Subject to testing and regulatory approval, Nasdaq Commodities is announcing changes to its Clearing Rules, effective November 30, 2017.
This is to inform you of upcoming amendments to the Clearing Rules of the Nasdaq Commodity Markets (the “Clearing Rules”).
These General Terms and Appendices are affected:
- Clearing Rules General Terms
- Joint Trading and Clearing Appendix 1 - Definitions
- Clearing Appendix 9 – Default Fund Rules
- Clearing Appendix 13 – Supplemental Default Fund Rules – Direct Clearing Clients
- New Clearing Appendix 16 – Clearing Client Documentation
- Direct Clearing Client Agreement
This notice includes information about amendments made in respect of Nasdaq Clearing AB’s (“Nasdaq Clearing”) Client Representative / Clearing Client model “Direct Clearing model”. The clients utilizing the Direct Clearing model are referred to as “Direct Clearing Clients”.
The Direct Clearing model is based on a direct relationship between the Direct Clearing Client and Nasdaq Clearing. A Direct Clearing Client is an entity that has been approved by Nasdaq Clearing to register transactions for clearing in its own name and on its own account. The Direct Clearing Client is Nasdaq Clearing’s counterparty even if it acts through a clearing member who is appointed to act as the Client’s agent (“Direct Clearing Agent”). This means that the Direct Clearing Client takes full responsibility for providing collateral, contributions to the default fund, paying cash settlement amounts and delivering securities that are due to Nasdaq Clearing. The Direct Clearing Client is also fully liable for any overnight risk. The Direct Clearing Agent will not take any risk in relation to the Direct Clearing Client’s positions (including overnight risk) or be liable for the Client’s margin or the payment of outstanding amounts.
The amendments will come into effect on November 30, 2017.
Please note that all changes are not mentioned herein but can be found in the full text versions which are provided separately.
Defined terms have the meaning set out under the Clearing Rules.
Direct Clearing Client Agreement
The existing Clearing Client Agreement is replaced by the Direct Clearing Client Agreement, which is a triparty agreement between the Direct Clearing Client, the Direct Clearing Agent and Nasdaq Clearing (“DCC Agreement”).
The Direct Clearing Client appoints the Direct Clearing Agent under the DCC Agreement. Upon entering into the DCC Agreement, the Direct Clearing Client obtains the right to submit Transactions in Exchange Listed Instruments and Clearing Listed Instruments for clearing as a Direct Clearing Client through the Direct Clearing Agent in accordance with the Clearing Rules.
Clause 4 of the new DCC Agreement provides that the Direct Clearing Agent shall act as an intermediary between Nasdaq Clearing and the Direct Clearing Client. Any communication with respect to the obligations under the Clearing Rules and other applicable market information shall be provided by Nasdaq Clearing to the Direct Clearing Agent, unless the Clearinghouse chooses to involve the Direct Clearing Client directly. The Direct Clearing Agent shall in a secure manner forward all relevant information to the Direct Clearing Client.
With a new Appendix 16 this clause is also made applicable to counterparties to existing Clearing Client Agreements.
Definitions
The following defined terms are added to the definitions list for the Clearing Rules: “Direct Clearing Account”, “Direct Clearing Agent”, “Direct Clearing Client” and “Direct Clearing Client Agreement”. References to these Definitions are made throughout the Clearing Rules where relevant. With a new Appendix 16 these definitions are also made applicable to existing Clearing Client Agreements.
General Terms
In section 3.1 it has been clarified that also Direct Clearing Clients can act on behalf of Clients if necessary regulatory approval is available.
In section 3.1.4 Direct Clearing Clients member requirements have been clarified and harmonized with other membership types.
Under section 4.9.1 and 4.9.2 it has been specified that the Direct Clearing Client shall be the only liable party for the obligations pursuant to Contracts Registered on a Direct Clearing Account, where the Transactions that gave rise to such Contracts were registered on a Direct Clearing Account are administered by a Direct Clearing Agent. This means that the Direct Clearing Agent is not liable for any of the obligations relating to Contracts recorded on a Direct Clearing Account and that the Direct Clearing Client bears the ultimate responsibility for all such obligations. This amendment is the materially most important change from the existing Client Representative / Clearing Client model.
Only minor amendments have been made to the Clearing Appendix 9 Default Fund Rules section 12. Please be aware however, that certain changes were introduced to the Clearing Appendix 9 Default Fund Rules on 7 November 2017:
https://newsclient.omxgroup.com/cdsPublic/vie...mp;lang=en
Clearing Appendix 13 Supplemental default rules for Clearing Transactions on Direct Clearing Accounts has been amended to reflect the new model. This appendix sets out the steps that need to be taken where a Clearing Member that acts as a Direct Clearing Agent that has one or more Direct Clearing Accounts is in default.
A new Direct Clearing Client Agreement has been drafted which will replace the current Client Clearing Agreement. Please note however, that existing Client representative / Clearing Clients agreements will remain in force.
A new Appendix 16 has been added to reflect the changes applying to the existing Client representative and Clearing Clients. This appendix sets out how terms and definitions of the existing Client representative / Clearing Clients agreements shall be applied under the revised rulebook and is in addition adding a sections about information responsibility for Clearing Client Documentation.
For updated rulebooks and appendices please see:
http://www.nasdaqomx.com/commodities/Marketac...s-to-rules
Please be aware that the above described amendments to the rulebooks are reflected on current versions of the rulebook per 16 November 2017. The General Terms and several of the Appendices will be updated with other rule changes on the 20 November and the effective version on the 30 November will reflect all these amendments.
For further information, please contact Nasdaq Commodities:
Mette Steinsland, AVP Head of Legal Nasdaq Commodities, phone +47 6752 8071, mette.steinsland@nasdaq.com
Knut Rabbe, Head of Sales, +47 67 52 8032, knut.rabbe@nasdaq.com
Media contact:
Sara Aadnesen, Head of Corporate Communication, phone +47 9060 0759, sara.aadnesen@nasdaq.com
About Nasdaq
Nasdaq (Nasdaq: NDAQ) is a leading provider of trading, exchange technology, information and public company services across six continents. Through its diverse portfolio of solutions, Nasdaq enables customers to plan, optimize and execute their business vision with confidence, using proven technologies that provide transparency and insight for navigating today’s global capital markets. As the creator of the world’s first electronic stock market, its technology powers more than 70 marketplaces in 50 countries, and 1 in 10 of the world's securities transactions. Nasdaq is home to more than 3,600 listed companies with a market value of over $8.8 trillion and more than 10,000 corporate clients. To learn more, visit www.nasdaq.com/ambition or www.nasdaqomx.com .
About Nasdaq Commodities
Nasdaq Commodities is the brand name for the worldwide suite of commodity related products and services offered by Nasdaq. The Nasdaq Commodities offerings include power, natural gas and carbon emission markets, tanker and dry cargo freight, fuel oil, seafood derivatives, iron ore, electricity certificates and clearing services.
Nasdaq Oslo ASA is the commodity derivatives exchange authorized by the Norwegian Ministry of Finance and supervised by the Norwegian Financial Supervisory Authority. All trades with Nasdaq Oslo ASA are subject to clearing with Nasdaq Clearing.
About Nasdaq Clearing
Nasdaq Clearing is the trade name of Nasdaq Clearing AB which is authorized and supervised as a multi-asset clearinghouse by the Swedish Financial Supervisory Authority in Sweden as well as authorized to conduct clearing operation in Norway by the Norwegian Ministry of Finance.
For more information, visit www.nasdaqomx.com/commodities
The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice, either on behalf of a particular security or an overall investment strategy. Neither The Nasdaq Group, Inc. nor any of its affiliates makes any recommendation to buy or sell any security or any representation about the financial condition of any company. Statements regarding Nasdaq-listed companies are not guarantees of future performance. Actual results may differ materially from those expressed or implied. Past performance is not indicative of future results. Investors should undertake their own due diligence and carefully evaluate companies before investing. ADVICE FROM A SECURITIES PROFESSIONAL IS STRONGLY ADVISED.
