The Clearing and Trade Guaranty Fund

SCCP has established a Clearing and Trade Guaranty Fund (CTGF or Clearing Fund).

The Clearing Fund is a credit management tool to support SCCP in meeting its obligations as CCP in the event that Clearing Members default on their settlement obligations. The Clearing Fund is continuously being built up through the collection of (i) monthly contributions from its active Clearing Members, based on the Clearing Members’ total monthly turnover value net of block sales and cross transactions of the same flag and (ii) initial contribution from new or returning Clearing Members. It is a last resort tool for covering failed trades. In case it is utilized, the concerned Clearing Member will be required to promptly replenish the amount advanced from the Clearing Fund as a result of its settlement default.

The Clearing Fund is funded by the following:

Contribution from the
Philippine Stock Exchange

Contributions required of Clearing Members

Contribution of SCCP by way of appropriation of its Retained Earning

Investment income of the Clearing Fund

Under SCCP Rule 5.1.6 of the SCCP Clearinghouse Rules, the Clearing Fund shall be used only for the following purposes:

Payment of the net money obligations in order to settle a failed trade

For use as collateral in borrowing securities through the Securities Borrowing and Lending facility

Buy-in of subject securities in order to settle a failed trade

Payment of premium on any insurance policy taken for the Clearing Fund

For use as collateral in securing credit facilities from the settlement banks for the purpose of settling a failed trade

Satisfaction of losses, liabilities and expenses of SCCP incidental to the operation of its Clearing and Settlement functions