NASDAQ OMX Commodities will amend its Default Fund Rules, an appendix to the Clearing Rules. The amendments will come into effect 2 September 2013 .
Background As a consequence of the European Market Infrastructure Regulation (EMIR) and related regulatory developments, NASDAQ OMX Stockholm AB ( “NOMX” ) is required to make certain changes to its member sponsored default fund. A summary of the changes can be found below. More detailed information on the default fund reflecting the changes summarized herein will be found in the updated NASDAQ OMX Default Fund Policy Paper which will be made available on NOMX’s website.
Summary of changes
- “Clearing Clients” will be responsible to contribute to the Default Fund on their own behalf. The Clearinghouse will no longer fund such participants’ default fund requirements. The new rules however make it possible for another Clearing Member or “Default Fund Participant” to contribute to the Default Fund for a Clearing Client by treating it as its “Default Fund Sponsored Participant”, as approved in each case by the Clearinghouse.
- The updated rules will include transitional provisions which enable the Clearinghouse to fund any missing default fund contributions of Clearing Clients during a one-month period following implementation of the updated rules. Such funding will be subject to interest.
- A special Minimum Fund Requirement is introduced for Clearing Clients. Such Minimum Fund Requirement must be met whether the Clearing Client contributes on its own behalf or another Default Fund Participant contributes on its behalf.
- A new EMIR compliant model for calculating the size of and applying the Junior Capital is introduced. The rules regarding how the Junior Capital may be applied in the event of a default is changed so that Junior Capital allocated to cover default losses in relation to “Non-Commodity Instruments” or “Commodity Instruments”, respectively, may only be used for such losses.
- References to “Commodity Spot Instruments” have been removed since the N2EX market will not be subject to the Default Fund Rules following the demerger of NOMX into two separate legal entities.
- In relation to the release of contributed assets and guarantee commitments following a “Default Fund Exit”, changes have been made to the effect that where a Default Fund Exit occurs later than ten business days prior to the day that the Clearinghouse is to notify new Fund Requirements for a Contribution Day to the participants, such contributions and guarantee commitments will be locked up until the next “Contribution Day”, i.e. for another three months. Currently, a 30 days’ lock-up period is applied.
- A possibility for the Clearinghouse to require a higher default fund contribution from a new Default Fund Participant than the general Minimum Fund Requirement is introduced. The Clearinghouse intends to use this possibility when a new participant is expected to contribute large trading and clearing volumes.
- In the Default Fund Requirements (included in the same document as a schedule to the Default Fund Rules), where the calculation model for the Default Fund is set out, changes have been made to reflect that CCaR is no longer a component in determining an individual participant’s share of the total default fund.
- Also in the Default Fund Requirements, a possibility for the Clearinghouse to increase or reduce the Fund Requirement of an individual Default Fund Participant to take into account known or anticipated changes in clearing volume and risk is introduced.
For the amended Default Fund Rules, see: http://www.nasdaqomx.com/commodities/Marketac...gestorules
For further information, please contact NASDAQ OMX Commodities: Juuso Korhonen, Head of Collateral Management, phone +46 8 405 7297, juuso.korhonen@nasdaqomx.com
Media contact: Sara Aadnesen, Director Corporate Communications, phone +47 9060 0759, sara.aadnesen@nasdaqomx.com
About NASDAQ OMX The inventor of the electronic exchange, The NASDAQ OMX Group, Inc., fuels economies and provides transformative technologies for the entire lifecycle of a trade - from risk management to trade to surveillance to clearing. In the U.S. and Europe, we own and operate 26 markets including 3 clearinghouses and 5 central securities depositories supporting equities, options, fixed income, derivatives, commodities, futures and structured products. Able to process more than 1 million messages per second at sub-55 microsecond average speeds with 99.99% uptime, our technology drives more than 70 marketplaces in 50 developed and emerging countries into the future, powering 1 in 10 of the world’s securities transactions. Our award-winning data products and worldwide indexes are the benchmarks in the financial industry. Home to approximately 3,300 listed companies worth $6 trillion in market cap whose innovations shape our world, we give the ideas of tomorrow access to capital today. Welcome to where the world takes a big leap forward, daily. Welcome to the NASDAQ OMX Century. To learn more, visit www.nasdaqomx.com. Follow us on Facebook (http://www.facebook.com/NASDAQ) and Twitter (http://www.twitter.com/nasdaqomx). (Symbol: NDAQ and member of S&P 500)
About NASDAQ OMX Commodities NASDAQ OMX Commodities is the brand name for the NASDAQ OMX Group’s worldwide suite of commodity related products and services. The NASDAQ OMX Commodities offerings include power, natural gas and carbon emission markets and clearing services. NASDAQ OMX Commodities is a trademark of the NASDAQ OMX Group, Inc.
NASDAQ OMX Commodities Europe is the trade name of NASDAQ OMX Oslo ASA which is authorized as a commodity derivatives exchange by the Norwegian Ministry of Finance and supervised by the Norwegian Financial Supervisory Authority. All trades with NASDAQ OMX Commodities Europe are subject to clearing with NASDAQ OMX Clearing.
NOS Clearing ASA is the leading clearing house for the freight market and a specialist clearing provider to the commodities markets. The company is wholly owned by the NASDAQ OMX Group Inc. The clearinghouse, which is situated in Oslo, has more than 300 members.
NASDAQ OMX Clearing is the trade name of NASDAQ OMX Stockholm 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
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