Member’s default risk refers to the risk of not fulfilling settlement by the settlement deadline resulted by the member’s disability of settlement due to deteriorated financial status or bankruptcy. The KRX deems, as default, those situations where a clearing member does not fulfill its settlement obligation or fails to deposit its margin or where the KRX deems such a situation possible.
Default Management Committee
The KRX operates the Default Management Committee (DMC) to efficiently manage the risk resulted from a clearing member’s default. The committee is in charge of efficient disposal of unsettled positions, and prompt and accurate understanding of market situation, classification of unsettled positions, hedging transactions to avoid loss, auctions, etc. in case of a clearing member’s default.