Rules

OTC Clear

Rules

OTC Clear Rates and FX Derivatives Clearing Rules
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Table of Contents
Preface
PART I	GENERAL PROVISIONS
Chapter 1	Definitions and Interpretation
101	Definitions
102-110	Interpretation
Chapter 2	General Provisions
201	Amendment
202-205	Liability
206-211	Force Majeure Events and Illegality
212-214	Disclosure of Information
215-218	Governing Law
219-223	Notice
224	Process Agent
225	Time Reference
226-227	Calculations and Currency
228	Third Party Rights
PART II	MEMBERSHIP
Chapter 3	General Provisions
301	OTC Clear Membership
302	Clearing Members
303	Qualification
304-309	Applications and Approval
Chapter 4	Legal Obligations
401-402	Continuing Obligations
403-404	Capital Requirement
405-408	Transfer of Membership
409-412	Reporting Obligation
Chapter 5	Information Obligations
501	Notifications by Clearing Members
502	Right to Demand Documents
503	Organization Structure
504	Financial Information
505	Record Keeping
Chapter 6	Suspension and Termination of Membership
601-603	Suspension
604-606	Resignation
607	Termination
608-612	Resignation and Termination
613	Former Clearing Members
Chapter 7	Designated Person
701-707	General
708	Continuing Authority of a Designated Person
709	Acknowledgment by a Designated Person
Chapter 7A	Sponsored Settlement Member
7A01-7A06	General
PART III	CLEARING OPERATIONS
Chapter 8	Clearing by OTC Clear
801-805	Acceptance for Registration of Original Transactions
806-811	Creation of Contracts through Submission of Original Transactions by Clearing Members or Clients
812	Clearing Members’ Representations as at Registration Time
813	Creation of Contracts other than through Submission of Original Transaction by Clearing Members or Clients
814-814B	Termination of Contracts relating to Ineligible Original Transactions after Registration
815	Transfers of Contracts
816-818	Client Clearing
819-822	Types of Client Clearing Categories
823-824	Segregation of Client Accounts
825-829	Porting of Contracts relating to Clients
830	Full Portfolio Porting
831	Partial Portfolio Porting
832	Porting of Client Collateral
833	Conditions Precedent to Porting of Contracts relating to Clients
834-835	Completion of Porting
836-837	Transfer of Contracts between Client Accounts and House Accounts
838-843	Multilateral Compression

Chapter 8A	Clearing by OTC Clear in respect of Original Northbound Transactions

8A01-8A06	Acceptance for Registration of Original Northbound Transactions
8A07-8A13	Creation of Contracts through Submission of Original Northbound Transactions by Clearing Members or Clients
8A14-8A16	Other amendments
8A17-8A18	Suspension of the Participantship of the Special Clearing House Participant or Clearing Link Services
8A19	Termination of the Participantship of the Special Clearing House Participant or Clearing Link Services

Chapter 9	Accounts
901	Accounts
902	Position Accounts
903-904	Collateral Accounts
905-906	GF Accounts
907	Multiple Client Accounts
908-909	Accounts for Holding of Non-Cash Collateral
Chapter 10	Payments
1001	Contract Payments
1002	Margin and Rates and FX Contribution
1002A	Reimbursement of Costs and Expenses
1003	Default Interest
1004	Interest Rates
1005	Income on Cash Collateral
1006-1008C	Income and Redemption Proceeds on Non-Cash Collateral
1009-1011	Fees, Levies and Charges
1012-1015	Payments Calculation
Chapter 10A	Interest Rate Transition
10A01-10A08	Interest Rate Transition
Chapter 10B	Floating Rate Conversion
10B01-10B12	Floating Rate Conversion
Chapter 11	Tax
1101-1105	Tax
PART IV	RISK MANAGEMENT AND DEFAULT PROCEDURES
Chapter 12	Margin
1201-1203	Margin and Collateral
1204-1208	Initial Margin, Additional Margin, Participating Margin, Variation Margin, and Intra-day Variation Margin
1209-1213	Margin Settlement
1214-1218A	Acceptable Collateral for Margin and Rates and FX Contribution
1219-1221	Rights relating to Collateral in respect of Margin and Rates and FX Contribution and Representations of Clearing Members
1222-1224	Position Limits and Notional Exchange Risk Limits
Chapter 13	Default Procedures
1301-1302	Clearing Member Event of Default
1303-1305	Termination following a Clearing Member Event of Default
1306-1310	Calculations of Net Payment following a Clearing Member Event of Default
1311	Termination of the Membership of a Defaulting Clearing Member
1312-1315	General Provisions relating to Clearing Member Event of Default
1316	Indemnity
1317-1321	OTC Clear Failure to Pay Event
1322-1323	OTC Clear Insolvency Event
1324-1325	Calculations of Net Payment following OTC Clear Default
Chapter 14	Disciplinary Actions and Proceedings
1401-1402	Situations Calling for Disciplinary Action
1403	Co-operation
1404	Notification
1405	Disciplinary Actions
1406-1408	Procedures relating to Disciplinary Committee
1409-1410	Appeals to the Disciplinary Appeals Committee
1411-1414	Grounds for Appeal
1415-1417	Order as to Costs
Chapter 15	Rates and FX Guarantee Resources
1501-1502	Rates and FX Guarantee Resources Purpose
1503	Calculations relating to the Rates and FX Guarantee Fund, Rates and FX Assessments and Rates and FX Contribution Balance
1504	Initial Rates and FX Contribution
1505	Further Rates and FX Contribution
1506-1507	Rates and FX Assessments Demand
1508-1511	Rates and FX Contribution due to Recalculations or Replenishments
1512-1513	Changes to Calculations relating to the Rates and FX Guarantee Fund and Rates and FX Assessments
1514	OTC Clear Use of Participating Margin Balance and Rates and FX Guarantee Resources
1515-1518	Reduction of Losses on a DMP Event and Application of the Rates and FX Guarantee Resources
1519-1521	Accounts of Rates and FX Guarantee Resources
1522	Recoveries
1523-1528	Loss Distribution Process
1529	Rates and FX Clearing Service Limited Recourse
1530-1540	Winding Down of the Rates and FX Clearing Services
1541-1543A	Voluntary Recapitalisation
1544-1545	Multiple DMP Events
1546-1549	Terms of Redelivery or Repayment of Rates and FX Contribution
Chapter 15A	Default relating to a Sponsored Settlement Member

15A01-15A02	Default relating to a Sponsored Settlement Member
PART V	DEFAULT MANAGEMENT PROCESS
Chapter 16	Default Management Process
1601-1604	Default Management Process
1605-1608	Default Management Group
1609	Undertaking by Clearing Members
1610-1612	Amendments to Default Management Process
Chapter 17	Porting
1701-1710	Porting
Chapter 18	Hedging
1801-1804	Hedging
Chapter 19	Auction
1901-1904	Auction Portfolios
1905	Auction for Multiple Auction Portfolios
1906-1909	Conduct of Auction
1910-1912	Bidding
1913-1913C	Initial Allocation of Resources
1914-1917	Loss Allocation
1918-1919	Successive Auction
1920	OTC Clear Financial Resources
1921-1922	Registration of Auction Contracts (non-PRC Bidders)
1923-1924	Failed Registration (non-PRC Bidders)
Chapter 20	Confidentiality Obligations relating to Receipt of DMP Information
2001-2004	Confidentiality
2005	Term
2006	Rights to DMP Information
2007	Liability of OTC Clear
2008-2009	Relief
Chapter 21	Obligations, Undertaking and Liability of Clearing Members relating to Participation in the Default Management Group
2101-2103	Confidentiality Obligations
2104	Conflict of Interest
2105	Representations and Warranties
2106	No Liability
PART VA	PROVISIONS RELATING TO THE SPECIAL CLEARING HOUSE PARTICIPANT

Chapter 21A	General Provisions

21A01	General Provisions
21A02-21A03	Obligations of the Special Clearing House Participant
21A04-21A06	Liability
21A07-21A09	Disclosure of Information
21A10-21A11	Governing Law
21A12-21A17	Notice
21A18	Process Agent
21A19	Calculations and Currency
21A20	Force Majeure Event and Illegality
21A21	Original Northbound Transactions

Chapter 21B	Participantship

21B01	The Special Clearing House Participant
21B02	Qualification
21B03	Publication

Chapter 21C	Legal Obligations

21C01	Continuing Obligations
21C02-21C04	Transfer of Participantship

Chapter 21D	Information Obligations

21D01	Information Obligations

Chapter 21E	Suspension and Termination of Participantship

21E01-21E03	Suspension
21E04-21E09	Termination

Chapter 21F	Accounts

21F01	Accounts
21F02	Position Account
21F03-21F04	Collateral Account

Chapter 21G	Payments

21G01	Contract Payments
21G02	Margin
21G03	Default Interest
21G04	Interest Rates
21G05	Income on Cash Collateral
21G06	Fees
21G07-21G09	Payments Calculation

Chapter 21H	Tax

21H01-21H06	Tax

Chapter 21I	Inter-CCP SHCH Margin Amount

21I01-21I07	Inter-CCP SHCH Margin Amount, Collateral and Variation Margin
21I08-21I11	Acceptable Collateral for Inter-CCP SHCH Margin Amount21I12-21I14 Rights relating to Collateral in respect of Inter-CCP SHCH Margin Amount and Representations
21I15-21I16	Position Limits
21I17	Inter-CCP OTCC Margin Amount and Collateral

Chapter 21J	Default Procedures

21J01-21J04	Defaulting Special Clearing House Participant
21J05	Termination of the Participantship of the Special Clearing House Participant
21J06-21J07	Calculations of Net Payment for the Defaulting Special Clearing House Participant
21J08-21J09	General Provisions relating to the Special Clearing House Participant
21J10	Indemnity
21J11-21J14	OTC Clear Default
21J15-21J16	Calculations of Net Payment following OTC Clear Default

Chapter 21K	Rates and FX Guarantee Resources

21K01-21K03	Rates and FX Guarantee Resources

Chapter 21L	Default Management Process

21L01-21L02	Default Management Process
21L03	General Provisions relating to the Special Clearing House Participant

Chapter 21M	Auction

21M01-21M05	General Provisions
21M06-21M07	Successful Auction (PRC Bidders)
21M08-21M09	Failure to Pay where PRC Bidders are Successful Bidders

Chapter 21N	Confidentiality Obligations relating to receipt of DMP Information

21N01-21N04	Confidentiality
21N05	Term
21N06	Rights to DMP Information
21N07-21N08	Relief

Chapter 21O	Product Specific Terms for Inter-CCP Rates Derivatives Contracts

21O01	Product Specific Terms for Inter-CCP Rates Derivatives Contracts
21O02	Interpretation
21O03	Economic Terms
21O04-21O05	General Terms

Appendix	Inter-CCP SHCH Charge Agreement

PART VI	PRODUCT SPECIFIC TERMS
Chapter 22	Product Specific Terms for Standard Rates Derivatives Contracts
2201-2202	Product Specific Terms for Standard Rates Derivatives Contracts
2203-2210	Interpretation
2211-2215	Economic Terms
2216	General Terms
2217	Clearing Rules
2218-2221	Economic and Monetary Union (EMU) Provisions
2222	Negative Interest Rates
2223	(Deleted)
2224	Rounding
2225	Tax Provisions
2226	Calculation Agent
2227	Governing Law
Chapter 23	Product Specific Terms for Non Deliverable Rates Derivatives Contracts
2301-2302	Product Specific Terms for Non Deliverable Rates Derivatives Contracts
2303-2310	Interpretation
2311-2315	Economic Terms
2316	General Terms
2317	Clearing Rules
2318	Calculation Agent
2319	Negative Interest Rates
2320	Rounding
2321	Tax Provisions
2322	Governing Law
Chapter 24	Product Specific Terms for Non Deliverable FX Derivatives Contracts
2401-2402	Product Specific Terms for Non Deliverable FX Derivatives Contracts
2403-2411	Interpretation
2412-2416	Economic Terms
2417	General Terms
2418	Clearing Rules
2419	Calculation Agent
2420	Rounding
2421	Tax Provisions
2422	Governing Law

Chapter 25	Product Specific Terms for Standard Cross-currency Rates Derivatives Contracts
2501-2502	Product Specific Terms for Standard Cross-currency Rates Derivatives Contracts
2503-2510	Interpretation
2511-2515	Economic Terms
2516	General Terms
2517	Clearing Rules
2518	Negative Interest Rates
2519	Rounding
2520	Tax Provisions
2521	Calculation Agent
2522	Governing Law
Chapter 26	Product Specific Terms for Deliverable FX Derivatives Contracts
2601-2602	Product Specific Terms for Deliverable FX Derivatives Contracts
2603-2610	Interpretation
2611-2615	Economic Terms
2616	General Terms
2617	Clearing Rules
2618	Calculation Agent
2619	Rounding
2620	Tax Provisions
2621	Governing Law

Chapter 27	Product Specific Terms for Standard Northbound Rates Derivatives Contracts
2701-2702	Product Specific Terms for Standard Northbound Rates Derivatives Contracts
2703-2707	Interpretation
2708-2710	Economic Terms
2711	General Terms
2712	Clearing Rules
2713	Calculation Agent
2714	Tax Provisions
2715	Governing Law

Appendix I	Chapter XVII - (deleted)
Supplement I	SOFR DISCOUNTING SWITCH SUPPLEMENT

Supplement II	SOFR FLOATING RATE CONVERSION SUPPLEMENT

OTC Clearing Hong Kong Limited (“OTC Clear”) has obtained a legal opinion from an independent law firm in respect of the enforceability of certain provisions of the Clearing Rules under Hong Kong law. To promote confidence among Clearing Members and transparency in the clearing system, the opinion may be disclosed to Clearing Members on request for information purposes only, on the basis that it may not be relied upon. Further, each Clearing Member who requests and receives a copy of the opinion from OTC Clear agrees not to transmit the opinion to anyone else or quote or refer to it in any public document filed with anyone. Please contact OTC_Operations@hkex.com.hk if you wish to receive a copy of the opinion.

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Updated 24 Jul 2023