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Separating statuses of Clearing member and Market Participant on FX Market


The project on separation of Clearing Members and Market Participants statuses on the FX market of the Moscow Exchange was implemented.

1.   Clearing Members and Market Participants

Trades are always concluded by a Market Participant within the Moscow Exchange trading. Party to trades is a Clearing Member.

If a Clearing Member is simultaneously a Market Participant then he submits orders, concludes trades and is a party to concluded trades.

If a Clearing Member is not a Market Participant:

·         Clearing Member may provide client clearing service to one Market Participant acting as a Clearing Broker (Clearing Member of the category “B”);

·         Clearing Member may provide client clearing service to several Market Participants acting as a Clearing Broker (Clearing Member of the category “O”);

·         Market Participant, being a client of a Clearing Member, may conclude trades on behalf of a Clearing Member, which is not a Clearing Broker, on the basis of Agency contract.

One Market Participant may act through several Clearing Members.

Clearing Members may be Direct or General.

Direct Clearing Member may have the category “B” – admission to clearing of partially secured trades, or the category “C” – without admission to clearing of partially secured trades.

General Clearing Member with the category “O” is admitted to clearing of partially secured trades and has the right to act as a Clearing Broker.

2.   Settlement Accounts and Trade Accounts structure

Settlement Account (SA)

is designed for recording collateral and obligations, forms a part of a TA

Trade Account (TA)

is indicated in trades and orders

Settlement Accounts of a Clearing Member are of the following types:

- S (proprietary) – for recording cash funds of a Clearing Member;

- L (client) – for recording cash funds of clients of a Clearing Member;

- D (trust management) – for recording cash funds, which are in trust management of a Clearing Member.

Settlement Accounts of the 2nd and of the 3rd level don’t have any types.

Several Settlement Accounts of the 2nd level may correspond to one Settlement Account of the 1st level and several Settlement Accounts of the 3rd level may correspond to one Settlement Account of the 2nd level.

Structure of Trade Accounts of the 1st, 2nd and of the 3rd level

Level

Structure

Example

1st level

MBNNNNNXXXXX,

where MBNNNNN – first 7 symbols of the Identifier of a Clearing Member on the FX market;

XXXXX – Settlement Account number

MB1111101234

2nd level

M2XXXXXYYYYY,

where XXXXX – Settlement Account of the 1st level number,

YYYYY – Settlement Account of the 2nd level number

M20123400002

3rd level

M3XXXXXZZZZZ,

where XXXXX – Settlement Account of the 1st level number,

ZZZZZ – Settlement Account of the 3rd level number

M30123400003

2.1.  TA of the 2nd and of the 3rd level registration

TA of the 2nd level is registered by a Clearing Member for client / clients of a Clearing Member, for the client that is a Market Participant inclusively.

In case of registration of the Trade Account of the 2nd level for the client, which is a Market Participant, Clearing Member indicates identification data of such client.

TA of the 3rd level is registered by a Market Participant, which concluded Agreement on keeping clearing registers with the NCC, for its clients. In the Application for the TA of the 3rd level registration identification data of a client of a Market Participant may be indicated.

Attention: if in the application for registration of TA of the 1st / of the 2nd / of the 3rd level identification data of a client was indicated, then when submitting an order indicating such TA, the FX market trading system checks the correspondence of the identification data of a client, code of which is indicated in the order, to the identification data, defined in the application for the registration of such TA. If such condition is not met then the order is not accepted (trade is not concluded).  

2.2.  Recording collateral under Settlement Accounts of the 1st, 2nd and of the 3rd level

 

SA of the 1st level

SA of the 2nd level

SA of the 3rd level

Collateral sufficiency control

Yes

‘Yes’ by default,
to be changed upon application

Margin Call

Yes

No

No

Termination of obligations

Yes

unconditional

unconditional

Settlement of non-fulfilled obligations

Yes

No

No

Obligations under Settlement Accounts of the 2nd and of the 3rd level is terminated in full, not depending on the availability of required asset. Procedure for termination of obligations is executed with informational purposes.

3.   Posting and return Collateral

 

Posting Collateral

Collateral return

SA of the 1st level

Debiting clearing account with the indication of the SA of the 1st level in the payment purpose

Return under details of the Account for collateral return

Transfer between Settlement Accounts upon request MTRNRQ

SA of the 2nd / 3rd level

Debiting clearing account with the indication of the SA of the 2nd / of the 3rd level in the payment purpose

Return under details of the Account for collateral return with the indication of the SA of the 2nd level / of the 3rd level and of the SA of the 1st level

Transfer between Settlement Accounts in the Trading and Clearing System (TRAN)

If in the payment purpose Settlement Account of the 2nd / of the 3rd level is indicated, funds are debited to the Settlement Account of the 1st level and are also reflected on the Settlement Account of the 2nd / 3rd level.

Change of balance reflected under Settlement Accounts of the 2nd and of the 3rd level is executed not depending on the availability of funds recorded under the relevant Settlement Accounts of the 1st level.

Sum of Collateral recorded under the Settlement Account of the 2nd level may exceed Collateral recorded under the Settlement Account of the 1st level corresponding to it. Same for the Settlement Account of the 3rd level.

4.   Fees

 

CM = MP

CM ≠ MP

Fee type

Clearing Member

Clearing Member

Market Participant

For organization of trading

Yes

-

Yes

For clearing service

Yes

Yes

-

For ITS

Yes

Yes (VAT inclusively)

Yes

For registering and closing of a Trade Account of the 3rd level

-

-

Yes (VAT inclusively)

Size of the variable and fixed part of the fees is defined in the chosen tariff fee


5.   Segregated clients

Segregated client is a client of a Clearing Member, which may use transfer of obligations and collateral to the other Clearing Member.

Segregated client is always fixed to the Settlement Account of the 1st level.

Segregated clients on the FX market.