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 Holiday Margin Arrangement
Mex Cambodia has put in place a set of holiday margin arrangements to mitigate the potential market risk on the reopening of the Cambodian markets after the holiday break arising from significant overseas market movements during the holiday period. Currently, when there is one calendar day, excluding Saturdays and Sundays, in the Cambodian holiday period, Mex Cambodia makes a mandatory intra-day call of variation adjustment on its participants on the trade day prior to the holiday period to mitigate the potential market risk. When there are more than one calendar day, excluding Saturdays and Sundays, in the Cambodian holiday period, in addition to the mandatory intra-day call of variation adjustment, Mex Cambodia also raises the margin levels for some major products based on the historical price movement with reference to the number of calendar days, excluding Saturdays and Sundays, in the holiday period and collects the margin requirements of open positions based on such increased margin levels from the participants before the holiday.
Reserve Fund
Within three months in to operation, with contributions from all participants involved in trading, Mex Cambodia plans establish a Settlement Guarantee Fund for the purpose of meeting its obligations as the central counterparty in circumstances where a clearing participant defaults in its obligations to the Clearing House. The resources available to the Settlement Guarantee Fund comprised initial contribution, interest income earned from the deposit of the Fund, and other resources as determined by the Mex Cambodia and Clearing House from time to time.
Collateral Management
Participants' margin funds must be in the form of cash or bank guarantee or other acceptable collateral types as prescribed from time to time. If a participant does not have sufficient margin collateral on deposit with Mex Cambodia to satisfy the margin requirements calculated, a direct debit instruction will be sent to the participant's designated bank to collect the shortfall. All margin calls must be met before the stipulated time.
Segregation of Customer Monies
Participants are also required to separate their customer positions and monies from their own positions. All margin funds are held in Segregated Accounts with designated banks. Mixing of margin funds and operational funds are prohibited. These regulations are designed to protect customers in the unlikely event of insolvency of the participants through which they conduct business. Based on specific written instructions from a Mex Cambodia participant, we maintain separate accounting of the aggregate positions and monies of the Mex Cambodia participant's customers. The Exchange and the Clearing House maintains continuous watch of the exposure limit of all clients and members on 24x5 basis to avoid major risks to the system.
Safeguards on risks
The safeguarding system of the Mex Cambodia provides a unique blend of risk management and financial surveillance techniques designed for the protection of the Clearing Participants and its customers. As the Clearing House strives to become more responsive to the demands of a sophisticated financial marketplace, it will continue to improve and strengthen its financial safeguard system.
Disclaimer
This article has been compiled by the Mex Cambodia for general information purposes only. Although every attempt has been made to ensure the accuracy of the information, the Mex Cambodia assumes no responsibility for any error or omission. All matters pertaining to byelaws, rules and procedures herein are made subject to and are superseded by the official Mex Cambodia Byelaws, Rules and Procedures. The contents of this should in no way to be termed as a way of solicitation.
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