1643340.2 387

11. Third Party Rights. 

The Clearing House shall be entitled to rely upon and enjoy the benefit of the 

representations, warranties, agreements, obligations and covenants of the Customer under 

these F&O Standard Terms and shall have the right to enforce such representations, 

warranties, agreements, obligations and covenants against the parties under the Contracts 

(Rights of Third Parties) Act 1999. Other than as set out in this Section 11, no persons 

other than Clearing Member and Customer shall have the right to enforce any provision 

of these F&O Standard Terms under the Contracts (Rights of Third Parties) Act 1999 or 

otherwise.

12. Miscellaneous.

(a) Entire Agreement. These F&O Standard Terms (together with the CustomerClearing Member Agreement and the Rules and the Procedures incorporated by 

reference herein) constitutes the entire agreement and understanding of Customer 

and Clearing Member with respect to its subject matter and supersedes all oral 

communication and prior writings (except as otherwise provided herein) with 

respect thereto.

(b) Headings. The headings used in these F&O Standard Terms are for convenience of 

reference only and are not to affect the construction of or to be taken into 

consideration in interpreting these F&O Standard Terms.

(c) Governing Law. Any contractual or non-contractual disputes arising out of or in 

connection with the Customer-Clearing Member Agreement are governed by and shall be 

construed in accordance with the law specified in the Customer-Clearing Member 

Agreement and subject to the non-exclusive jurisdiction of the courts specified in the 

Cleared Transactions Master Agreement provided that: (i) Sections 6(d) and 11 of these 

F&O Standard Terms shall be governed by and shall be construed in accordance with the 

laws of England and Wales and are subject to arbitration under Rule 117 as if such 

provisions of these F&O Standard Terms were Rules and the parties were bound thereby 

as if they were both Clearing Members, notwithstanding any choice of law or jurisdiction 

in the Cleared Transactions Master Agreement; and (ii) each provision of the Rules and 

the Procedures incorporated by reference herein or in the Customer-Clearing Member 

Agreement shall be governed by and construed in accordance with the laws of England 

and Wales, as set forth in the relevant governing law provision of such document (it 

being understood that no Pledged Collateral Matters are of relevance to Non-FCM/BD 

Clearing Members). Clearing Member and Customer hereby waive any right to object to 

any such proceedings on the basis of forum non conveniens or otherwise. 

13. Modifications where Clearing Member is a Sponsor and Customer is a Sponsored 

Principal.

(a) This paragraph 13 shall apply only in respect of an Individually Segregated Sponsored 

Account, notwithstanding any other provisions of these F&O Standard Terms to the 

contrary.
NYDOCS01/1643340.2 388

(b) The Sponsored Principal and Sponsor agree that, save in the circumstances contemplated 

by these F&O Standard Terms and as provided for in any Customer-Clearing Member 

Agreement or other agreement between Sponsored Principal and Sponsor, each 

Customer-CM F&O Transaction is intended to reflect exactly the obligations of the 

Clearing Member in respect of the related F&O Contract in the manner set forth in Part 

19 of the Rules. Any reference to an F&O Contract or Customer-CM F&O Transaction 

or the relationship between a Sponsored Principal and Sponsor shall be construed in 

accordance with recitals 4 to 8, Part 19 of the Rules, the Sponsored Principal Clearing 

Agreement and the Sponsor Agreement.

(c) The following provisions of these F&O Standard Terms shall be modified as set out 

below in connection with an Individually Segregated Sponsored Account:

(i) paragraph 4(a) shall not apply if the Nominated Bank Account used for the 

Individually Segregated Sponsored Account is an account of the Sponsored 

Principal;

(ii) the second sentence of paragraph 4(b) shall not apply; and the rights of the 

Sponsored Principal to the assets recorded in the Individually Segregated 

Sponsored Account shall be as set out in the Rules;

(iii) paragraphs 6(b)-(e) shall be construed as being modified to the extent that the 

Default Portability Rules and default rules are modified for Sponsors and 

Sponsored Principals pursuant to Rule 904 and in particular for purposes of 

paragraph 6(b)(iii) the Clearing House shall in addition be entitled to accept the 

appointment of a new Sponsor pursuant to Rule 904; and

(iv) paragraphs 8(a)(i) and (iii) and the provisions of the Rules shall instead apply to 

determine the liability of the Clearing House to the Sponsored Principal.

(d) The Sponsored Principal shall be deemed to represent and warrant to the Sponsor, upon 

their first date of its holding such status and on each subsequent date that it is a 

Sponsored Principal with such Sponsor, that it meets all of the criteria set out in Rule 

1901(b) and (d) and is in compliance with all of its obligations under these Rules.

(e) Any asset received by the Sponsor from the Clearing House in respect of an Individually 

Segregated Sponsored Account shall be treated by the Sponsor and Sponsored Principal 

as if it had been received by the Sponsor from the Sponsored Principal as collateral (or 

cover for collateral) pursuant to the Cleared Transactions Master Agreement and these 

F&O Standard Terms.
NYDOCS01/1643340.2 389

EXHIBIT 3

ICE CLEAR EUROPE LIMITED

CUSTOMER-CM FX TRANSACTIONS STANDARD TERMS 

BACKGROUND:

In respect of a Non-FCM/BD Clearing Member and Customer using a Customer Account other 

than an Individually Segregated Sponsored Account:

(1) Clearing Member is a Non-FCM/BD Clearing Member, as defined in the rules (together 

with the procedures, as interpreted in accordance with guidance and circulars thereunder, 

the "Rules") of ICE Clear Europe Limited (the "Clearing House") and is thereby 

permitted to submit certain FX Trade Particulars which, if an FX Acceptance Notice is 

issued, will result in a cleared FX Contract arising in accordance with the Rules and the 

FX Procedures of the Clearing House.

(2) Clearing Member and Customer are or intend to become party to one or more CustomerCM FX Transactions, where related cleared FX Contracts are requested or are to be 

requested by the FX Clearing Member to be recorded in a Customer Position Account in 

which FX Contracts may be recorded. They further desire to agree to the operation of the 

Rules and the Procedures in relation to any Customer-CM FX Transactions that may arise 

following the submission of the related FX Trade Particulars, as further provided for in 

these Customer-CM FX Transactions Standard Terms (these "FX Standard Terms").

(3) Clearing Member and Customer have established a "master" futures account, clearing 

agreement or other master agreement (the "Cleared Transactions Master Agreement", 

as amended from time to time) and, if applicable, a related collateral arrangement, 

whether contained in the same or another agreement with respect to cleared transactions, 

including such Customer-CM FX Transactions (which Cleared Transactions Master 

Agreement may be supplemented by a cleared derivatives addendum, or similar 

document, as agreed by Clearing Member and Customer (together, the "CustomerClearing Member Agreement") and as amended and supplemented by these FX 

Standard Terms).

In respect of a Non-FCM/BD Clearing Member and Customer using an Individually Segregated 

Sponsored Account:

(4) Clearing Member is a Non-FCM/BD Clearing Member and Customer is a Sponsored 

Principal, in each case as defined in the Rules, and each of them is thereby permitted to 

submit certain FX Trade Particulars which, if an FX Acceptance Notice is issued, will 

result in a cleared FX Contract governed by Part 19 arising in accordance with the Rules 

and the FX Procedures of the Clearing House.

(5) Clearing Member and Customer are or intend to become party to one or more CustomerCM Transactions on the terms set out in these FX Standard Terms as modified pursuant 
NYDOCS01/1643340.2 390

to Part 19, where related cleared FX Contracts are requested or are to be requested by the 

FX Clearing Member or Customer to be recorded in a Position Account linked to an 

Individually Segregated Sponsored Account in which FX Contracts are recorded. They 

further desire to agree to the operation of the Rules and the Procedures in relation to any 

Customer-CM FX Transactions that may arise following the submission of the related FX 

Trade Particulars, as further provided for in these FX Standard Terms.

(6) Clearing Member and Customer have established a Cleared Transactions Master 

Agreement and, if applicable, a related collateral arrangement, whether contained in the 

same or another agreement with respect to cleared transactions, including such CustomerCM FX Transactions (which Cleared Transactions Master Agreement may be 

supplemented by a cleared derivatives addendum, or similar document, as agreed by 

Clearing Member and Customer and as amended and supplemented by these FX Standard 

Terms).

(7) These FX Standard Terms shall apply equally to the Sponsored Principal as they apply to 

a Customer and to the Clearing Member as they apply to a Sponsor, subject to such 

amendments and modifications as are set out in the Rules (including Part 19 of the Rules) 

and Procedures, the Sponsored Principal Clearing Agreement, the Sponsor Agreement 

and section 13 hereof.

FX STANDARD TERMS:

1. Defined Terms. Terms used but not otherwise defined in these FX Standard Terms 

shall have the meaning set forth in the Rules or the Procedures, as applicable.

2. Exhibit to Rules. These FX Standard Terms are published by the Clearing House as an 

Exhibit to the Rules but do not form part of the Rules. Clearing Member and Customer 

agree that any amendments, modifications, restatements or supplements in respect of 

such Exhibit to the Rules (including the withdrawal of any part of these FX Standard 

Terms) may be effective if made by the Clearing House pursuant to the provisions of 

Rule 109 as if the Exhibit were Rules and as if Rule 109 applied to Customers in addition 

to, and in the same way as it applies to, Clearing Members. At the request of Clearing 

Member or the Clearing House, Customer will enter into a written confirmation of the 

terms of any such amendment, modification, supplement or restatement.

3. Cleared Transactions.

(a) Clearing Member may designate, by specifying that certain FX Trade Particulars 

submitted to the Clearing House are to be recorded in a Customer Position 

Account, that certain transactions between Clearing Member and Customer shall 

arise at the same time as related FX Contracts and shall constitute Customer-CM 

FX Transactions.

(b) Clearing Member and Customer agree that a Customer-CM FX Transaction shall 

arise automatically and without further action on the part of Clearing Member or 

Customer at the Acceptance Time in respect of the related FX Contract.
NYDOCS01/1643340.2 391

(c) The terms of any Customer-CM FX Transaction shall, save as contemplated by 

these FX Standard Terms, be identical to those of the related FX Contract 

between Clearing Member and the Clearing House (as such FX Contract may be 

amended from time to time in accordance with the Rules and/or FX Procedures), 

except that: 

(i) if the Clearing Member is the Reference Currency Seller under the FX 

Contract it shall be the reference currency buyer under the Customer-CM 

FX Transaction and vice versa;

(ii) Customer's recourse against Clearing Member shall be limited and 

Clearing Member's obligations to Customer shall be conditional as 

provided for in Section 8(c) below; 

(iii) Customer-CM FX Transactions shall also be subject to these FX Standard 

Terms and the terms of the Customer-Clearing Member Agreement; and

(v) except where the Settlement and Notices Terms or a Customer-Clearing 

Member Agreement provide for specific timings in respect of the 

performance of obligations:

(1) any obligation of the Clearing Member to the Customer shall not 

be required to be performed until a reasonable period has passed 

after the Clearing Member has received equivalent performance 

from the Clearing House; and

(2) any obligation of the Customer to the Clearing Member may be 

required by the Clearing Member to be performed a reasonable 

period in advance of the Clearing Member becoming obliged to the 

Clearing House in respect of an equivalent obligation.

(d) If any Customer-CM FX Transactions are governed by a Customer-Clearing 

Member Agreement which is not a separate agreement from any master 

agreement applicable to transactions between Clearing Member and Customer 

other than Customer-CM FX Transactions ("Non-Cleared Transactions"), 

Clearing Member and Customer shall distinguish in their books and records 

Customer-CM FX Transactions from Non-Cleared Transactions to the extent 

required to enable them to comply with the Rules, the Procedures and these FX 

Standard Terms.

(e) For purposes of the Customer-Clearing Member Agreement, in the event of any 

inconsistency among or between the Customer-Clearing Member Agreement, 

these FX Standard Terms, the Rules and the Procedures with respect to CustomerCM FX Transactions the following provisions shall prevail in the following order: 

(i) first, the Rules from time to time; (ii) second, subject to (m) below, the 

Procedures from time to time; (iii) third, these FX Standard Terms from time to 

time; and (iv) fourth, the Customer-Clearing Member Agreement.
NYDOCS01/1643340.2 392

(f) Customer agrees with Clearing Member that Customer-CM FX Transactions shall 

be subject to the provisions of the Rules and the Procedures applicable to 

Customer-CM FX Transactions as such Rules or Procedures are amended, 

modified, supplemented or restated from time to time. In particular but without 

limitation, Customer hereby agrees that it shall be bound by, shall comply with 

and shall facilitate compliance by Clearing Member with the terms and conditions 

set forth in Parts 5 and 9 of the Rules and Rule 202 in so far as they relate to 

Customer-CM FX Transactions. 

(g) Customer agrees that publication of a Circular by the Clearing House shall 

constitute valid notice by the Clearing House of any matter under or relating to 

the Rules, the Procedures, Customer-CM FX Transactions or these FX Standard 

Terms.

(h) Clearing Member and Customer agree that, save in the circumstances 

contemplated by these FX Standard Terms and as provided for in any CustomerClearing Member Agreement or other agreement between Clearing Member and 

Customer, each Customer-CM FX Transaction is intended to reflect exactly the 

operation of the related FX Contract. In any circumstances in which an FX 

Contract is netted (in whole or in part), terminated or voided under the Rules, the 

related Customer-CM FX Transaction will also be netted (in whole or in part), 

terminate or be voided by reference to the same price as the FX Contract is so 

netted, terminated or voided and a payment in respect of such price may be 

payable between Customer and Clearing Member pursuant to the CustomerClearing Member Agreement or as determined by the Clearing Member. 

Thereupon, Customer and Clearing Member shall have no further rights and be 

under no further liability with respect to such Customer-CM FX Transaction(s) 

(or, if applicable, part thereof) other than in respect of any unpaid payments under 

such Customer-CM FX Transactions (which shall be payable as and when 

originally payable). Clearing Member may, at its discretion, elect to continue an 

equivalent transaction with Customer as a Non-Cleared Transaction. 

(i) In addition, without limiting any rights that Clearing Member may have under the 

Customer-Clearing Member Agreement, if the Clearing House takes any step, 

including but not limited to the following events or actions, or any such event or 

action otherwise occurs (in each case including but not limited to any change in 

Applicable Law or any action taken by any Regulatory Authority pursuant to 

Applicable Law) in relation to an FX Contract, Clearing Member, at its option 

and discretion, shall be entitled to take equivalent action (or, if it cannot take 

equivalent action, it is not advisable to do so or equivalent action would not deal 

with the matter in hand, other appropriate action) in good faith and in a 

commercially reasonable manner, in relation to the related Customer-CM FX 

Transaction and/or against Customer, including but not limited to terminating, 

and/or modifying the non-economic terms of, such Customer-CM FX Transaction 

and/or making adjustments to any determination of amounts paid or payable 

under the Customer-Clearing Member Agreement:
NYDOCS01/1643340.2 393

(i) imposition of a fine or disgorgement payment pursuant to Part 10, any 

arbitral award or any other payment obligation arising other than pursuant 

to the Contract Terms or Parts 5 or 11 of the Rules, where the conduct in 

question is caused by, or in any way due to, the Customer and/or under the 

Customer-CM FX Transaction;

(ii) any other event or action the effect of which is to create a material 

mismatch between the rights, obligations or exposures as between 

Clearing Member and the Clearing House pursuant to an FX Contract on 

the one hand and the rights, obligations or exposures as between Clearing 

Member and Customer, including without limitation pursuant to the 

related Customer-CM FX Transaction, on the other hand; and

(iii) any other event or action the effect of which is to result in any loss, 

liability, cost, claim, damages or expenses being incurred by Clearing 

Member in connection with an FX Contract where such event or action 

does not form part of the FX Contract (and so is not reflected in the related 

Customer-CM FX Transaction). 

(j) Notwithstanding Section 3(c), Clearing Member and Customer may agree 

different settlement arrangements between Clearing Member and Customer so as 

to accommodate any particular requirements of Clearing Member or Customer. 

(k) Any price or rate determined by the Clearing House as Calculation Agent or 

otherwise under the Rules in relation to an FX Contract shall be used as the same 

price or rate by the Clearing Member in relation to the related Customer-CM FX 

Transaction(s).

(l) Customer shall not be entitled to serve any type of notice under a Customer-CM 

FX Transaction in circumstances in which or by means that the Clearing Member 

would not, by virtue of the Rules or FX Procedures, be entitled to serve a 

corresponding notice on the Clearing House in relation to the corresponding FX 

Contract. Clearing Member and the Clearing House shall be entitled to treat any 

service of a notice in breach of this provision as invalid.

(m) Clearing Member may, but (subject as otherwise agreed) is not obliged to, deliver 

any electronic notices in relation to Customer-CM FX Transactions at the times 

allowed under the Rules and Procedures.

(n) These FX Standard Terms may, pursuant to the process provided for in paragraph 

2 of these FX Standard Terms, from time to time, incorporate additional standard 

terms published by the Clearing House so as to establish mechanics for dealing 

with the relationship between FX Contracts and Customer-CM FX Transactions 

until such time as market infrastructure solutions are available to address the 

relevant operational issues. Such additional standard terms shall form part of 

these FX Standard Terms, may (if so specified) prevail over the applicable 

Procedures in respect of Customer-CM FX Transactions and may be amended 
NYDOCS01/1643340.2 394

and/or withdrawn only as provided for in paragraph 2 of these FX Standard 

Terms. 

(o) On each date on which the Customer has any open Customer-CM FX 

Transaction, the Customer shall represent that the Clearing House is not prevented 

from entering into any Contract nor is the Clearing Member prevented from 

entering into any Customer-CM FX Transaction as a result of any sanctions 

administered or imposed by the European Union, H.M. Treasury, the Office of 

Foreign Assets Control of the U.S. Department of the Treasury, the United 

Nations Security Council or any other relevant Governmental Authority affecting 

the Customer or any of its assets.

4. Margin Requirements.

(a) Subject as agreed otherwise in the Customer-Clearing Member Agreement, 

Clearing Member shall be entitled to require each of its Customers in respect of 

FX Contracts to provide margin (or permitted cover in respect thereof) in an 

amount no less than the amount of Margin of each relevant type required on a 

gross basis by the Clearing House with respect to the relevant Open Contract 

Position(s), separately for each of its Customer Accounts. For this purpose, 

"gross basis" shall mean that the margin requirement will be determined giving 

effect to any offset permitted under the Rules of such Open Contract Positions 

against Open Contract Positions relating to the same Set and Customer in the 

same Customer Account, but without giving effect to any offset or permitted 

offset of such Open Contract Positions against Open Contract Positions relating to 

a different Customer.

(b) Customer agrees that Clearing Member may use any margin provided by 

Customer under the Customer-Clearing Member Agreement to satisfy Clearing 

Member's obligations to the Clearing House under Rule 504 and Rule 505 or 

Part 11. Customer shall not be entitled to assert any equitable or other claim to 

any such collateral and/or Permitted Cover that has been transferred to the 

Clearing House.

5. Events of Default and Termination. 

(a) In the event of the declaration by the Clearing House of an Event of Default (as 

defined in the Rules) with respect to Clearing Member (such an event being an 

"ICE-Declared Default"), whether or not any other default (howsoever defined 

or described) has also occurred under the Customer-Clearing Member Agreement 

or otherwise, Customer shall not be entitled to exercise any remedies with respect 

to Customer-CM FX Transactions pursuant to the Customer-Clearing Member 

Agreement or otherwise, except as provided herein (and any other remedies being 

exercised at the time of the declaration of such ICE-Declared Default shall cease 

and be superseded by the applicable provisions of these FX Standard Terms).
NYDOCS01/1643340.2 395

(b) If an ICE-Declared Default occurs at a time when Clearing Member has not 

already terminated the relevant Customer-CM FX Transactions by reason of the 

occurrence of an event of default or termination event relating to Customer, 

Clearing Member may not take any action against Customer that may interfere 

with the Default Portability Rule resulting in Customer discharging its obligations 

to Clearing Member as provided for in Section 6(e) below. Save for such 

restriction, nothing in these FX Standard Terms will limit Clearing Member's 

remedies under the Customer-Clearing Member Agreement in respect of 

Customer-CM FX Transactions if an event of default or termination event (or 

similar concept) with respect to Customer occurs under the Customer-Clearing 

Member Agreement. 

6. Post-default Portability; Termination and Valuation of Cleared Transactions.

(a) Customer shall indicate to Clearing Member in such manner as the Clearing 

House may direct:

(i) Customer's preference as to whether, in the event of an ICE-Declared 

Default, it would prefer the Clearing House to apply the Default 

Portability Rules and related processes to the Customer's Customer-CM 

FX Transactions and related FX Contracts; and 

(ii) its Default Portability Preference.

Any Default Portability Preference notified by Customer must apply to all 

Customer-CM FX Transactions with Clearing Member. Any such Default 

Portability Preference by Customer may be amended by notice to Clearing 

Member (who will, in turn, notify the Clearing House in accordance with the 

Rules and the Procedures), at any time prior to the occurrence of an ICE-Declared 

Default in respect of Clearing Member or, at the discretion of the Clearing House, 

by notice directly to the Clearing House in accordance with the Rules and the 

Procedures, following the occurrence of such an ICE-Declared Default. 

(b) Unless it has notified the Clearing Member and Clearing House in writing to the 

contrary, Customer hereby consents and agrees that, in the event of an ICEDeclared Default, whether or not Customer has specified a Default Portability 

Preference, the Clearing House shall be entitled (but shall not be obliged) to 

apply the Default Portability Rules with respect to FX Contracts to which 

Clearing Member and Customer's Customer-CM FX Transactions relate, 

including by taking any of the following steps:

(i) transferring, assigning, selling or novating Customer-CM FX Transactions 

(and related FX Contracts) to any Transferee Clearing Member;

(ii) terminating Customer-CM FX Transactions (and related FX Contracts) 

and arranging for the entry into of new replacement Customer-CM FX 

Transactions (and related FX Contracts) with any Transferee Clearing 

Member (by way of novation or otherwise); and/or
NYDOCS01/1643340.2 396

(iii) transferring Margin (in such amount as the Clearing House may 

determine) credited to the Customer Margin Account of Clearing Member 

to the Customer Margin Account of the Transferee Clearing Member and, 

if such a transfer occurs, Clearing Member's obligations to Customer in 

respect of the transferred Margin shall be fully discharged.

(c) In the event that the Clearing House arranges for a replacement FX Contract and 

related Customer-CM FX Transaction pursuant to Section 6(b)(ii), the CustomerCM FX Transaction with the Transferor Clearing Member shall be deemed 

terminated at the same time that the replacement FX Contract and related 

Customer-CM FX Transaction is entered into. Customer shall take no action, 

including but not limited to attempting to obtain a court order, that could interfere 

with the ability of the Clearing House to take action contemplated by Part 9 of the 

Rules, including, without limitation, the Transfer of FX Contracts and CustomerCM FX Transactions, the transfer of any related Margin or other collateral or 

cover (or contingent cover) for the same or the imposition of the Transferee 

Clearing Member's form of Customer-Clearing Member Agreement where so 

permitted under the Default Portability Rules. 

(d) Customer hereby appoints the Clearing House as its lawful agent and attorney-infact to take such actions on behalf of the Customer as the Clearing House 

determines necessary or appropriate in order to effect the Default Portability 

Rules with respect to Customer's Customer-CM FX Transactions and the 

Customer Margin Account, including executing any document or instrument with 

respect to the Transfer or replacement of the Customer-CM FX Transaction 

and/or exercising rights and remedies to terminate or Transfer Customer-CM FX 

Transactions, including (without limitation) the execution of any Transfer, or the

exercise of any termination notice or the transfer of amounts recorded in the 

Customer Margin Account. Such appointment shall not be revoked by Customer. 

Customer shall take such actions as the Clearing House and/or a Transferee 

Clearing Member may request to give full effect to the Default Portability Rules, 

including without limitation execution of documentation confirming or agreeing 

to any terms specified by Transferee Clearing Member pursuant to Rule 904(j).

(e) In connection with any Transfer of Customer-CM FX Transactions pursuant to 

the Default Portability Rules, any termination payments owed between Customer 

and Clearing Member in respect of the relevant Customer-CM FX Transactions 

(determined in accordance with the Rules and the provisions of the CustomerClearing Member Agreement), any termination payments owed between Clearing 

Member and the Clearing House in respect of the related FX Contracts (which in 

each case shall be determined by the Clearing House pursuant to its default rules), 

any upfront mark-to-market margin payments owed between Customer and the 

Transferee Clearing Member with respect to the initiation of the replacement 

cleared transactions and any upfront FX Mark-to-Market Margin payments owed 

between such Transferee Clearing Member and the Clearing House with respect 

to the initiation of replacement FX Contracts shall be equal. 
NYDOCS01/1643340.2 397

(f) In the event of an ICE-Declared Default: 

(i) There will be a minimum period, after issuance by the Clearing House of a 

Circular including a Default Notice naming a Clearing Member, for 

Customers and their Transferee Clearing Members to notify the Clearing 

House of their agreement that Contracts and/or Margin can be Transferred 

to a Transferee Clearing Member pursuant to the Default Portability Rules 

("Porting Notice"). For Customers other than Sponsored Principals, a 

Porting Notice must be received by the Clearing House within 4 hours of 

the Default Notice being published in order to be assured of being acted 

upon, subject to the below. For Sponsored Principals, the minimum 

period for receipt of Porting Notices is specified in Rule 904. Any Porting 

Notice, in order to be valid, must:

(A) be in writing;

(B) concern and be duly authorised and executed by a Customer who would 

not, if it were a Clearing Member, be capable of being declared a 

Defaulter;

(C) concern and be duly authorised and executed by a Transferee Clearing 

Member who is not a Defaulter;

(D) be delivered to the Clearing House electronically in the form and to the 

address specified by the Clearing House;

(E) concern positions which have not already been closed out or Transferred; 

and

(F) otherwise comply with the requirements of Part 9 of the Rules.

In the case of an Individually Segregated Margin-flow Co-mingled Account or 

Individually Segregated Sponsored Account, a Porting Notice must be in respect 

of the single Customer interested in the Account in order to be valid. In the case 

of a Customer Account that is neither an Individually Segregated Margin-flow 

Co-mingled Account nor an Individually Segregated Sponsored Account, the 

Porting Notice must be in respect of and executed by all Customers interested in 

the Account in order to be valid.

Subject to Rule 904(c), the Clearing House will act upon Porting Notices received 

by it within the 4 hour period specified above. The Clearing House may also act 

upon other Porting Notices received by it after the end of such period, at its 

discretion. However, Customers and Transferee Clearing Members acknowledge 

that due to operational constraints and depending on market conditions, it may not 

be possible for the Clearing House to process all Porting Notices (whether 

received within the 4 hour period or thereafter) within a reasonable period of time. 

Porting Notices received within the initial 4 hour period will be prioritised over 

any other notice. The Clearing House may select Porting Notices to be dealt with 
NYDOCS01/1643340.2 398

in such order as it sees fit, based on such criteria as it determines are relevant, 

including completeness and due execution of Default Notices, legibility, time of 

receipt, size of positions, lawfulness of porting, Customer jurisdiction of 

incorporation or place of business, whether risk increasing or risk decreasing and 

satisfaction of the requirements of Part 9 of the Rules. The Clearing House will 

not be obliged to comply with any Porting Notice which has not been acted upon 

by it:

(A) if the Default Notice was issued before 13:00 hrs on a Business Day prior 

to the close of business on the same Business Day;

(B) if the Default Notice was issued on a day which is not a Business Day 

prior to close of business on the next following Business Day; or

(C) if the Default Notice is issued after 13:00 hrs on a Business Day prior to 

noon of the next following Business Day.

At the end of this period, the Clearing House may, at its sole discretion, terminate 

any open Contracts and related assets of the Defaulter or undertake other 

Transfers under consents provided for in the Rules and these Standard Terms. 

The deadlines for the delivery of prioritised Porting Notices or for the Clearing 

House to act upon any Porting Notices may be extended at the Clearing House's 

discretion by Circular. If, as of the end of the period for acting upon Default 

Notices, any Customer-CM FX Transactions have not been Transferred pursuant 

to the Default Portability Rules, such Customer-CM FX Transactions shall be 

deemed terminated, and in such case an early termination date (or similar 

concept) in respect of the Customer-CM FX Transactions shall occur under the 

Customer-Clearing Member Agreement, on the applicable date on which the 

Clearing House terminates the related FX Contracts pursuant to Part 9 of the 

Rules. 

(ii) Notwithstanding anything to the contrary in the Customer-Clearing 

Member Agreement or any other agreement or arrangement between 

Clearing Member and Customer, the amount payable pursuant to the 

Customer-Clearing Member Agreement in respect of the termination of 

the Customer-CM FX Transactions shall be determined on the basis of the 

termination value calculated by the Clearing House for the corresponding 

FX Contracts pursuant to Part 9 of the Rules but subject always, in the 

case of amounts due from Clearing Member, to Section 8(c) below. 

Customer hereby agrees and acknowledges that any determination made 

by the Clearing House with respect to the termination value of a FX 

Contract or a Customer-CM FX Transaction shall be conclusive and 

binding upon Customer for this purpose to the same extent that any 'net 

sum' declared by the Clearing House is conclusive and binding on 

Clearing Member. The obligation of a Clearing Member to a Customer 

under a Customer-CM FX Transaction shall be discharged to the extent 
NYDOCS01/1643340.2 399

that the Clearing House makes payment of any net sum or any part thereof 

direct to the Customer.

(iii) Customer acknowledges and agrees that the allocation and, subject to 

Applicable Law, return of available amounts in the relevant Customer 

Margin Account shall be governed by Part 9 of the Rules, which may 

reduce or defer Clearing Member's obligations to Customer.

(g) For the avoidance of doubt, nothing in these FX Standard Terms shall prevent 

other amounts being due and payable between Clearing Member and Customer as 

provided for in the Customer-Clearing Member Agreement. 

7. Consents to Disclosure. 

Customer hereby consents to:

(i) the Clearing House having the right to obtain information in relation to the 

Customer-CM FX Transactions from any FX Trade Execution/Processing 

Platform or Repository so as to enable the Clearing House to identify which FX 

Contracts and Margin or Permitted Cover between the Clearing House and 

Clearing Member relate to such Customer-CM FX Transactions;

(ii) Clearing Member making any disclosures in connection with Customer and 

Customer-CM FX Transactions as are required by the Rules and/or Procedures or 

as are required by Applicable Law;

(iii) disclosures to, use by and disclosures by the Clearing House of information 

relating to Customer (including the Personal Data of its Data Subjects) pursuant to 

Rule 105(c); and

(iv) submissions of and other actions relating to data concerning Customer-CM FX 

Transactions by the Clearing House pursuant to Section 12, the Rules and the 

Procedures. 

8. Certain Limitations. 

(a) Customer agrees and acknowledges for the benefit of the Clearing House and 

Clearing Member that: (i) the liability of the Clearing House to Customer shall be 

excluded and limited as set forth in Rule 111 and specifically that the Clearing 

House shall have no liability or obligation to Customer in respect of a CustomerCM FX Transaction or otherwise nor shall it have any duty of care directly to 

Customer, in any case whether in tort, contract, restitution, in respect of any 

Contract, pursuant to the Rules, pursuant to a Clearing Membership Agreement, 

pursuant to these FX Standard Terms or otherwise, save for any liability which by 

law may not be excluded, (ii) in no event shall Customer attempt to interfere with 

the ability of the Clearing House to exercise its rights hereunder or as set forth in 

the Rules, the Procedures or any Clearing Membership Agreement, and (iii) it is 

not entitled to, and will not, petition a court or take any action or commence any 
NYDOCS01/1643340.2 400

proceedings against the Clearing House, directly or indirectly and will if any such 

action is taken fully indemnify the Clearing House against any costs, losses or 

other consequences of Customer taking any such action. Customer agrees that 

Clearing Member acts as principal at all times in all its Contracts with the 

Clearing House.

(b) The Clearing House shall have no responsibility for the compliance by Clearing 

Member or Customer with its obligations under a Customer-Clearing Member 

Agreement. The Clearing House shall be under no obligation to enquire into, and 

shall be fully protected in relying on, any instructions or directions with respect to a 

Customer Account or the assets recorded therein or transferred thereto or therefrom 

under the Rules received from a Person that the Clearing House believes to be 

authorised to act on behalf of Clearing Member.

(c) Customer agrees and acknowledges that the performance and payment obligations 

of Clearing Member to Customer are limited by and contingent on the actual 

performance or payment by the Clearing House under the related FX Contract and 

that Clearing Member shall have no responsibility for the compliance by the 

Clearing House (or any person other than that Clearing Member) with its 

obligations, including without limitation, under any FX Contract, the Rules or the

Procedures. In the event that the Clearing House defaults in or defers or varies the 

payment or performance of any obligation otherwise owed by it in respect of an FX 

Contract corresponding to a Customer-CM FX Transaction (including, without 

limitation, any shortfall in repayment of Permitted Cover or any recovery of less 

than 100% of amounts owed by the Clearing House or property provided to the 

Clearing House in circumstances in which Rule 912 applies), Clearing Member will 

be entitled to make a corresponding deduction, withholding or other reduction from, 

or tolling or deferring of, any payment or performance otherwise owed by it under 

such corresponding Customer-CM FX Transactions and/or to make its performance 

under such Customer-CM FX Transactions conditional on performance by the 

Clearing House under the related FX Contract (and where any such deduction may 

be attributable to both Customer-CM FX Transactions and to Customer Account 

Contracts of other Customers, Clearing Member shall allocate such deduction 

among such contracts on a pro rata basis) provided that if such defaulted or delayed 

payment or performance is subsequently obtained by Clearing Member from the 

Clearing House (in whole or in apart), Clearing Member shall thereupon make the 

corresponding payment or performance (or portion thereof) to Customer.

9. Certain Tax Matters. 

Subject always, and without prejudice, to any provisions of a Customer-Clearing Member 

Agreement: (i) if Clearing Member is required to pay to Clearing House any additional 

amount under Rule 301(j) or the Contract Terms with respect to an FX Contract

corresponding to a Customer-CM FX Transaction, Customer shall be obliged to pay to 

Clearing Member an amount equal to such additional amount (or the applicable portion 

thereof), but without duplication of any additional amount payable by Customer under 

any relevant provision of the Customer-Clearing Member Agreement, (ii) for the 
NYDOCS01/1643340.2 401

avoidance of doubt, and without prejudice to the above, if Clearing House deducts or 

withholds any amount otherwise payable to Clearing Member on an FX Contract

pursuant to Rule 301 or the Contract Terms, Clearing Member shall be entitled to make a 

corresponding deduction from any amount otherwise payable by Clearing Member to 

Customer under a corresponding Customer-CM FX Transaction, and (iii) where such 

additional amount or deduction may be attributable to both Customer-CM FX 

Transactions and to Customer-CM FX Transactions of other customers, Clearing 

Member shall allocate such additional amount or deduction among such contracts on a 

pro rata basis. 

10. Reliance on FX Trade Particulars and submissions to Repositories etc.

The Clearing House shall be entitled to assume, without enquiry, that (i) at each 

Acceptance Time at which a Customer-CM FX Transaction arises, the respective 

obligations of Clearing Member and Customer under such Customer-CM FX Transaction 

constitutes its legal, valid and binding obligations enforceable in accordance with their 

respective terms, subject to applicable bankruptcy, reorganisation, insolvency, 

moratorium or similar laws affecting creditors' rights generally and subject, as to 

enforceability, to equitable principles in general application (regardless of whether 

enforcement is sought in a proceeding in equity or at law); (ii) where Customer or 

Clearing Member are acting out of an office in the United States of America, each of 

Clearing Member and Customer represents to the other and to the Clearing House that it 

is an "eligible contract participant" as defined in the US Commodity Exchange Act, as 

amended and (iii) that the Clearing House is duly authorised by Clearing Member and 

Customer to submit, in accordance with the Rules and the Procedures, details of any FX 

Trade Particulars or Customer-CM FX Transaction to a Repository and to amend or 

delete such records from time to time in accordance with the Rules and the Procedures, in 

each case subject to Applicable Law. For the avoidance of doubt, Clearing Member shall 

not take any actions in any Repository of a nature specified in this paragraph and neither 

the Clearing House nor Clearing Member will be liable to Customer for any action or 

omission of the Clearing House as a result of having made such submissions. The sole 

remedy of Customer in the case of any error shall be to request that Clearing Member 

request the Clearing House to amend or correct any error pursuant to the Rules or 

Procedures.

11. Third Party Rights. 

The Clearing House shall be entitled to rely upon and enjoy the benefit of the 

representations, warranties, agreements, obligations and covenants of the Customer under 

these FX Standard Terms and shall have the right to enforce such representations, 

warranties, agreements, obligations and covenants against the parties under the Contracts 

(Rights of Third Parties) Act 1999. Other than as set out in this Section 11, no persons 

other than Clearing Member and Customer shall have the right to enforce any provision 

of these FX Standard Terms under the Contracts (Rights of Third Parties) Act 1999 or 

otherwise.

12. Miscellaneous.
NYDOCS01/1643340.2 402

(a) Entire Agreement. These FX Standard Terms (together with the CustomerClearing Member Agreement and the Rules and the Procedures incorporated by 

reference herein) constitutes the entire agreement and understanding of Customer 

and Clearing Member with respect to its subject matter and supersedes all oral 

communication and prior writings (except as otherwise provided herein) with 

respect thereto.

(b) Headings. The headings used in these FX Standard Terms are for convenience of 

reference only and are not to affect the construction of or to be taken into 

consideration in interpreting these FX Standard Terms.

(c) Governing Law. Any contractual or non-contractual disputes arising out of or in 

connection with the Customer-Clearing Member Agreement are governed by and 

shall be construed in accordance with the law specified in the Customer-Clearing 

Member Agreement and subject to the non-exclusive jurisdiction of the courts 

specified in the Cleared Transactions Master Agreement provided that: (i) Sections 

6(d) and 11 of these FX Standard Terms shall be governed by and shall be 

construed in accordance with the laws of England and Wales and are subject to 

arbitration under Rule 117 as if such provisions of these FX Standard Terms were 

Rules and the parties were bound thereby as if they were both Clearing Members, 

notwithstanding any choice of law or jurisdiction in the Cleared Transactions 

Master Agreement; and (ii) each provision of the Rules and the Procedures 

incorporated by reference herein or in the Customer-Clearing Member Agreement 

shall be governed by and construed in accordance with the laws of England and 

Wales, as set forth in the relevant governing law provision of such document (it 

being understood that no Pledged Collateral Matters are of relevance to NonFCM/BD Clearing Members). Clearing Member and Customer hereby waive any 

right to object to any such proceedings on the basis of forum non conveniens or 

otherwise. 

13. Modifications where Clearing Member is a Sponsor and Customer is a Sponsored 

Principal.

(a) This paragraph 13 shall apply only in respect of an Individually Segregated Sponsored 

Account, notwithstanding any other provisions of these FX Standard Terms to the 

contrary.

(b) The Sponsored Principal and Sponsor agree that, save in the circumstances contemplated 

by these FX Standard Terms and as provided for in any Customer-Clearing Member 

Agreement or other agreement between Sponsored Principal and Sponsor, each 

Customer-CM FX Transaction is intended to reflect exactly the obligations of the 

Clearing Member in respect of the related FX Contract in the manner set forth in Part 19 

of the Rules. Any reference to an FX Contract or Customer-CM FX Transaction or the 

relationship between a Sponsored Principal and Sponsor shall be construed in accordance 

with recitals 4 to 8, Part 19 of the Rules, the Sponsored Principal Clearing Agreement 

and the Sponsor Agreement.
NYDOCS01/1643340.2 403

(c) The following provisions of these FX Standard Terms shall be modified as set out below 

in connection with an Individually Segregated Sponsored Account:

(i) paragraph 4(a) shall not apply if the Nominated Bank Account used for the 

Individually Segregated Sponsored Account is an account of the Sponsored 

Principal;

(ii) the second sentence of paragraph 4(b) shall not apply; and the rights of the 

Sponsored Principal to the assets recorded in the Individually Segregated 

Sponsored Account shall be as set out in the Rules;

(iii) paragraphs 6(b)-(e) shall be construed as being modified to the extent that the 

Default Portability Rules and default rules are modified for Sponsors and 

Sponsored Principals pursuant to Rule 904 and in particular for purposes of 

paragraph 6(b)(iii) the Clearing House shall in addition be entitled to accept the 

appointment of a new Sponsor pursuant to Rule 904; and

(iv) paragraphs 8(a)(i) and (iii) and the provisions of the Rules shall instead apply to 

determine the liability of the Clearing House to the Sponsored Principal.

(d) The Sponsored Principal shall be deemed to represent and warrant to the Sponsor, upon 

their first date of its holding such status and on each subsequent date that it is a 

Sponsored Principal with such Sponsor, that it meets all of the criteria set out in Rule 

1901(b) and (d) and is in compliance with all of its obligations under these Rules.

(e) Any asset received by the Sponsor from the Clearing House in respect of an Individually 

Segregated Sponsored Account shall be treated by the Sponsor and Sponsored Principal 

as if it had been received by the Sponsor from the Sponsored Principal as collateral (or 

cover for collateral) pursuant to the Cleared Transactions Master Agreement and these 

FX Standard Terms.
Exhibit Settlement and Notices Terms

NYDOCS01/1643340.2 404

EXHIBIT 4

ICE CLEAR EUROPE LIMITED

SETTLEMENT AND NOTICES TERMS

1. APPLICATION AND INTERPRETATION

These settlement and notices terms (the "Settlement and Notices Terms") apply to all 

Customer-CM CDS Transactions and to the clearing arrangements between an FCM/BD CDS 

Clearing Member and its FCM/BD Customers and, in each case, to the related CDS Contracts 

(the term "CDS Contract", as used in these Settlement and Notices Terms, being restricted to 

CDS Contracts in a CDS Chain, as described below). Notwithstanding the previous sentence but 

without prejudice to the terms of any CDS Contract or Customer-CM CDS Transaction, a 

Clearing Member and its Customer may agree in their clearing arrangements or otherwise to vary 

or override the terms of these Settlement and Notices Terms as between themselves only, in 

respect of the Customer-CM CDS Transaction between them or, in the case of an FCM/BD 

Customers, the clearing arrangements between them, provided that this shall not result in any 

amendment to the terms, or required performance under, any Customer-CM CDS Transaction to 

which such parties are not both a party or to any CDS Contract. These Settlement and Notices 

Terms apply equally to Sponsors and Sponsored Principals, respectively, as they apply to 

FCM/BD CDS Clearing Members and FCM/BD Customers, respectively.

These Settlement and Notices Terms are published by the Clearing House as an exhibit to the 

Rules. They are incorporated into the Contract Terms of CDS Contracts under Rule 1502 and 

are part of the terms of Customer-CM CDS Transactions pursuant to the CDS Standard Terms 

(and, in relation to FCM/BD CDS Clearing Members and Sponsors, are incorporated by 

reference into the clearing agreements between FCM/BD CDS Clearing Members or Sponsors 

and their Customers or Sponsored Principals, respectively). These Settlement and Notices Terms 

shall be governed by and construed in accordance with the law governing the CDS Contract, 

Customer-CM CDS Transaction or clearing arrangement into which they are incorporated and 

shall be subject to such dispute resolution mechanisms and procedures and such courts or other 

forum for hearing disputes as are applicable in respect of such CDS Contract, Customer-CM 

CDS Transaction and/or clearing arrangement, in each case of which they form part, as 

applicable. Each Clearing Member, Sponsor, Customer and Sponsored Principal to which these 

Settlement and Notices Terms apply hereby waives any right to object to any such choice of law 

or proceedings on the basis of forum non conveniens, that the governing law or forum is not 

specified on the face of this document or otherwise.

These Settlement and Notices Terms are intended to apply in their present form pending broader 

industry discussion of other possible solutions, possibly in connection with technological 

progress, and may be amended as any further technological or industry developments take place. 

Any amendments, modifications, restatements or supplements in respect of these Settlement and 

Notices Terms shall be effective if made by the Clearing House pursuant to the provisions of 

Rule 109 as if these Settlement and Notices Terms were Rules and as if Rule 109 applied to 

Customers of CDS Clearing Members and Sponsored Principals in addition to, and in the same 

way as it applies to, Clearing Members and Sponsors. At the request of a CDS Clearing 
Exhibit Settlement and Notices Terms

NYDOCS01/1643340.2 405

Member, a Sponsor or the Clearing House, a Customer of that CDS Clearing Member or 

Sponsored Principal in relation to that Sponsor will enter into a written confirmation of its 

agreement to the terms of these Settlement and Notices Terms or any amendment, modification, 

supplement or restatement made to them.

In the event of any inconsistency between any provision of the Rules, CDS Procedures or CDS 

Standard Terms and any provision of these Settlement and Notices Terms, Rule 102(f) shall 

apply to determine which provision prevails.

Capitalised terms used, but not defined, in these Settlement and Notices Terms shall have the 

meanings given to them in the Rules, CDS Procedures, and Standard Terms (together, the "ICE 

Documentation") as applicable, and in the order of priority specified in Rule 102(f) in the event 

and to the extent of any conflict. 

These Settlement and Notices Terms are intended to establish the processes for dealing with 

certain aspects of Physical Notices. "Physical Notices" mean those notices that may be 

delivered in connection with the terms of CDS Contracts and, where applicable, Customer-CM 

CDS Transactions (other than Electronic Notices and other equivalent electronic notices under 

Customer-CM CDS Transactions which are or are required pursuant to the Rules or CDS 

Procedures to be given through Deriv/SERV) but excluding any notices that may be delivered 

solely pursuant to the bilateral clearing arrangements existing between any Clearing Member and 

its Customer or between any Sponsor and its Sponsored Principal and excluding also notices 

arising under the Rules that are not specific to the terms of a CDS Contract or Customer-CM 

CDS Transaction. 

For the avoidance of doubt, nothing herein is intended to or shall create any additional 

obligations or liability for Clearing Members or Sponsors to their Customers or Sponsored 

Principals, respectively, for the performance of the Clearing House, which is limited pursuant to 

the Standard Terms or the clearing arrangements between a Clearing Member or Sponsor and its 

Customer or Sponsored Principal.

References to "Sections" herein are to sections of these Settlement and Notices Terms, unless 

specified otherwise.

These Settlement and Notices Terms are intended to amend and supplement the contractual 

relationships created pursuant to the documentation referred to herein; they are not intended to 

create new contractual relationships between parties which would not otherwise exist.

2. THE SETTLEMENT AND NOTICES TERMS

2.1 Provisions Applicable to all Physical Notices

(a) These Settlement and Notice Terms apply where there is a chain of transactions 

(each a "CDS Chain") for which:

(i) a Clearing Member ("Clearing Member A") is the protection buyer 

under a CDS Contract with the Clearing House;
Exhibit Settlement and Notices Terms

NYDOCS01/1643340.2 406

(ii) Clearing Member A may have entered into a related Customer-CM CDS 

Transaction with, or if it is an FCM/BD CDS Clearing Member may be 

party to the CDS Contract on behalf of, its Customer ("Customer A");

(iii) a Matched Pair has been created pursuant to which Clearing Member A is 

a Matched CDS Buyer with Clearing Member B (defined below) in 

respect of the CDS Contract referred to in (i) above;

(iv) a Clearing Member ("Clearing Member B") is the protection seller under 

a CDS Contract with the Clearing House and is the Matched CDS Seller in 

respect of such CDS Contract in the Matched Pair with Clearing Member 

A referred in the (iii) above; and

(v) Clearing Member B may have entered into a related Customer-CM CDS 

Transaction with, or if it is an FCM/BD CDS Clearing Member may be 

party to the CDS Contract on behalf of, its Customer ("Customer B"),

but will not apply to a CDS Chain in which there is neither a Customer A nor a 

Customer B. Accordingly a CDS Chain may involve:

(A) Customer A, Clearing Member A, the Clearing House, Clearing 

Member B and Customer B;

(B) Customer A, Clearing Member A, the Clearing House and 

Clearing Member B; or

(C) Clearing Member A, the Clearing House, Clearing Member B and 

Customer B.

Non FCM/BD CDS Clearing Members and their Customers

(b) A Physical Notice from a Customer to its Non-FCM/BD CDS Clearing Member 

will only be deemed to be effective for purposes of a Customer-CM CDS 

Transaction if and when a Physical Notice of an equivalent type has been 

delivered by such Non-FCM/BD CDS Clearing Member pursuant to and in 

accordance with the related CDS Contract and is effective pursuant to the terms of 

such CDS Contract (which may, for the avoidance of doubt, be by delivery to the 

other Clearing Member in a Matched Pair as designee for the Clearing House in 

accordance with the ICE Documentation). 

(c) If a Physical Notice is delivered by a Non-FCM/BD CDS Clearing Member to the 

Clearing House (which may, for the avoidance of doubt, be by delivery to the 

other Clearing Member in a Matched Pair as designee for the Clearing House in 

accordance with the ICE Documentation) under a CDS Contract, the NonFCM/BD CDS Clearing Member's Customer, if any, will be deemed to have 

delivered at the same time to such Non-FCM/BD CDS Clearing Member, 

pursuant to and in accordance with the related Customer-CM CDS Transaction, a 

Physical Notice of an equivalent type and with identical content and effect to that 
Exhibit Settlement and Notices Terms

NYDOCS01/1643340.2 407

delivered by such Non FCM/BD CDS Clearing Member under such CDS 

Contract.

(d) An effective Physical Notice that has been delivered to a Non-FCM/BD CDS 

Clearing Member by the Clearing House (which may, for the avoidance of doubt, 

be by delivery by the other Clearing Member in a Matched Pair on behalf of the 

Clearing House in accordance with the ICE Documentation) pursuant to a CDS 

Contract shall, subject to the terms of the clearing arrangement between such 

Clearing Member and its Customer, be deemed to constitute the effective delivery 

at the same time of a Physical Notice of an equivalent type and with identical 

content and effect by such Clearing Member to its Customer, if any, under the 

related Customer-CM CDS Transaction, regardless of whether or when the 

Customer actually receives such or a corresponding Physical Notice from such 

Clearing Member under the Customer-CM CDS Transaction.

(e) Each Non-FCM/BD CDS Clearing Member agrees for the benefit of each of its 

Customers that, if such Customer delivers any Physical Notice which it is 

permitted to deliver under a Customer-CM CDS Transaction and which would, in 

the absence of Section 2.1(b) of these Settlement and Notices Terms, be effective 

pursuant to such Customer-CM CDS Transaction and any clearing arrangements 

between them, the Non-FCM/BD CDS Clearing Member will, subject to the 

terms of the related CDS Contract and the ICE Documentation, deliver a 

corresponding Physical Notice under the relevant CDS Contract no later than two 

(2) hours after effective receipt by such Non-FCM/BD CDS Clearing Member of 

such Physical Notice from such Customer. 

(f) Each Non-FCM/BD CDS Clearing Member agrees for the benefit of each of its 

Customers that, if it (i) receives a Physical Notice pursuant to a CDS Contract or 

(ii) gives a Physical Notice that is effective pursuant to the terms of a CDS 

Contract, it will, subject to the terms of the CDS Contract, the ICE 

Documentation, the clearing arrangements between them, and the terms of any 

related Customer-CM CDS Transaction, deliver a copy of such Physical Notice to 

Customer no later than two (2) hours after effective receipt or delivery by it of 

such notice. 

FCM/BD CDS Clearing Members and their Customers

(g) Each FCM/BD CDS Clearing Member agrees for the benefit of each of its 

Customers that, if such Customer delivers any request or instruction to such 

FCM/BD CDS Clearing Member to deliver a Physical Notice under a CDS 

Contract (that such FCM/BD CDS Clearing Member is permitted to deliver) and 

where such request or instruction is effective pursuant to both (i) the clearing 

arrangements between them and (ii) these Settlement and Notice Terms, the 

FCM/BD CDS Clearing Member will, subject to the terms of the relevant CDS 

Contract and the ICE Documentation, deliver such Physical Notice under the 

relevant CDS Contract no later than two (2) hours after effective receipt by the 

FCM/BD CDS Clearing Member of such request or instruction.
Exhibit Settlement and Notices Terms

NYDOCS01/1643340.2 408

(h) An effective Physical Notice that has been delivered to an FCM/BD CDS 

Clearing Member by the Clearing House (which may, for the avoidance of doubt, 

be by delivery by the other Clearing Member in a Matched Pair on behalf of the 

Clearing House in accordance with the ICE Documentation) pursuant to a CDS 

Contract shall, subject to the terms of the clearing arrangement between such 

FCM/BD CDS Clearing Member and its Customer, be deemed to have been 

copied to and bind its Customer, if any, at the same time, regardless of if or when 

the Customer actually receives such Physical Notice or copy of such Physical 

Notice or any corresponding notice from such FCM/BD CDS Clearing Member 

or any other Person.

(i) Each FCM/BD CDS Clearing Member agrees for the benefit of each of its 

Customers that, if it (i) receives a Physical Notice pursuant to a CDS Contract or 

(ii) gives a Physical Notice that is effective pursuant to the terms of a CDS 

Contract, it will, subject to the terms of the CDS Contract, the ICE 

Documentation and the clearing arrangements between them, deliver a copy of 

such Physical Notice to Customer no later than two (2) hours after effective 

receipt or delivery by it of such notice. 

2.2 Credit Event Notices and Notices to Exercise Movement Option

No Customer may deliver any Restructuring Credit Event Notice or Notice to Exercise 

Movement Option or an instruction to deliver the same other than pursuant to the Electronic 

Notice Process. 

2.3 Notices

(a) For the purposes of determining, as between each Clearing Member and its 

Customer only, (A) when notices, requests or instructions delivered by a 

Customer to a Clearing Member pursuant to their clearing arrangements and, if 

applicable a Customer-CM CDS Transaction are treated as received or given; and 

(B) when notices received or given by a Clearing Member must be copied by a 

Clearing Member to its Customer, in each case pursuant to Section 2.1 of these 

Settlement and Notices Terms, the following shall apply:

(i) (A) a notice, request or instruction received from a Customer or (B) a 

notice given by the Clearing Member pursuant to a CDS Contract, in each 

case on or after 9:00 am and on or prior to 4:00 pm (in each case 

Calculation Agent City time) on a Calculation Agent City Business Day 

will be effective at the time received (as referred to in (A)) or given (as 

referred to in (B));

(ii) (A) a notice, request or instruction received from a Customer or (B) a 

notice given by the Clearing Member pursuant to a CDS Contract, in each 

case prior to 9:00 am (in each case Calculation Agent City time) on a 

Calculation Agent City Business Day will be effective at 9:00 am 

Calculation Agent City time on such Calculation Agent City Business 

Day; and
Exhibit Settlement and Notices Terms

NYDOCS01/1643340.2 409

(iii) (A) a notice, request or instruction received from a Customer or (B) a 

notice given by the Clearing Member pursuant to a CDS Contract, in each 

case on a day that is not a Calculation Agent City Business Day or after 

4:00 pm (Calculation Agent City time) on a day that is a Calculation 

Agent City Business Day, will be effective at 9:00 am Calculation Agent 

City time on the next following Calculation Agent City Business Day.

A deemed notice, request or instruction under a Customer-CM CDS Transaction 

will be deemed to be given at the same times as the notice, request or instruction 

is treated as given or received under the related CDS Contract pursuant to this 

Section 2.3(a).

Terms used but not defined in this Section 2.3(a) shall have the meanings given to 

them in the relevant CDS Contract.

(b) Any notice required to be delivered pursuant to these Settlement and Notices 

Terms shall be delivered in accordance with the terms of the relevant CDS 

Contract or, if applicable, Customer-CM CDS Transaction, the ICE 

Documentation and the clearing arrangements applicable between a Clearing 

Member and its Customer. Subject to paragraph 6.2 and paragraph 6.3 of the 

CDS Procedures and these Settlement and Notices Terms, section 1.10 

(Requirements Regarding Notices) of the 2003 Credit Derivatives Definitions or 

section 1.38 of the 2014 Credit Derivatives Definitions, as applicable, will apply 

to all such notices.

2.4 Delivery of Deliverable Obligations

(a) Customer A, Clearing Member A, Clearing Member B and Customer B may, if 

they wish and subject to Applicable Law, in any instance where Physical 

Settlement applies, arrange among themselves for delivery versus payment as 

between any two of them in satisfaction of the obligations of the relevant parties 

in the CDS Chain agreeing to such arrangement (including the Clearing House 

where the obligations of the two Clearing Members to each other are so satisfied). 

In any instance in which a Customer makes or receives delivery or payment on 

behalf of its Clearing Member pursuant to such arrangements, the Customer will 

be treated as a Representative and designee of the Clearing Member. 

(b) To the extent that no arrangement of a nature referred to in Section 2.4(a) is 

established, the remaining provisions of this Section 2.4 shall apply in connection 

with Physical Settlement of CDS Contracts and Customer-CM CDS Transactions, 

if any.

(c) Delivery of Deliverable Obligations by Customer A, if any, under a CustomerCM CDS Transaction will only be deemed to have been effectively made if and 

when Clearing Member A has Delivered under the related CDS Contract 

Deliverable Obligations, having an outstanding principal balance (or, if 

applicable, a Due and Payable Amount) equal to that Delivered to it by Customer 
Exhibit Settlement and Notices Terms

NYDOCS01/1643340.2 410

A, which may for the avoidance of doubt, be by way of Delivery to Clearing 

Member B as designee for the Clearing House in accordance with the ICE 

Documentation. Consequently, no payment is due from Clearing Member A to 

Customer A upon delivery by Customer A of such Deliverable Obligations to 

Clearing Member A until the corresponding Physical Settlement Amount or Cash 

Settlement Amount is paid to Customer A pursuant to the CDS Contract.

(d) Each Clearing Member covenants separately for the benefit of each of its 

Customers A that if it is acting as Clearing Member A and receives Delivery of a 

Deliverable Obligation from its Customer for purposes of settlement under a CDS 

Contract or Customer-CM CDS Transaction, it will, in accordance with the 

relevant CDS Contract, the ICE Documentation and the clearing arrangements 

between such Clearing Member and its Customer, Deliver Deliverable 

Obligations (which, for the avoidance of doubt need not correspond to those 

Delivered to it by the Customer) no later than the first Business Day following the 

day on which a trade in the relevant Deliverable Obligations would, if effected on 

the day of receipt by such Clearing Member A of such Deliverable Obligations 

from Customer A, be settled in accordance with customary practice. On each

occasion on which a Customer of an FCM/BD CDS Clearing Member Delivers 

Deliverable Obligations to its FCM/BD CDS Clearing Member, such Customer 

will be deemed to make the representations in section 9.2 of the 2003 Credit 

Derivatives Definitions or section 11.2 of the 2014 Credit Derivatives Definitions, 

as applicable, as if it were party as Buyer to a Customer-CM CDS Transaction 

with such FCM/BD CDS Clearing Member. 

(e) For the purposes of sections 9.3, 9.4, 9.5, 9.6, 9.9 and 9.10 of the 2003 Credit 

Derivatives Definitions and sections 9.1, 9.2, 9.3, 9.4, 9.7 and 9.8 of the 2014 

Credit Derivatives Definitions but subject to any other provision of these 

Settlement and Notices Terms, the ICE Documentation and the clearing 

arrangements between a Clearing Member and its Customer which provides for 

an alternative means of settlement (or no settlement), when Clearing Member B 

receives Delivery of Deliverable Obligations pursuant to a CDS Contract where 

Clearing Member B is party to a related Customer-CM CDS Transaction with 

Customer B, Delivery of Deliverable Obligations with an outstanding principal 

balance (or, if applicable, a Due and Payable Amount) equal to that Delivered to 

Clearing Member B pursuant to such CDS Contract will be deemed to have been 

made by Clearing Member B to Customer B, whether or not Customer B actually 

receives Delivery from Clearing Member B.

(f) Each Clearing Member covenants separately for the benefit of each of its 

Customers B that if it is acting as Clearing Member B and receives Deliverable 

Obligations pursuant to the terms of a CDS Contract where the Clearing Member 

is party to a related Customer-CM CDS Transaction with Customer B, it will, in 

accordance with the Standard Terms, the terms of such Customer-CM CDS 

Transaction, and the clearing arrangements between Clearing Member B and 

Customer B, Deliver Deliverable Obligations with an outstanding principal 

balance (or, if applicable, a Due and Payable Amount) equal to that Delivered to 
Exhibit Settlement and Notices Terms

NYDOCS01/1643340.2 411

Clearing Member B under the relevant CDS Contract on or prior to the first 

Business Day following the date on which a trade in the relevant Deliverable 

Obligations would, if effected on the day of receipt by such Clearing Member B 

of such Deliverable Obligations, settle in accordance with customary practice. 

For the purposes of this covenant only, Section 2.4(e) shall be deemed not to 

apply.

(g) For the avoidance of doubt, if Customer A has delivered Deliverable Obligations 

to Clearing Member A but the relevant CDS Contract to which Clearing Member 

A is party is not physically settled for any reason, Clearing Member A shall return 

Obligations equivalent to the Deliverable Obligations to Customer A as soon as 

reasonably practicable.

2.5 Fallback to Cash Settlement

(a) In respect of any CDS Chain where there is a Customer A, if fallback to Cash 

Settlement applies under the Customer-CM CDS Transaction between Clearing 

Member A and Customer A (or, where Clearing Member A is an FCM/BD CDS 

Clearing Member, the relevant CDS Contract would fall back to Cash Settlement 

if Customer A were alone party to such CDS Contract as protection buyer), then 

all CDS Contracts and any Customer-CM CDS Transactions in such CDS Chain 

shall be subject to a fallback to Cash Settlement in accordance with either Rule 

1513 or Article 9 of the Applicable Credit Derivatives Definitions, depending on 

the reason for the fallback to Cash Settlement.

(b) If fallback to Cash Settlement applies under a CDS Contract in a CDS Chain then 

all CDS Contracts and any Customer-CM CDS Transactions in such CDS Chain 

shall be subject to a fallback to Cash Settlement in accordance with either Rule 

1513 or Article 9 of the Applicable Credit Derivatives Definitions, depending on 

the reason for the fallback to Cash Settlement.

(c) If fallback to Cash Settlement applies only under a Customer-CM CDS 

Transaction between Clearing Member B and Customer B in a CDS Chain, then 

such fallback to Cash Settlement shall apply only to such Customer-CM CDS 

Transaction in such CDS Chain.

(d) Without prejudice to the provisions of the ICE Documentation in relation to CDS 

Contracts, as soon as reasonably practicable on becoming aware that fallback to 

Cash Settlement applies to any part of a CDS Chain (other than solely a 

Customer-CM CDS Transaction between Clearing Member B and Customer B): 

(i) Clearing Member A and Customer A; (ii) Clearing Member A, the Clearing 

House and Clearing Member B; and (iii) Clearing Member B and Customer B 

shall notify each other in accordance with the terms of the relevant CDS Contracts 

and, if applicable, Customer-CM CDS Transactions and/or any clearing 

arrangements describing in reasonable detail the facts giving rise to the fallback. 

Sections 2.1 and 2.3 shall apply to such notices.
Exhibit Settlement and Notices Terms

NYDOCS01/1643340.2 412

(e) Where Section 2.5(a) or (b) applies, Clearing Member A shall determine the Cash 

Settlement Amount in accordance with the terms of the relevant CDS Contract 

pursuant to the Rules and section 9.8 (Partial Cash Settlement Terms) of the 2003 

Credit Derivatives Definitions or section 9.6 of the 2014 Credit Derivatives 

Definitions, as applicable: (i) as if: (A) Clearing Member A were the Calculation 

Agent in respect of such CDS Contract; and (B) the Valuation Date were the first, 

or in the case of a fallback to cash settlement pursuant to Rule 1512 or 1513, its 

corresponding counterpart in a Customer-CM CDS Transaction or the relationship 

between and FCM/BD CDS Clearing Member and its Customer, the second 

Business Day after the date of receipt or delivery by it of the notice referred to in 

Section 2.5(d)(ii); and (ii) subject to Section 2.5(h). No other party to a CDS 

Contract or Customer-CM CDS Transaction in the relevant CDS Chain shall 

determine any separate or different Cash Settlement Amount and the Cash 

Settlement Amount determined by Clearing Member A (provided that it is 

determined as set out above) shall apply to all CDS Contracts and Customer-CM 

CDS Transactions in the CDS Chain and to any related clearing arrangements. 

Sections 2.1 and 2.3 shall apply to any notices delivered or served in connection 

with the determination or notification of the Cash Settlement Amount. 

(f) For the purposes of Section 2.5(e):

(i) section 9.8(k) of the 2003 Credit Derivatives Definitions is amended by 

inserting the following at the beginning thereof:

"For the purposes hereof, in addition to the requirements of Section 7.10 (Full 

Quotation), each firm Quotation shall:

(A) be for a transaction with the party seeking the Quotation (or its designee) 

(the "Relevant Party") in which the Relevant Party agrees to Deliver the 

Deliverable Obligations to the Dealer submitting the firm quotation (the "Quoting 

Dealer"), which transaction shall be governed by documentation that is consistent 

with market practice applicable to the sale and purchase of Deliverable 

Obligations on the Valuation Date (which may be determined by the Determining 

Body), including without limitation a representation that the Quoting Dealer has 

completed all "know your customer" or similar requirements under all Applicable 

Laws and internal compliance procedures relating to a transaction with the 

Relevant Party and on the Reference Entity;

(B) be capable of acceptance by the Relevant Party (for such purposes, each firm 

Quotation must, inter alia, be obtained from a Dealer with whom the Relevant 

Party in its sole, unfettered and absolute discretion determines that it is able in 

accordance with all its internal compliance and policy requirements to transact 

and to Deliver the Deliverable Obligations) and be open for acceptance to the 

relevant party for at least 30 minutes; and

(C) be obtained on the basis that if the Relevant Party agrees to Deliver the 

Deliverable Obligations to such Quoting Dealer on the terms set forth herein, such 
Exhibit Settlement and Notices Terms

NYDOCS01/1643340.2 413

Quoting Dealer agrees to pay the settlement amount (calculated and payable for 

this purpose in accordance with the relevant market standard documentation and 

based on the price so quoted) that would be payable for such Deliverable 

Obligations to the Relevant Party.

provided that:

(D) if Rule 1512 applies: (I) on the same Business Day that the CDS Buyer (as if 

it were Calculation Agent) has attempted to obtain all Quotations that the 

Calculation Agent is required to attempt to obtain in accordance with section 

9.8(k) of the 2003 Credit Derivatives Definitions, the CDS Buyer shall offer the 

Clearing House the opportunity to provide a Quotation as if the Clearing House 

were a Dealer in accordance with section 9.8(k) of the 2003 Credit Derivatives 

Definitions; and (II) if the Quotation provided by the Clearing House is higher 

than any Quotation obtained by the CDS Buyer (as if it were Calculation Agent) 

from the Dealers in accordance with section 9.8(k) of the 2003 Credit Derivatives 

Definitions (including, for the avoidance of doubt, any Weighted Average 

Quotation) such Quotation shall be deemed to be the Highest Quotation and the 

CDS Buyer (as if it were Calculation Agent) shall use such Quotation to 

determine the Final Price; and

(E) if Rule 1513(a)(ii) applies: (I) on the same Business Day that the Matched 

CDS Buyer (as if it were Calculation Agent) has attempted to obtain all 

Quotations that the Calculation Agent is required to attempt to obtain in 

accordance with section 9.8(k) of the 2003 Credit Derivatives Definitions, the 

Matched CDS Buyer shall offer the Clearing House the opportunity to provide a 

Quotation as if the Clearing House were a Dealer in accordance with section 

9.8(k) (as amended) of the 2003 Credit Derivatives Definitions; and (II) if the 

Quotation provided by the Clearing House is higher than any Quotation obtained 

by the Matched CDS Buyer (as if it were Calculation Agent) from the Dealers in 

accordance with section 9.8(k) of the 2003 Credit Derivatives Definitions 

(including, for the avoidance of doubt, any Weighted Average Quotation) such 

Quotation shall be deemed to be the Highest Quotation and the Matched CDS 

Buyer (as if it were Calculation Agent) shall use such Quotation to determine the 

Final Price."; and

(ii) section 9.6(k) of the 2014 Credit Derivatives Definitions is amended by 

inserting the following at the beginning hereof:

"For the purposes hereof, in addition to the requirements of Section 7.10 (Full

Quotation), each firm Quotation shall:

(A) be for a transaction with the party seeking the Quotation (or its designee) (the 

"Relevant Party") in which the Relevant Party agrees to Deliver the Deliverable 

Obligations to the Dealer submitting the firm quotation (the "Quoting Dealer"), 

which transaction shall be governed by documentation that is consistent with 

market practice applicable to the sale and purchase of Deliverable Obligations on 
Exhibit Settlement and Notices Terms

NYDOCS01/1643340.2 414

the Valuation Date (which may be determined by the Determining Body), 

including without limitation a representation that the Quoting Dealer has 

completed all "know your customer" or similar requirements under all Applicable 

Laws and internal compliance procedures relating to a transaction with the 

Relevant Party and on the Reference Entity;

(B) be capable of acceptance by the Relevant Party (for such purposes, each firm 

Quotation must, inter alia, be obtained from a Dealer with whom the Relevant 

Party in its sole, unfettered and absolute discretion determines that it is able in 

accordance with all its internal compliance and policy requirements to transact 

and to Deliver the Deliverable Obligations) and be open for acceptance to the 

relevant party for at least 30 minutes; and

(C) be obtained on the basis that if the Relevant Party agrees to Deliver the 

Deliverable Obligations to such Quoting Dealer on the terms set forth herein, such 

Quoting Dealer agrees to pay the settlement amount (calculated and payable for 

this purpose in accordance with the relevant market standard documentation and 

based on the price so quoted) that would be payable for such Deliverable 

Obligations to the Relevant Party.

provided that:

(D) if Rule 1512 applies: (I) on the same Business Day that the CDS Buyer (as if 

it were Calculation Agent) has attempted to obtain all Quotations that the 

Calculation Agent is required to attempt to obtain in accordance with section 

9.6(k) of the 2014 Credit Derivatives Definitions, the CDS Buyer shall offer the 

Clearing House the opportunity to provide a Quotation as if the Clearing House 

were a Dealer in accordance with section 9.6(k) of the 2014 Credit Derivatives 

Definitions; and (II) if the Quotation provided by the Clearing House is higher 

than any Quotation obtained by the CDS Buyer (as if it were Calculation Agent) 

from the Dealers in accordance with section 9.6(k) of the 2014 Credit Derivatives 

Definitions (including, for the avoidance of doubt, any Weighted Average 

Quotation) such Quotation shall be deemed to be the Highest Quotation and the 

CDS Buyer (as if it were Calculation Agent) shall use such Quotation to 

determine the Final Price; and

(E) if Rule 1513(a)(ii) applies: (I) on the same Business Day that the Matched 

CDS Buyer (as if it were Calculation Agent) has attempted to obtain all 

Quotations that the Calculation Agent is required to attempt to obtain in 

accordance with section 9.6(k) of the 2014 Credit Derivatives Definitions, the 

Matched CDS Buyer shall offer the Clearing House the opportunity to provide a

Quotation as if the Clearing House were a Dealer in accordance with section 

9.6(k) of the 2014 Credit Derivatives Definitions: and (II) if the Quotation 

provided by the Clearing House is higher than any Quotation obtained by the 

Matched CDS Buyer (as if it were Calculation Agent) from the Dealers in 

accordance with section 9.6(k) of the 2014 Credit Derivatives Definitions 

(including, for the avoidance of doubt, any Weighted Average Quotation) such 
Exhibit Settlement and Notices Terms

NYDOCS01/1643340.2 415

Quotation shall be deemed to be the Highest Quotation and the Matched CDS 

Buyer (as if it were Calculation Agent) shall use such Quotation to determine the 

Final Price."

(g) As soon as practicable after determining the Cash Settlement Amount pursuant to 

Section 2.5(f), Clearing Member A shall deliver a notice pursuant to the relevant 

CDS Contract, notifying such Cash Settlement Amount. Sections 2.1 and 2.3 will 

apply to such notice. 

(h) The Cash Settlement Date in respect of each of all CDS Contracts and any 

Customer-CM CDS Transactions in the relevant CDS Chain in respect of which 

Clearing Member A has determined the Cash Settlement Amount for the relevant 

CDS Contract shall be the third Business Day after the date of service of the 

notice by Clearing Member A pursuant to the relevant CDS Contract under 

Section 2.5(g).

2.6 Additional provisions relating to section 9.9 (Buy-in of Bonds Not Delivered) of the 2003 

Credit Derivatives Definitions and section 9.7 (Buy-in of Bonds Not Delivered) of the 

2014 Credit Derivatives Definitions

(a) No Clearing Member or Customer may deliver (or, in the case of a Customer of 

an FCM/BD CDS Clearing Member, request or instruct the delivery of) a Buy-In 

Notice except for a Clearing Member that is acting as Clearing Member B (where 

there is no Customer B) or a Customer that is acting as Customer B in a CDS 

Chain. If a Buy-In Notice (or instruction or request to deliver a Buy-in Notice, as 

applicable), is effectively given in respect of a CDS Contract or a Customer-CM 

CDS Transaction by Clearing Member B or Customer B (the relevant party being 

the "Electing Seller"), the Electing Seller may exercise the rights of Seller 

pursuant to and subject to section 9.9 (Buy-in of Bonds Not Delivered) of the 2003 

Credit Derivatives Definitions and section 9.7 (Buy-in of Bonds Not Delivered) of 

the 2014 Credit Derivatives Definitions, as applicable, under the CDS Contract or 

Customer-CM CDS Transaction, as applicable, but without prejudice to Sections 

2.1 and 2.3.

(b) Where a Buy-In Price is determined by the Electing Seller, each other seller of 

protection in the CDS Chain shall be deemed to have effectively determined the 

same Buy-In Price for the transactions to which it is a party as seller of protection 

in the CDS Chain, provided that the Buy-In Price determined by the Electing 

Seller was determined in accordance with the terms of the relevant CDS Contract 

or Customer-CM CDS Transaction, as applicable.

2.7 Additional provisions applicable to section 9.10 (Alternative Procedures Relating to 

Loans not Delivered) of the 2003 Credit Derivatives Definitions and section 9.8 

(Alternative Procedures Relating to Loans not Delivered) of the 2014 Credit Derivatives 

Definitions
Exhibit Settlement and Notices Terms

NYDOCS01/1643340.2 416

(a) No Customer may deliver (or, in the case of a Customer of an FCM/BD CDS 

Clearing Member, request or instruct the delivery of) a notice under section 

9.10(a) of the 2003 Credit Derivatives Definitions or section 9.8(i) of the 2014 

Credit Derivatives Definitions. 

(b) No Clearing Member or Customer may deliver (or, in the case of a Customer of 

an FCM/BD CDS Clearing Member, request or instruct the delivery of) a notice 

under section 9.10(b) of the 2003 Credit Derivatives Definitions or section 9.8(ii) 

of the 2014 Credit Derivatives Definitions (a "9.10(b)/9.8(ii) Notice") except for 

a Clearing Member that is acting as Clearing Member B. Sections 2.1 and 2.3 

hereof shall apply to 9.10(b)/9.8(ii) Notices.

(c) If a CDS Contract is subject to settlement in accordance with section 9.10(b) of 

the 2003 Credit Derivatives Definitions or section 9.8(ii) of the 2014 Credit 

Derivatives Definitions then, where there is a Customer A in the relevant CDS 

Chain, the related Customer-CM CDS Transaction between Clearing Member A 

and Customer A or the rights between Clearing Member A and Customer A 

where Clearing Member A is an FCM/BD CDS Clearing Member shall be settled 

as if a fallback to Cash Settlement applied to such transaction or relationship, by 

reference to the Deliverable Obligations in respect of the CDS Contract.