- Settlement Resources
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Settlement resources are the financial resources for a member's default and prevent the effect of the default from spreading to other members. As such, the resources are prepared for a failure of settlement by a member and also for extreme but plausible market situation.
Settlement Resources Paid by Resources Members Joint Compensation Fund (JCF)
Fidelity Guarantee Money
Member MarginKRX Settlement reserves - Joint Compensation Fund (JCF)
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- The Joint Compensation Fund is a fund reserved at the Exchange to compensate for the loss incurred by a clearing member’s default in the securities market or the derivatives market. Clearing members are jointly responsible within the contribution amounts of the JCF for the loss compensation arising from a member’s default.
(FSCMA §394 and §399, Membership Regulation §23 and §24) - The JCF is managed separately from the assets of the KRX and operated only in specific products such as KTBs and MSBs for safety’s sake.
- The JCF is comprised of Basic Contribution and Intermittent Contribution. The latter is collected in proportion to the trading value (margin amount in derivatives market). The contribution amount per member is calculated each month and compared with the existing contribution to collect the difference within next trading day 5pm.
- The Joint Compensation Fund is a fund reserved at the Exchange to compensate for the loss incurred by a clearing member’s default in the securities market or the derivatives market. Clearing members are jointly responsible within the contribution amounts of the JCF for the loss compensation arising from a member’s default.
- Member’s Fidelity Guarantee Money
- Fidelity Guarantee Money refers to the fund deposited with the KRX by a member to guarantee the fulfillment of obligations from the transactions in the securities and derivatives markets.
(FSCMA §395, Membership Regulation §31) - Member Margin
- For details, please refer to Margin.
- KRX’s Assets including Settlement Reserve
- The KRX, as the CCP, guarantees the settlement by becoming the counterparty to every member via novation of all the obligations of the members. For this purpose, the KRX holds a part of its assets as settlement reserve (currently amounting to KRW 400 bil.). Also, the KRX has entered into contracts to establish credit lines with commercial banks and the KSFC to secure sufficient settlement resources.
(Articles of Incorporation §54)