MIR 4.12 MIR 4.12 Segregation and portability
A Recognised Clearing House acting as a Recognised Clearing House must have systems and procedures to enable segregation and portability of positions of the clients of its Members and other participants on its facilities, and any collateral provided to it with respect to those positions. Such systems and procedures must enable the Recognised Clearing House to:(a) maintain the client positions and any related collateral referred to in 4.12.1 in individual client accounts or in Omnibus Client Accounts; and(b) structure its portability arrangements so that the positions and collateral of a defaulting Member's or other participant's clients can be transferred to one or more other Members or participants.
A Recognised Clearing House's systems and controls must, at a minimum, provide for the following:(a) the segregation and portability arrangements that effectively protect the positions and related collateral of the clients of the Members or other participants on its facilities, from the default or insolvency of the relevant Member or other participants;(b) if the Recognised Clearing House offers additional protection of the client positions and related collateral against the concurrent default of both the relevant Member or other participants or other clients, the adoption of necessary measures to ensure that the additional protection offered is effective; and(c) the use of account structures that enable the Recognised Clearing House to readily identify assets and positions of the clients of the relevant Member or other participant, and to segregate their related collateral.
The requirement to distinguish assets and positions in accounts in 4.12.2(a) is satisfied where:(a) the assets and positions are recorded in separate accounts;(b) the netting and positions recorded on different accounts is prevented; and(c) the assets covering the positions recorded in an account are not exposed to losses connected to positions recorded in another account.
In relation to 4.12.2(a) above, a Recognised Clearing House shall offer to(a) keep separate records and accounts enabling its Members or participants to distinguish in accounts with the Recognised Clearing House its assets and positions from those held for the accounts of its clients ('Omnibus Client Segregation'); or(b) keep separate records and accounts enabling its Members or participants to distinguish in accounts with the Recognised Clearing House the assets and positions held for the account of a specific client from those held for the account of other clients ('Individual Client Segregation'). If requested, the Recognised Clearing House must offer Members or participants the possibility to open more accounts in their own name or for the account of their clients.
A Recognised Clearing House must make available to its Members and other participants using its facilities, its rules, policies and procedures relating to the segregation and portability of the positions and related collateral of the clients of its Members and other participants using its facilities. This includes specifying the method for determining the value at which client positions will be transferred.
A Recognised Clearing House should also disclose whether:(a) the segregated assets and/or client collateral are held by the Recognised Clearing House or unaffiliated third-party custodians that hold assets on behalf of the Recognised Clearing House;(b) the Recognised Clearing House takes title transfer or if it takes a security interest, whether it has a right of use or re-use of client collateral and when;(c) the clients' collateral is protected on an individual or omnibus basis or a Clearing Member default for different accounts; and(d) there are any constraints, such as legal or operational, that may impair its ability to segregate or transfer a Member's or other participant's clients' positions and related collateral.
In this section, assets refers to collateral held to cover positions and include the right to the transfer of assets equivalent to that collateral or the proceeds of the realisation of any collateral, but does not include default fund contributions.
In relation to a Non-Abu Dhabi Global Market Recognised Clearing House, this Chapter does not prevent other customer segregation models being offered to Clearing Members outside the Abu Dhabi Global Market. In relation to clearing members of clearing houses incorporated outside the Abu Dhabi Global Market, this Chapter does not require such clearing members to offer levels of segregation which are not made available by such clearing houses.