Cash Funding (Derivatives)

Size: px

Start display at page:

Download "Cash Funding (Derivatives)"

Ashlie Perry
5 years ago
Views:

1 Cash Funding (Derivatives) How-to Guide 30 July 2018 Version 1.4

2 CONTENTS 1. Introduction Document Purpose Intended Audience Document History USD Cash Submission NZX Clearing USD Payment Account Procedure (USD) Funds Submitted to Meet Margin Call NZD Cash Submission NZX Clearing NZD Payment Account Procedure (NZD) Funds Submitted to Meet Margin Call Cash Release (USD and NZD) Procedure Internal Cash Collateral (on behalf) Eligible Requests Procedure... 9 DISCLAIMER: THE INFORMATION CONTAINED IN THIS DOCUMENT IS A GUIDE ONLY. ALL PARTICIPANTS ON ANY NZX MARKET MUST COMPLY WITH THE RELEVANT RULES, AND THIS DOCUMENT IS NOT A SUBSTITUTE FOR THOSE RULES. NZX CLEARING WILL DETERMINE, IN ITS SOLE DISCRETION, WHETHER ANY PARTICIPANT OR POTENTIAL PARTICIPANT MEETS THE REQUISITE CRITERIA TO BECOME AND REMAIN A PARTICIPANT. THOSE WISHING EITHER TO TRADE IN ANY PRODUCTS AVAILABLE AT NZX OR TO OFFER AND SELL THEM TO OTHERS SHOULD CONSIDER BOTH THEIR LEGAL AND REGULATORY POSITION, INCLUDING THE RELEVANT RULES, AND THE RISKS ASSOCIATED WITH SUCH PRODUCTS BEFORE DOING SO. NO PART OF THIS PUBLICATION MAY BE REDISTRIBUTED OR REPRODUCED IN ANY FORM OR BY ANY MEANS OR USED TO MAKE ANY DERIVATIVE WORK WITHOUT WRITTEN PERMISSION FROM NZX CLEARING. NZX CLEARING (INCLUDING ITS PARENT COMPANY DIRECTORS, OFFICERS, EMPLOYEES AND CONTRACTORS) SHALL NOT BE LIABLE (EXCEPT TO THE EXTENT REQUIRED BY LAW) FOR THE USE OF THE INFORMATION CONTAINED HEREIN HOWEVER ARISING IN ANY CIRCUMSTANCES CONNECTED WITH ACTUAL TRADING OR OTHERWISE. NZX CLEARING IS NOT RESPONSIBLE FOR ANY ERRORS OR OMISSIONS CONTAINED IN THIS PUBLICATION. THIS PUBLICATION IS FOR INFORMATION ONLY AND DOES NOT CONSTITUTE AN OFFER, SOLICITATION OR RECOMMENDATION TO ACQUIRE OR DISPOSE OF ANY INVESTMENT OR TO ENGAGE IN ANY OTHER TRANSACTION. ALL INFORMATION, DESCRIPTIONS, EXAMPLES AND CALCULATIONS CONTAINED IN THIS PUBLICATION ARE FOR GUIDANCE PURPOSES ONLY, AND SHOULD NOT BE TREATED AS DEFINITIVE. CASH FUNDING (DERIVATIVES) 2 of 10

3 1. Introduction 1.1 Document Purpose This document is intended to provide guidance for Clearing Participants of the Derivatives Market around the cash funding process. 1.2 Intended Audience This document is intended for use Clearing & Settlement Participants. 1.3 Document History Version Date Nature of Amendment Jun-2015 Initial draft Jun-2015 Head of Clearing review, amendments, final document produced Jun-2016 Expanded procedure to capture all Derivatives cash funding Dec-2016 Updates for BaNCS V Jul-2018 Adjusted procedure due to NZClear CashP function removal CASH FUNDING (DERIVATIVES) 3 of 10

4 2. USD Cash Submission Payment of initial / additional USD funds 2.1 NZX Clearing USD Payment Account Bank name: Citibank, N.A. Bank branch: 111 Wall Street, New York, NY Bank SWIFT code: CITIUS33XXX Branch identifier: /FW Beneficiary account name: New Zealand Depository Nominee Ltd Beneficiary account number: Procedure (USD) NZX Clearing operates an internal reflection funding model, where funds paid to NZX Clearing must also be booked into the Clearing and Settlement system (BaNCS). This is not an automatic process. When a payment of additional funds is made, the following actions should be taken by the Participant to ensure a timely booking of funding into the BaNCS system. Participants must send an to clearing@nzx.com stating that payment has been made. The should follow the format outlined below: Subject: [Participant BPID] Additional Cash Funding [date] Body: In the body of the , the Participant must specify the following: Amount of payment What account/s the funds should be applied to in BaNCS If the funds are intended to meet a margin call, also include a screen shot of the completed payment (also see 2.3) Please be aware that if your does not meet the described standard, NZX Clearing may not be able to apply the additional funds to your account/s in BaNCS promptly. Without sufficient detail, additional information may be required from you. Example CASH FUNDING (DERIVATIVES) 4 of 10

5 Upon receipt of , the following steps will be taken by the NZX Clearing team: Monitor New Zealand Depository Nominee Ltd (Citibank) bank account for receipt of cleared funds Upon receipt of funds, complete a special manual booking into BaNCS per Participant instructions, reflecting the cash amount paid Confirm receipt of funds and completion of booking request to Participant by reply Funds Submitted to Meet Margin Call If the funds being submitted are required to meet a margin call, please also read section 5 of this document. CASH FUNDING (DERIVATIVES) 5 of 10

6 3. NZD Cash Submission Payment of initial / additional NZD funds 3.1 NZX Clearing NZD Payment Account SWIFT BIC: NZXCNZ2W NZClear Mnemonic: NZDL Procedure (NZD) NZX Clearing operates an internal reflection funding model, where funds paid to NZX Clearing must also be booked into the Clearing and Settlement system (BaNCS). This is not an automatic process. NZX Clearing monitor the NZD Payment Account daily between 9:00am and 9:30am for incoming funds and payments made. Participants need to lodge enough cash at the start of each day to cover at an absolute minimum, their net settlement obligations, their gross OTC settlement obligations and any derivatives collateral required for margin calls. Failure by a Participant to meet their cash obligations will result in a Credit Event. Cash lodgements for collateral are required to be made by 9:30a.m. and for MTM / Option Premium settlement prior to the 10:00am batch. It is expected that participants will just lodge one amount prior to 9:30am to cover all funding requirements. Each morning CHO will perform the following for each Participant: i. Check payments lodged by Participant via SWIFT; ii. Book (credit) the advised amounts to the Participants BaNCS account (all cash received will be paid to the Participants #1 account). In the event of any irregularities during the checking process, the CHO will immediately contact the Participant to resolve. 3.3 Funds Submitted to Meet Margin Call If the funds being submitted are required to meet a margin call, please also read section 5 of this document. CASH FUNDING (DERIVATIVES) 6 of 10

7 4. Cash Release (USD and NZD) Requesting the repayment of funds 4.1 Procedure When a release of available funds (withdrawal) is required, the following actions should be taken: Participants must send an to clearing@nzx.com requesting that a return of funds (withdrawal) be processed. The should follow the format outlined below: Subject: [Participant BPID] Cash Release [date] Body: In the body of the , the Participant must specify the following: Amount to be returned (include currency) What account/s the funds should be taken from in BaNCS Please be aware that if your does not meet the described standard, NZX Clearing may not be able to complete the return of cash funding to your nominated bank account. Without sufficient detail, additional information may be required from you. If the funds are not available in BaNCS for any reason, the request will not be able to proceed. Example CASH FUNDING (DERIVATIVES) 7 of 10

8 Upon receipt of the following steps will be taken by the NZX Clearing team: Upon receipt of request, complete a special manual booking from BaNCS per Participant instructions Complete payment of funds to the participant using the bank account details held on file. Note we are unable to pay to any account other than the one held on file. If you wish to change the account on file please contact clearing@nzx.com with your request Confirm completion of request to Participant by reply . CASH FUNDING (DERIVATIVES) 8 of 10

9 5. Internal Cash Collateral (on behalf) Outside normal business hours of Participant When a margin call requires submission of additional funds, and the funds are expected to be received and booked by NZX Clearing outside the normal business hours of a Participant (i.e. Participant not domiciled in New Zealand), a request can be made for NZX Clearing to complete an Internal Cash Collateral submission on the Participants behalf. 5.1 Eligible Requests It is expected that this type of request will only occur to allow Participants domiciled outside of New Zealand to meet EOD Margin Calls by 9:30am (NZ time) the following business day, as is the obligation for all Clearing Participants. 5.2 Procedure Participants must send an to clearing@nzx.com requesting that an Internal Cash Collateral booking be made on the Participants behalf. The should follow the format outlined below: Subject: [Participant BPID] Internal Cash Collateral booking [date] Body: In the body of the , the Participant must specify the following: Whether the collateral booking is contingent on the receipt of funds Attachment: Complete the Internal Cash Collateral (on behalf) form specifying the details of your Internal Cash Collateral request and attach to the . Note: Please be aware that if your and attachment do not meet the described standard (above), NZX Clearing may not be able to complete the Internal Cash Collateral booking as requested. Without sufficient detail provided, additional information may be required from you, and your request may not be able to be processed. Upon receipt of the following steps will be taken by the NZX Clearing team: Upon receipt of request, confirm adequacy of funds in BaNCS. Complete Internal Cash Collateral booking/s in BaNCS per Participant instructions Confirm completion of request to Participant by reply . CASH FUNDING (DERIVATIVES) 9 of 10

User Management. User Guide June 2016 Version 1.5

User Management. User Guide June 2016 Version 1.5 User Management User Guide 4 24 June 2016 Version 1.5 CONTENTS 1. Introduction... 3 1.1 Document Purpose... 3 1.2 Intended Audience... 3 1.3 Document History... 3 2. User Management Overview... 4 3. User