UOBBF CLEARING LIMITED

Transcription

1 UOBBF CLEARING LIMITED FCM-SPECIFIC DISCLOSURE DOCUMENT COMMODITY FUTURES TRADING COMMISSION RULE 1.55(K): TABLE OF CONTENTS General Information and UOB Group... 2 Firm, Board of Directors and Management Business Scope... 4 Licensing and Regulatory Requirements... 4 Source of Assets and Financials... 5 Depositories, DCO and DS Material Risks, Material Complaints or Actions... 7 Customer Funds Segregated & Accounts, Investment of Customer Funds SIPC Protection, Filing a Complaint (Commission, NFA, DSRO) Relevant Financial Data, Firm s Risk Management Summary

2 GENERAL INFORMATION UOBBF Clearing Limited ( UCL ), incorporated on 20 th December 2013 as a limited liability company in the Republic of Singapore, is a 100% owned subsidiary of United Overseas Bank ( UOB ). As required by the Commodity Futures Trading Commission ( Commission ), UCL (NFA ID ) provides the following information to a customer prior to the time the customer first enters into an account agreement with the company or deposits money or securities (funds) with the company. Except as otherwise noted below, the information set out is as of 4 th Sep UCL will update this information annually and as necessary to take account of any material change to its business operations, financial condition or other factors that the company believes may be material to a customer s decision to do business with UCL. Nonetheless, UCL s business activities and financial data are not static and will change in non-material ways frequently throughout any twelvemonth period. UOB GROUP United Overseas Bank ( UOB ) is a leading bank in Asia with a global network of more than 500 offices in 19 countries and territories in Asia Pacific, Western Europe and North America. Since its incorporation in 1935, UOB has grown organically and through a series of strategic acquisitions. Today it operates in Asia through its branches and representative offices as well as banking subsidiaries in China, Indonesia, Malaysia, Philippines, Singapore and Thailand. UOB offers a wide range of financial services including personal financial services, private banking, business banking, commercial and corporate banking, transaction banking, investment banking, corporate finance, capital market activities, treasury services, futures broking, asset management, venture capital management and insurance. UOB is highly rated among the world s top banks: Aa1 by Moody s and AA- by Standard & Poor s and Fitch Ratings. UOBBF CLEARING LIMITED Address: 80 Raffles Place #05-00 UOB Plaza 1, Singapore Tel: (65) Fax: (65) futures@uobgroup.com Board of Directors and Principals Lee Chee Pin (NFA ID ) Managing Director, Global Markets, UOB 80 Raffles Place #05-00 UOB Plaza 1 Mr Lee Chee Pin joined UOB in May He is responsible for the Bank s Global Markets businesses including market making, sales and structuring, portfolio & liquidity management as well as the bullion, brokerage & clearing businesses. Chee Pin holds a Bachelor of Science (Building) from the National University of Singapore and is a Chartered Financial Analyst. He has more than 25 years of experience in the financial industry. 2

3 Lou Mui Lee (NFA ID ) Managing Director & Head, Group Business Management, Global Markets, UOB 80 Raffles Place #05-00 UOB Plaza 1 Ms Lou Mui Lee is the Managing Director and Head, Group Business Management at UOB. She oversees 7 functional areas supporting the Global Markets businesses in 14 locations, managing a team of over 200 staff. Her responsibilities cover Business Assurance & Control, Legal & Documentation, Business Risk & Product Management, Credit Management, Product Support, Infrastructure & Admin Services, Banknotes/Bullion Vault Operations, KYC & AML/Client Administration. Ang Siang Hoon (NFA ID ) Executive Director, Group Finance, UOB 156 Cecil Street #07-01 FEB Building Ms Ang Siang Hoon heads UOB Group Finance - Financial Information Management (FIM) department. FIM drives the strategic roadmap for the Bank s financial systems and partners with stakeholders and technology specialists to deliver solutions to support the growth of UOB. She is also responsible for system administration, covering regulatory reporting, risk-weighted assets and regulatory capital, financial accounting, financial reporting, performance management, budget and forecast systems. Siang Hoon holds a Bachelor of Accountancy from the National University of Singapore and has more than 20 years of experience in the Finance and Banking industry. Management and Principals Chief Executive Officer (CEO) Dennis Seet Choon Seng (NFA ID ) Dennis.SeetCS@UOBGroup.com 80 Raffles Place #05-00 UOB Plaza 1 Mr Dennis Seet has more than 30 years of sales, operations and management experience in the exchange-traded derivatives, margin foreign exchange and securities markets. Mr. Seet started his career with Singapore International Monetary Exchange Ltd where he was Head of the Clearing House from 1988 to 1996, before his appointment as General Manager of OCBC Bullion and Futures till He later joined Man Financial, Singapore as its Chief Operating Officer till Prior to his appointment as CEO of UCL, he was the CEO for UOB Bullion & Futures, Thailand from 2007 to (Interim) Chief Compliance Officer (CCO) Christopher Lim Sek Fei Lim.SekFeiChristopher@UOBGroup.com One Raffles Place, #22-63, Singapore Christopher Lim is First Vice President and interim Chief Compliance Officer of UOBBF Clearing Limited. He has over 17 years experience in financial services industry and is responsible for the compliance program covering the listed derivatives, OTC Commodities Clearing and Leveraged Foreign Exchange business under Global Commodities, Brokerage and clearing ( GCBC ) Division of UOB. 3

4 Chief Financial Officer (CFO) Tan Siew Poh (NFA ID ) 80 Raffles Place #05-00 UOB Plaza 1 Ms Tan Siew Poh joined UOB Group in She leads a team of 8 financial professionals. She holds a Bachelor of Accountancy (Hons) from the National University of Singapore and has more than 20 years of experience in financial and management accounting. Business Scope UCL is established as an offshore Clearing Member of CME Group, namely CME, CBOT, NYMEX and COMEX to provide clearing services in futures and options products listed under the CME s Group of Exchanges. Its client focus will be on institutional and corporate customers from the Asia Pacific region. The Company does not engage in proprietary trading and does not guarantee Introducing Brokers. In addition, the Company also does not conduct customers business in other domestic or international exchanges and it does not have any agreements or arrangements with other carrying brokers. Its clearing business is restricted to the customer omnibus and house accounts of affiliates. Activity / Product Line Percentage of Assets Percentage of Capital Non-US Customers trading on CME s Group of Exchanges Non-US Customers trading other US exchanges Non-US Customers trading on non-us exchanges Licensing and Regulatory Requirements 100% 100% UCL is a holder of a Capital Markets Services License ( CMSL ) issued by the Monetary Authority of Singapore ( MAS ) and regulated under the requirements of the Securities and Futures Act ( SFA ). UCL is approved by the U.S. National Futures Association ( NFA ) as Futures Commission Merchant ( FCM ) and an approved Clearing Member of the Chicago Mercantile Exchange Group ( CME Group ), which requires it to comply with the regulations of the Commission and rules of the CME Group. UCL s exchange memberships can be summarized in the table below: NIL NIL NIL NIL Exchange Memberships Chicago Mercantile Exchange ( CME ) Chicago Board of Trade ( CBOT ) New York Mercantile Exchange ( NYMEX ) Commodity Exchange ( COMEX ) 4

5 Source of Assets and Financials UCL s capitalization of USD30.5 million was contributed by its parent company, UOB. The capital contribution is for the purpose of operating the clearing business and will continue to be used for such purpose as required by CFTC Regulation The company pays for its own expenses and its liquid capital funds is mainly deposited with the CME Clearing House. Note: UCL s financial data as of 30 th Jun 2018 computed is in accordance with U.S. Generally Accepted Accounting Principles and Rule Ownership Equity Net Capital Adjusted Net Capital Excess Net Capital Customer s Segregation Required 4d(a)(2) Target Residual Interest The percentage of all customer receivable balances that the Firm has written-off as uncollectable during the last 12 month period, as compared to the current balance of funds held for all customers. Fixed and All Other Assets Dollar value of UCL s proprietary margin requirements as a % of total customer margin Requirements (futures, 30.7 and cleared swaps) Aggregate notional value (by asset class), of all non hedged, principal over the counter transactions into which UCL has entered. Amount of short term funding available that UCL has obtained but not yet drawn upon: such amount reflects additional available resources of UCL in the unlikely event that the resources of UCL are exhausted. Aggregate amount of financing UCL provides for customer transactions involving illiquid financial products for which it is difficult to obtain timely and accurate prices. US$29,621,947 US$26,156,773 US$26,132,053 US$23,422,606 US$42,768,695 US$2,700,000 NIL US$86,315,579 N.A. N.A. US$50,000,000 N.A. UOB Bullion & Futures Ltd (an affiliated entity) is the only client that comprised 50% or more of UCL s total funds held for futures customers as at 30 th Jun As the Company does not engage in clearing of non-us futures exchanges and swaps, it has no 30.7 and cleared swap customers. Permitted Bank Depositories for USD and Foreign Currencies JPMorgan Chase N.A. USD JPMorgan Chase N.A. (London Branch) JPY BMO Harris N.A. USD, JPY, GBP, CNH, EUR 5

6 Locations and Qualifications of Depositories Criteria used by UCL on selection of bank depositories to permitted transactions under CFTC Regulation 1.25 include but not limited to: (i) Segregated Bank is in CME s list of approved settlement banks; (ii) It has approved counterparty relationship with UOB Group; (iii) Its capitalization, operations reliability and access to liquidity; (iv) Availability of deposit insurance. UCL shall ensure that customer segregated funds are not deposited with any Segregated Bank prior to receiving acknowledgement letter from the Segregated Bank pursuant to CFTC Regulation 1.20, and also the accounts are properly titled to reflect that it is holding segregated funds. UCL currently has three depositories: CME, BMO Harries and JP Morgan. Approximately 98% of the Firm s segregated funds are deposited with CME. The remainder of the funds is deposited at BMO Harries, except for a de minimis amount sufficient to cover bank fees are deposited with JP Morgan. Designated Clearing Organization ( DCO ) CME Clearing House UCL s DSROs CME Group Inc. ( CME ) 20 South Wacker Drive Chicago, Illinois U.S.A. Telephone: (1) (312) Fax: (1) (312) info@cmegroup.com National Futures Association ( NFA ) Chicago Headquarters 300 S. Riverside Plaza, #1800 Chicago, IL Telephone: (1) (312) Fax: (1) (312) information@nfa.futures.org New York Office One New York Plaza, #4300 New York, NY Telephone: (1) (212) Fax: (1) 212)

7 Material Risks In order to ensure compliance with regulatory capital requirements and that it has sufficient liquidity to meet its ongoing business obligations, UCL holds significant portion of its assets in cash and certificates of deposits. As UCL does not engage in proprietary trading, it does not jeopardize its capital through trading losses and exposure to market risk is minimal. Also, UCL only engages in clearing and does not perform trade execution; house error trades arising from clearing will be rare. For any error trade, immediate liquidation must be carried out. UCL s exposure to credit risk is associated with customer not fulfilling their performance bond timely in respect of their contractual obligations pursuant to futures transactions. For effective management of client credit risk, an established pre-trade checking and post-trade monitoring regime is in place. In the event of margin calls, customers are advised to undertake actions to ensure that their accounts are not under-margined, by performance bond topping up and/or trade offsetting. In an extreme event, enforced liquidation shall be carried out to ensure that the customer does not suffer from a negative equity balance on a best effort basis. UCL does not anticipate non-performance by clients in the preceding situation, though in a volatile market situation, potential loss cannot be ruled out. UCL conducts weekly stress tests on clients portfolios to assess the customers potential losses in the event of extreme shocks on market prices. Resultant potential losses are then reviewed against adequacy of initial margins placed by the customers. For customers with deemed risky portfolios, they can be required to place excess margins. Client Risk Monitoring ( CRM ) team undertakes the credit risk management function by systematically implementing pre-trade limit setting and administrating intraday post-trade market risk monitoring. CRM team operates 24 hours from Monday 5.30am to Saturday 6.30am covering all major markets across the globe. UCL will be posed with temporary liquidity risk if it faces the unlikely default event of a large customer or a depository, or large settlement payments with the clearing house during international banking holidays. To ensure that UCL will be able to meet its cashflow needs, it maintains a USD 50 million line of credit with UOB New York. This line of credit can be used to provide proceeds for contingency requirements. UCL does not have any significant liabilities, contingent or otherwise, or any material commitments. Material Complaints or Actions UCL has no material administrative, civil, enforcement or criminal complaints or actions filed against it or any of its Principals, either pending or concluded. 7

8 Customer Funds Segregated A basic overview of customer fund segregation, futures commission merchant collateral management and investments, futures commission merchants, and joint futures commission merchant/broker dealers is noted below: UCL has obtained written acknowledgement from each depository to ensure that all customer funds that are in depositories are placed in segregated accounts, and these accounts are properly titled in compliant to CFTC Rule Customer Accounts FCMs may maintain up to three different types of accounts for customers, depending on the products a customer trades: (i) (ii) (iii) a Customer Segregated Account for customers that trade futures and options on futures listed on US futures exchanges; a 30.7 Account for customers that trade futures and options on futures listed on foreign boards of trade; and a Cleared Swaps Customer Account for customers trading swaps that are cleared on a DCO registered with the Commission. The requirement to maintain these separate accounts reflects the different risks posed by the different products. Cash, securities and other collateral (collectively, Customer Funds) required to be held in one type of account, e.g., the Customer Segregated Account, may not be commingled with funds required to be held in another type of account, e.g., the 30.7 Account, except as the Commission may permit by order. UCL only maintains Customer Segregated Accounts for clients trading futures and options on futures listed on the CME Group of Exchanges. It does not operate 30.7 Account or Cleared Swaps Customer Account, as it does not offer trading and clearing of futures and options on futures listed on foreign boards of trade, nor trading of swaps that are cleared on a DCO registered with the Commission. Customer Segregated Account Funds that customers deposit with UCL, or that are otherwise required to be held for the benefit of customers, to margin futures and options on futures contracts traded on futures exchanges located in the US, i.e., designated contract markets, are held in a Customer Segregated Account in accordance with Section 4d(a)(2) of the Commodity Exchange Act and Commission Rule Customer Segregated Funds held in the Customer Segregated Account will not be used to meet the obligations of UCL or any other person, including another customer. All Customer Segregated Funds may be commingled in a single account, i.e., a customer omnibus account, and held with: (i) a bank or trust company located in the US; (ii) a bank or trust company located outside of the US that has in excess of $1 billion of regulatory capital; (iii) an FCM; or (iv) a 8

9 DCO. Such commingled account must be properly titled to make clear that the funds belong to, and are being held for the benefit of, the UCL s customers. Unless a customer provides instructions to the contrary, UCL may hold Customer Segregated Funds only: (i) in the US; (ii) in a money center country, i.e. Canada, France, Italy, Germany, Japan and United Kingdom; or (iii) in the country of origin of the currency. UCL shall hold sufficient US dollars in the US to meet all US dollar obligations and sufficient funds in each other currency to meet obligations in such currency. Notwithstanding the foregoing, assets denominated in a currency may be held to meet obligations denominated in another currency (other than the US dollar) as follows: (i) US dollars may be held in the US or in money center countries to meet obligations denominated in any other currency; and (ii) funds in money center currencies may be held in the US or in money center countries to meet obligations denominated in currencies other than the US dollar. Investment of Customer Funds Section 4d(a)(2) of the Act authorizes FCMs to invest Customer Segregated Funds in obligations of the United States, in general obligations of any State or of any political subdivision thereof, and in obligations fully guaranteed as to principal and interest by the United States. Commission Rule 1.25 authorizes FCMs to invest Customer Segregated Funds in instruments of a similar nature. Commission rules further provide that the FCM may retain all gains earned and is responsible for investment losses incurred in connection with the investment of Customer Funds. However, the FCM and client may agree that the FCM will pay the client interest on the funds deposited. UCL adopts the policy of accepting only cash as Performance Bond and it does not engage in investment of customer funds. No SIPC Protection Although UCL is a registered futures commission merchant, it is important to understand that the funds you deposit with UCL for trading futures and options on futures contracts in the US are not protected by the Securities Investor Protection Corporation. Commission rules require UCL to hold funds deposited to margin futures and options on futures contracts traded on US designated contract markets in Customer Segregated Accounts. In computing its Customer Funds requirements under relevant Commission rules, UCL may only consider those Customer Funds actually held in the applicable Customer Accounts and may not apply free funds in an account under identical ownership but of a different classification or account type (e.g., securities, Customer Segregated, 30.7) to an account s margin deficiency. In order to be used for margin purposes, the funds must actually transfer to the identically-owned under margined account. 9

10 For additional information on the protection of customer funds, please see the Futures Industry Association s Protection of Customer Funds Frequently Asked Questions located at Filing a Complaint A customer that wishes to file a complaint about UCL or one of its employees can contact the following: Commission - electronically at or by calling the Division of Enforcement toll-free at 866-FON-CFTC ( ). National Futures Association - electronically at or by calling the NFA at Chicago Mercantile Exchange - electronically at or by calling the CME at Relevant Financial Data UCL annual audited financial statements, most recent month-end data are made available on its website at: Additional financial information on all FCMs is also available on the Commission s website at: Customers should be aware that the National Futures Association ( NFA ) publishes on its website certain financial information with respect to each FCM. The FCM Capital Report provides each FCM s most recent month-end adjusted net capital, required net capital, and excess net capital. (Information for a twelve-month period is available.) In addition, NFA publishes twice-monthly a Customer Segregated Funds report, which shows for each FCM: (i) total funds held in Customer Segregated Accounts; (ii) total funds required to be held in Customer Segregated Accounts; and (iii) excess segregated funds, i.e., the FCM s Residual Interest. This report also shows the percentage of Customer Segregated Funds that are held in cash and each of the permitted investments under Commission Rule Finally, the report indicates whether the FCM held any Customer Segregated Funds during that month at a depository that is an affiliate of the FCM. The report shows the most recent semi-monthly information, but the public will also have the ability to see information for the most recent twelve-month period. The above financial information reports can be found by conducting a search for a specific FCM in NFA s BASIC system ( and then clicking on View Financial Information on the FCM s BASIC Details page. 10

11 Firm s Risk Management Summary The assumption of financial and non-financial risks is an integral part of UOB Group s business. The Group s risk management strategy is targeted at ensuring proper risk governance so as to facilitate ongoing effective risk discovery and to efficiently set aside adequate capital to cater for the risks. Risks are managed within levels established by the Group management committees, and approved by the Board and its committees. The Group has a comprehensive framework of policies and procedures for the identification, assessment, measurement, monitoring, control and reporting of its risks. The Group applies the following risk management principles: - Delivery of sustainable long-term growth using sound risk management principles and business practices; - Continual improvement of risk discovery capabilities and risk controls; and - Business development within a prudent, consistent and efficient risk management framework. Being a wholly owned subsidiary of UOB, UCL s risk management procedures are built in line with the Group s risk management strategy, which essentially means the Group s framework of policies and procedures are included into its Risk Management Program ( RMP ). UCL s RMP takes into account operational, market, credit, liquidity, foreign currency, settlement, segregation, technological, capital, affiliates and legal risks in its written procedures. Where relevant and required, risk tolerance limits and underlying methodology are set, reviewed and approved annually by the CEO and the respective function heads. This Disclosure Document was first used on 26 th October 2016 and last updated on 4 th Sep