APX Clearing Rule Book

Transcription

1 APX Clearing Rule Book APX Clearing B.V. Atlas Arena Amsterdam Australia Building, 3rd floor Hoogoorddreef BA Amsterdam The Netherlands Tel: Fax:

2 TABLE OF CONTENTS 1. DEFINITIONS AND INTERPRETATIONS 1.1 Definitions 1.2 Interpretations 2. MEMBERSHIP 2.1 Types of Clearing Members 2.2 General pre-conditions 2.3 Application procedure 2.4 Termination and suspension 3. NON-CLEARING MEMBERS 3.1 GCM-appointment Agreement 3.2 Relationship with Clearing Member 4. RIGHTS AND OBLIGATIONS OF THE CLEARING MEMBERS 4.1 General obligations 4.2 Corporate organisation 4.3 Record keeping 4.4 Information 4.5 Audit and inspection 4.6 Fees 5. GENERAL CLEARING CONDITIONS 5.1 Clearing procedures 5.2 Novation 5.3 OTC Transactions 5.4 Give Up / Take Up 6. COLLATERAL 6.1 Collateral in cash / Bank Guarantee 6.2 Payment and repayment of Collateral 7. CLEARING FUND 7.1 Contribution 7.2 Utilization 7.3 Release 7.4 Recovery 8. ACCOUNTS 8.1 Cash Accounts 8.2 Position Accounts 9. SETTLEMENT OF TRADE LEGS 9.1 Delivery 9.2 Payment 2

3 10. EVENTS OF DEFAULT AND CLOSE-OUT NETTING 10.1 General 10.2 Suspension of clearing rights and deferral of payment obligations 10.3 Close-out netting 10.4 Other measures 11. LIABILITY AND FORCE MAJEURE 11.1 Liability of Clearing Members 11.2 Liability of the Clearing House 11.3 Force Majeure 12 PAYMENT AND INVOICING 12.1 Invoices 12.2 Self-billing 12.3 Time of payment 12.4 Late payment and interest 12.5 Disputes and interest in the event of disputes 12.6 Other sums payable to the Clearing House 12.7 Method of payment to the Clearing House 12.8 Method of payment to the Clearing Member 12.9 Deductions and set-off 13. FINAL PROVISIONS 13.1 Clearing Rule Book amendment 13.2 Applicable law 13.3 Disputes 13.4 Outsourcing 13.5 Publication and effectiveness of the Clearing Rule Book 13.6 Communications 13.7 Currency 13.8 Confidentiality Appendix A: Template Participation Agreement Clearing and Settlement Services (CSS) Appendix B: Template GCM-Appointment Agreement Appendix C: Settlement Provisions for the Dutch Power Market Appendix D: Settlement Provisions for the Belgian Power Market Appendix E: Settlement Provisions for Gas Market 3

4 1. CHAPTER I - GENERAL PROVISIONS 1. DEFINITIONS AND INTERPRETATIONS 1.1 Definitions For the purposes of this Clearing Rule Book, the following capitalised terms shall, unless specifically provided otherwise, have the respective meanings set out below: Admission Fee Appeals Committee Applicant Article Bank Account Bank Guarantee Base Rate Belpex Belgian Power Market Belgian Power Market Rules Belgian Indirect Participation Agreement Broker Business Day Cash Account the one-off fee which is due upon admission by the Clearing Member to the Clearing House, as communicated from time to time by the Clearing House. the committee which is exclusively authorised to decide on disputes between the Clearing House and a Clearing Member, as set out in further detail in Paragraph a legal entity that wishes to be admitted as Clearing Member. an article of this Clearing Rule Book. a bank account held by and in the name of the Clearing House with a Settlement Bank for the account of the Clearing Member, in which Collateral is held and to which payments are credited or from which payments are debited as a result of Settlement of the Trade Legs. a bank guarantee issued for the benefit of the Clearing House as security for the obligations of a Clearing Member towards the Clearing House, in a form satisfactory to the Clearing House in its sole discretion. the Euro overnight deposit rate as published from time to time in the Financial Times. Belpex NV, a public company with limited liability incorporated under the laws of Belgium and having its registered seat in Brussels. The Belgian power spot market operated by Belpex on which Principal Transactions can be concluded with respect to the Instruments tradable on such market in accordance with the Belgian Power Market Rules. the market trading rules for the Belgian Power Market, as amended from time to time. shall have the meaning set forth in the Belgian Power Market Rules. has the meaning ascribed thereto in the Gas Market Rules. has the meaning ascribed thereto in the Trading Rules. a Member Escrow Account, a Bank Account or any other 4

5 bank account designated by the Clearing House. CER or Certified Emission Reduction Clause Clearing Clearing Fees Clearing Fund Clearing House Clearing House Holding Account Clearing Member Clearing Rule Book Clearing and Settlement System Collateral Collateral Fee Collateral Requirement a unit issued under the CDM mechanism pursuant to Paragraph 12 of the Kyoto Protocol and other relevant requirements and which is equal to one metric tonne of CO2e and which meets (i) the requirements of the EU ETS Directive and (ii) the requirements of the EU Linking Directive. a clause of this Clearing Rule Book. the process whereby Principal Transactions are novated into new, identical Trade Legs in Instruments upon registration by the Clearing House, which becomes the central counterparty to such Trade Legs in Instruments visà-vis the accountable Clearing Members involved. the fees payable by the Clearing Member to the Clearing House as remuneration for the Clearing and Settlement of Trade Legs, as set out in the Price List, which may be a fee per Trade Leg and/or a periodic fee. The Clearing Fees also include the Collateral Fees and the Admission Fee. the clearing fund established by the Clearing House, which shall be administered in such way that it reflects the Commodity Market for which contributions have been made. APX Clearing B.V., a private company with limited liability incorporated under the laws of the Netherlands and having its registered office in Amsterdam, which executes the Clearing and Settlement of Principal Transactions traded on a Commodity Market in accordance with this Clearing Rule Book. a Person Holding Account of the Clearing House held at a Local Registry. a General Clearing Member or a Direct Clearing Member admitted as such by the Clearing House pursuant to the Clearing Rule Book. this clearing rule book, including all Instructions and Notices issued pursuant thereto, as may be amended from time to time. the relevant IT systems and infrastructure managed by the Clearing House which provides technical access to the clearing and settlement facilities. the amount of cash held by a Clearing Member in a Cash Account and/or the amount guaranteed under a Bank Guarantee, in each case as security for the obligations of the Clearing Member towards the Clearing House, including the Default Contribution. the fee for the processing and management of the Collateral. the total amount of obligations of a Clearing Member vis-àvis the Clearing House with respect to Trade Legs 5

6 calculated in accordance with the calculation method published on the Website of the Clearing House which includes the Default Contribution. Commodity Market Competent Authority Consequential Damages Day Defaulting Clearing Member Default Contribution Direct Clearing Member Dispute Dutch Indirect Participation Agreement Dutch Power Market Dutch Power Market Rules ERU or Emission each of the Dutch Power Market, the Gas Market and the Belgian Power Market. any local, national or supra-national authority, agency, department, inspectorate, ministry, official, court, tribunal or public or statutory person (whether autonomous or not) of the Netherlands, or any other country which has jurisdiction over an Operator, the Clearing House, any Clearing Member or Non-Clearing Member or the subject matter of the Clearing Rule Book, the Dutch Power Market Rules, the Gas Market Rules and/or the Belgian Power Market Rules. means indirect damages, including but not limited to consequential damage, consequential loss, lost profits, lost and anticipated savings, loss of goodwill, loss of turnover, damage due to business interruptions or disturbances, penalties or damages which a Party has to pay to third parties and mutilation or loss of data. period of 24 consecutive hours starting 00:00 hours CET. the Clearing Member that is subject to an Event of Default. the amount of the contribution of a Clearing Member to the Clearing Fund calculated in accordance with the specifications posted on the Website of the Clearing House. a Clearing Member admitted by the Clearing House pursuant to Article 2 of this Clearing Rule Book to have Principal Transactions which have been carried out for its own account in its capacity as Trading Member cleared and settled via the Clearing and Settlement System. a dispute between a Clearing Member and the Clearing House with respect to a decision made by the Clearing House with regard to the Clearing Rule Book. the light membership agreement in which a Light Member shall mandate and give a power of attorney to a Trading Member to trade on the Dutch Power Market or on the Gas Market on behalf of and for the risk and account of such Light Member vis-à-vis the respective Operator and which is admitted as a Clearing Member by the Clearing House, in the form as subscribed by the Dutch Power Market or Gas Market respectively and amended from time to time. the Dutch power spot market operated by APX Power B.V. on which Principal Transactions can be concluded with respect to the Instruments tradable on such market in accordance with the Dutch Power Market Rules. the market trading rules for the Dutch Power Market. a unit converted from either an assigned amount unit 6

7 Reduction Unit EUA or EU Allowance EU ETS Directive EU Linking Directive Event of Default (AAU) or removal unit (RMU) and issued to project participants in a joint implementation project under Article 6 of the Kyoto Protocol and other relevant requirements and which is equal to one metric tonne of CO2e and which meets (i) the requirements of the EU ETS Directive and (ii) the requirements of the EU Linking Directive. an allowance as defined in the EU ETS Directive that has been issued by a Competent Authority pursuant to Paragraph 11(4) of the EU ETS Directive. Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the European Community and amending Council Directive 96/61/EC, as amended from time to time. Directive 2004/101/EC of the European Parliament and of the Council of 27 October 2004 amending Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Community, in respect of the Kyoto Protocol's project mechanisms as amended from time to time. in respect of a Clearing Member, any one or more of the following events: (a) the Clearing Member fails to pay to the Clearing House any amounts due and payable by it under or pursuant to the Clearing Rule Book; (b) the Clearing Member is unable to effect or procure or subject to an event or (legal) action resulting in such Member being unable or restricted from effecting or procuring Settlement of a Trade Leg and/or resulting in the Clearing House being unable to effect or procure Settlement of a Trade Leg; (c) the Clearing Member breaches any other obligation under the Clearing Rule Book; (d) the occurrence of an Insolvency Event; (e) a supervisory body or other regulatory body takes any action (or threatens to do so) against or in relation to that Clearing Member or exercises or threatens to exercise any powers it has to restrict or to prohibit that Clearing Member from entering into or performing any of its obligations under or pursuant to the Clearing Rule Book; (f) at any time, any licence, authorisation, consent or registration necessary to enable that Clearing Member to comply with its obligations to the Clearing House or to carry on its business in the normal manner is revoked, withheld, materially modified or no longer in full force and effect; (g) the Clearing Member is in default with respect to the rules of any other exchange or trading platform or clearing house; (h) the membership of the Clearing Member of any other 7

8 exchange or trading platform or clearing house is suspended or terminated; (i) the occurrence of a change in the business of the Clearing Member which has a material adverse effect on the ability of the Clearing Member to meet its obligations under the Clearing Rule Book; and/or (j) the occurrence of any of the aforementioned events in relation to one or more of the Clearing Member's affiliates. Fees Force Majeure Gas Market Gas Market Rules Gas Transmission Network GCM-appointment Agreement General Clearing Member Give Up Give Up / Take Up- Procedures Grid Insolvency Event the Clearing Fees and the Trading Fees, as applicable. a failure by a Person to perform which is not attributable to such Person for the reasons as set out in Article 6:75 of the Dutch Civil Code, including any circumstances beyond the reasonable control of such Person, including acts of God, wars, national emergencies, industrial disputes, civil commotions, fires, tempests and/or floods and the failure of the Grid and/or the Gas Transmission Network. the Dutch and Belgian gas spot market on which Principal Transactions can be concluded with respect to the Instruments tradable on such markets in accordance with the Gas Market Rules. the market trading rules for the Gas Market. the gas transmission network operated by a TSO. the agreement in which a Non-Clearing Member appoints a General Clearing Member in the form of the format set out in Appendix B. a Clearing Member admitted by the Clearing House pursuant to Article 2 of this Clearing Rule Book to clear Principal Transactions which have been concluded by itself in its capacity as Trading Member or which have been concluded by its Non-Clearing Members. a request from a Clearing Member to transfer the rights and obligations under the Trade Legs which have been registered by such Clearing Member for Clearing to another Clearing Member. the procedures relating to a Give Up and Take Up, as published on the Website of the Clearing House, as amended from time to time. the high voltage network for the transmission of electricity, including any cross border interconnector facilities that are considered to form part of a specific high voltage network. in respect of a Clearing Member, any of the following events: (a) the Clearing Member generally fails to pay, or is unable to pay its debts, as they become due; (b) the Clearing Member admits that it is unable to pay its debts generally or as they become due or the Clearing Member becomes or is deemed to have become unable to 8

9 pay its debts as they become due under the laws of any jurisdiction; (c) the Clearing Member makes a general assignment for the benefit of, entering into a reorganisation, arrangement or composition with creditors; (d) the Clearing Member commences or takes any proceedings or steps or has such proceedings commenced or steps taken against it seeking or proposing to adjudicate it bankrupt or insolvent, or seeks or proposes liquidation, winding-up, reorganisation, dissolution, administration, arrangement, adjustment, protection, moratorium or similar relief or composition of it or its debts or seeks the entry of an order for relief or the appointment of a receiver, receiver and manager, liquidator, provisional liquidator, administrator, custodian, trustee, examiner, conservator or other similar official of it or any substantial part of its revenues and assets (except, in each case, for the purpose of a reconstruction or amalgamation by a Clearing Member, the terms of which have previously been approved by the Clearing House in writing), in each case whether under the laws relating to bankruptcy, insolvency or reorganisation or relief of debtors or regulatory or supervisory laws or similar laws of the country of incorporation or domicile of the Clearing Member or under the laws of any other jurisdiction; (e) the Clearing Member takes any action or other step to authorise, institute or commence any of the actions referred to above; (f) any execution, distress, sequestration, attachment or other process being levied or enforced against the Clearing Member or against any substantial part of its revenues and assets and not being discharged within seven days of being so levied or enforced; (g) the Clearing Member is dissolved or in respect of a Clearing Member whose existence is dependent upon formal registration, such registration is removed or terminated; (h) on the basis of publicly available information, the Clearing House determines that a Clearing Member is likely to become subject to one or more of the events listed under (a) up to (g) above; or (i) the occurrence of any of the aforementioned events in relation to one or more of the Clearing Member's affiliates. Instruction Instruments Instrument any document issued as such by the Clearing House, as amended from time to time, whereby the provisions of this Clearing Rule Book are interpreted or implemented and which is binding upon Clearing Members generally or to any category of Clearing Members in particular, communicated in accordance with Paragraph the instruments that have been approved for Clearing and Settlement by the Clearing House. has the meaning ascribed thereto in the Trading Rules. 9

10 Specifications Invoice Light Member Local Registry Member Escrow Account Member Escrow Account Agreement Membership Agreement MiFID Non-Clearing Member Non-Proprietary Account Notice an overview sent by the Clearing House to each Clearing Member on a Business Day, setting forth the amounts or net amount owed by the Clearing Member to the Clearing House or to the Clearing Member by the Clearing House. an entity that in accordance with the Trading Rules is only allowed to trade on a Commodity Market through the intermediation of a Trading Member acting as its agent and which is admitted as a Clearing Member by the Clearing House pursuant to a Dutch Indirect Participation Agreement or Belgian Indirect Participation Agreement. the registry established by any Member State pursuant to the EU ETS Directive and the Registry Regulation, in order to ensure the accurate accounting of the issue, holding, transfer, acquisition, surrender, cancellation and replacement of Carbon Emission Rights. a Cash Account held in the name of the Settlement Bank acting as escrow agent, in which account Collateral is held and to which payments are credited or from which payments are debited as a result of Settlement of the Trade Legs and which is subject to a Member Escrow Account Agreement. the agreement between a Settlement Bank and a Clearing Member, in a form acceptable to the Clearing House in its sole discretion. the agreement between on the one hand a Clearing Member and on the other hand respectively APX Power B.V, ICE Endex Gas B.V,, Belpex SA, or any affiliated entity pursuant to which a Clearing Member accepts to be bound by the Trading Rules. Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC as amended from time to time. any Trading Member whose membership on the relevant Commodity Market has not been terminated and which has designated a General Clearing Member by entering into a GCM-appointment Agreement. a Position Account established by the Clearing House in the name of a General Clearing Member which refers to a Non-Clearing Member that is to be administered separately from any other Position Accounts established in the name of that General Clearing Member. any document issued as such by the Clearing House, as amended from time to time, informing Clearing Members generally, or a particular category of Clearing Members, of specific matters of relevance with respect to the proper functioning of the Clearing of Transactions and which is binding upon such Clearing Members. Unless stated otherwise in the Clearing Rule Book, Notices may only 10

11 cover issues of technical and operational nature, implementing the main principles laid down in the Clearing Rule Book or in an Instruction, communicated in accordance with Paragraph Open Position Operator Operator Holding Account OTC Transaction Paragraph Participation Agreement Clearing and Settlement Services (CSS) Party Person Person Holding Account Position Account Power Market Price List Principal Transaction Proprietary Account the sum of the Trade Legs netted per Instrument. the market operator of a Commodity Market. the account of a Clearing Member as described in Article 4 of the Registry Regulation on which the Competent Authority annually credits the EUAs in accordance with the relevant national allocation plan. an over the counter transaction between two Trading Members, i.e. a bilateral transaction in respect of Instruments which is registered on the Commodity Market by a Trading Member or its Broker subject to the acceptance by the Clearing House thereof in accordance with Paragraph 5.3. a paragraph of this Clearing Rule Book. the written agreement entered into between the Clearing House and a Clearing Member, in the form of the template set out in Appendix A. the Clearing House or a Clearing Member as the context permits. a natural person, partnership, incorporated organisation, unincorporated organisation, or association, limited liability company, trust or other legal entity as the context requires. an account of a Clearing Member as described in Section 5 of the EU Commission regulation No. 2216/2044 for a standardised and secured system of registries pursuant to Article 19(3) of the EU ETS Directive and Article 6(1) of Decision 280/2004/EC, held at a Local Registry. an account opened in the administration of the Clearing House in the name of the Clearing Member, in which all Trade Legs are administered in the form of a Proprietary Account or a Non-Proprietary Account. both the Belgian Power Market and the Dutch Power Market. the list containing the Clearing Fees published by the Clearing House on its Website as amended from time to time. any trade concluded by a Trading Member on a Commodity Market regarding one or more Instruments. a Position Account established by the Clearing House in the name of a Clearing Member for the registration of Trades Legs concluded for its own risk and account. Registry Regulation EU Commission regulation No. 2216/2044 for a standardised and secured system of registries pursuant to 11

12 Article 19(3) of the EU ETS Directive. Settlement Settlement Bank Settlement Day the process referred to in Article 9 in which the contractual obligations of the Clearing Members vis-à-vis the Clearing House resulting from Trade Legs are discharged. a bank which has been approved by the Clearing House for maintaining a Member Escrow Account and/or a Bank Account. the Business Day as defined in the relevant Trading Rules on which the Clearing House issues Invoices and, with respect to payments to be made pursuant to these Invoices, the Business Day on which such payments are required to be made pursuant to the Invoice. Settlement Provisions the supplementary provisions contained in Appendices C, E and F that govern the delivery of an Instrument or offtake obligations under a Trade Leg in a specific Commodity Market. System Operator Take Up Termination Amount Trade Leg Trade Out Compensation Trading Fees Trading Member Trading Rules TSO a company that operates the Grid in a specific area. the acceptance of a Clearing Member of a request for Give Up from a Clearing Member. in respect of all Trade Legs of a Defaulting Clearing Member, the amount calculated by the Clearing House pursuant to Paragraph either a payment obligation, a delivery obligation or an offtake obligation in respect of Instruments of a Clearing Member vis-à-vis the Clearing House resulting from the Clearing of a Principal Transaction. With regard to the Belgian Power Market, a Trade Leg only concerns the payment obligations arising out of Principal Transactions. has the meaning ascribed thereto in Appendix E. the fees payable by a Trading Member to APX Power B.V., ICE Endex Gas B.V., Belpex SA or any other affiliated entity pursuant to the Trading Rules. a member admitted to trade Instruments on a Commodity Market. the Dutch Power Market Rules, the Gas Market Rules and the Belgian Power Market Rules, as amended from time to time. the operator of a gas transmission network where an Instrument traded on the Gas Market can be off taken or delivered. 12

13 Unrealised Settlement Website or Website of the Clearing House the financial obligations in respect of payment of the relevant Instrument, related Fees and VAT (if any) that have become due and payable, but that have not been the object of a Settlement. Unrealised Settlements represent the accrued net amount in respect of a Clearing Member that is payable or receivable upon the next invoicing / self billing Interpretations In this Clearing Rule Book, unless the context requires otherwise: references to any law, regulation, policy rule or directive shall be construed in force as those in force from time to time; headings in this Clearing Rule Book or in the Instructions are for ease of reference only; they are not part of the relevant Article and may not in any way affect the interpretation thereof; words used in the singular may be interpreted as including the plural and vice versa; the word "including" is to be construed as: "including without limitation"; and where reference is made to a time or deadline, it shall be understood to mean the Central European Time (CET and CEST), unless expressly stipulated otherwise in this Clearing Rule Book The Settlement Provisions apply in addition to, and not instead of, the common provisions of the Articles of the Clearing Rule Book, where applicable. In case of any inconsistency between the Settlement Provisions and the provisions of the Articles of the Clearing Rule Book, the Settlement Provisions will prevail As regards the clearing of Principal Transactions concluded on the Belgian Power Market the common provisions of the Articles of the Clearing Rule Book are supplemented by the provisions of Appendix D which shall apply cumulatively. To the extent the provisions of Appendix D deviate from the common provisions of the Articles of the Clearing Rule Book, the provisions of Appendix D shall prevail The Clearing Rule Book shall be implemented and interpreted through Instructions and by Notices, issued by the Clearing House and published in accordance with Clause Instructions and Notices shall not be used to amend the principles and general conditions set out in the Clearing Rule Book. 2. MEMBERSHIP 2.1 Types of Clearing Members A Clearing Member is a legal entity admitted as such by the Clearing House and authorised, subject to the Clearing Rule Book, to submit and clear Principal Transactions for Clearing and Settlement, pursuant to a Participation Agreement CSS concluded between the Clearing House and itself There are two types of Clearing Members: General Clearing Members and Direct Clearing Members General Clearing Members are authorised to clear Principal Transactions which have been concluded by themselves in their capacity as Trading Member and/or by Non-Clearing Member(s) on a Commodity Market and to settle the corresponding Trade Legs. 13

14 Such Trade Legs include Trade Legs which have been transferred to the General Clearing Member concerned pursuant to the Give Up / Take Up-procedure pursuant to Clause or Clause Direct Clearing Members are only authorised to clear their own Principal Transactions concluded in their capacity as Trading Member and to settle the corresponding Trade Legs which includes Trade Legs which have been transferred to it pursuant to the Give Up / Take Up-procedure pursuant to Clause or Clause The following entities are eligible to become a General Clearing Member: (i) (ii) (iii) licensed credit institutions, having their head office in an EU Member State or in a state which is a party to the agreement on the European Economic Area, or in any other state as designated by the Clearing House; licensed investment firms, such term as defined in MiFID, having their head office in an EU Member State or in a state which is party to the agreement on the European Economic Area, or in any other state as designated by the Clearing House; or branch offices of the entities set out under (i) and/or (ii) above The following entities are eligible to become a Direct Clearing Member: (i) (ii) the parties set out in Clause of this Clearing Rule Book; or parties, which, in the opinion of the Clearing House: (a) have the required expertise and trustworthiness; (b) possess the required competences and powers in respect of trading on a Commodity Market; (c) have taken adequate organisational measures; and (d) have sufficient financial resources for the activities as a Direct Clearing Member The capacity of General Clearing Member has not been operationally implemented yet and this modality will only be available upon a Notice of the Clearing House. 2.2 General pre-conditions An Applicant wishing to be admitted as a Clearing Member by the Clearing House should satisfy the following conditions: a. it must be validly incorporated; b. it must undertake to accept the Clearing Rule Book by executing the Participation Agreement CSS; c. it must provide evidence to the Clearing House that it can meet and will continue to be able to meet its delivery obligations under Trade Legs, implying amongst others that it has and will be able to maintain the BRP status it has indicated in Clause 3.3 of its Participation Agreement CSS; d. It must have entered into Membership Agreement; e. it must be in possession of and comply with all necessary and relevant permits regarding its business, as required by applicable law; f. it must meet the financial requirements as determined by the Clearing House from time to time and also meet any further requirements regarding liquidity and/or solvency as may be set by the Clearing House from time to time; g. it must have sufficient expertise in relation to the clearing activities and its technical systems, its related organisational structure must be reliable from an operational perspective and its risk management policy must be adequate; h. it must have at its disposal the technical environment to be connected to the relevant Clearing and Settlement System managed by the Clearing House; i. the intended or past activities of any person or persons determining or co-determining the policy of the Applicant, or other facts or circumstances relating to these persons, will not represent a serious risk to the interests of the Clearing House or other Clearing Members; j. all those determining or co-determining the day-to-day policy of an Applicant must have sufficient expertise to conduct the business of a Clearing Member, as applicable; k. it must be established in a Member State of the European Union or in a state that is a member of the European Economic Area. However, the Clearing House may, at its sole discretion, 14

15 decide to accept an Applicant from another state provided that the Applicant is not established in a country that is rated 5 or lower on the Corruption Perceptions Index as published and updated from time to time by Transparency International on l. it must provide the Clearing House, if so requested, with a legal opinion from local counsel that its domestic law system will not inhibit the ability of the Clearing House to act effectively under the Clearing Rule Book; and m. it must satisfy such other requirements as may be imposed by the Clearing House generally or for a category of Clearing Members An Applicant wishing to be admitted as a General Clearing Member by the Clearing House should satisfy the conditions laid down in Clause and, in addition thereto, it must have a license as a credit institution or as an investment firm (such terms as defined in MiFID); Evidence of the continued existence of the pre-conditions for membership shall be furnished to the Clearing House at any time upon a request to that end. The Clearing House shall be entitled to commission an auditor at the expense of the Clearing Member to investigate the continued existence of the preconditions for membership The Clearing House may at any time impose additional conditions on a Clearing Member or a category of Clearing Members, and may at any time vary or withdraw any such conditions. These conditions may include, but are not limited to, a requirement to deposit additional Collateral as determined by the Clearing House. 2.3 Application Procedure The Applicant shall fill in the Clearing House's admission application form which is available on the Website of the Clearing House. The admission application form specifies, amongst other things, the Commodity Market(s) on which the Applicant wishes to clear and settle Principal Transactions and the membership category (General Clearing Member or Direct Clearing Member) the Applicant applies for The Clearing House may request an Applicant to provide information other than the information which is listed in the admission application form. The Applicant must provide this information together with the completed admission application form, or, to the extent that the information is requested following the submission of the admission application form, as soon as possible The Clearing House shall examine the information in the admission application and inform the Applicant of its admission decision by ordinary mail within one month following the date of receipt of all documents to be included in the application. Should the information contained in the application be incomplete or unsatisfactory or should the Clearing House require further information to verify that the Applicant meets the conditions set out in Clause and, if applicable, Clause 2.2.1, the Clearing House shall have the right to require additional information from the Applicant. In such event, the one month-period will commence on the date of receipt of the additional information The Applicant irrevocably authorises such persons as may be specified by the Clearing House to inspect its facilities, interview its staff, audit the technical system that is operated by or on behalf of the Applicant to clear and settle Principal Transactions together with the procedures that are in place to operate such system, including risk management provisions, check the proposed procedures (as recorded in writing) and inspect its books, papers and other data, for the purpose of determining whether the Applicant complies with the conditions set forth in Clause and, if applicable, Clause The Clearing House may request information from any party for the purposes of verifying the information which it has received from the Applicant in connection with its application The Clearing House may impose conditions or limitations on the admission of a Clearing Member The membership admission is granted for a membership category (General Clearing Member of Direct Clearing Member) and with respect to one or more Commodity Markets Whilst the application is pending, the Applicant must notify the Clearing House in advance in writing of every change in the information supplied with the application and of facts and circumstances 15

16 concerning the Applicant which may be of importance in the context of the application or on the ability of the Applicant to perform its obligations under the Clearing Rule Book and the orderly conduct of its activities as a Clearing Member If the Clearing House has not made a decision on a particular application within one month following the date on which the complete application was filed with the Clearing House, subject to an extension in the event of a request of additional information pursuant to Clause or 2.3.3, the Clearing House shall be deemed to have rejected the application, unless otherwise indicated by the Clearing House The Clearing House may refuse an application for admission to membership if: (i) the Clearing Member does not meet the requirements set out in Paragraph 2.2; (ii) it considers that such admission may adversely affect the operation of the Clearing and Settlement System; or (iii) the Applicant does not comply with its obligations resulting from its admission to another clearing house If an application is rejected, the Clearing House shall at the request of the Applicant - provide the reasons for its rejection to the Applicant within one month after the request If the Applicant has been approved as a Clearing Member, it shall before commencing operations: (i) (ii) provide the Clearing House with the remaining documents and information as notified in the approval letter; and comply with the specific requirements as set out in this Paragraph The Applicant shall signify its acceptance of the Clearing Rule Book by returning the Participation Agreement CSS signed by a duly authorised representative or, as applicable, duly authorised representatives The Participation Agreement CSS cannot be assigned or transferred without the Clearing House's prior written approval. Clearing Members cannot transfer or pledge their rights vis-à-vis the Clearing House to other parties unless expressly provided otherwise in the Clearing Rule Book A Clearing Member must commence operations within six months after the Clearing House notifies it of its admission, unless the Clearing House accepts an extension of this period. Failing such extension, the admission decision shall be automatically revoked The six months period referred to in Clause does not apply when a Clearing Member, which is already active on one or more Commodity Markets, requests an extension to (an) other Commodity Market(s). 2.4 Termination and suspension of clearing membership A Clearing Member can terminate its membership with the Clearing House at all times by giving no less than 30 days' prior written notice to the Clearing House. Such termination shall only become effective once all outstanding delivery, offtake and payment obligations have been fulfilled in respect of the Trade Legs for the Clearing and Settlement of which the Clearing Member is responsible or once the obligations under these Trade Legs have been transferred to another Clearing Member Without prejudice to the possible applicability of the event of default provisions set out in Article 10, if the Clearing House is of the opinion that events have occurred which could or are likely to result in a situation in which a Clearing Member no longer satisfies one or more of the requirements or complies with one or more obligations set out in this Clearing Rule Book or could negatively affect the proper functioning of the Clearing and Settlement System, the Clearing House may with immediate effect: terminate the membership of the Clearing Member, refuse to register Trade Legs for Clearing and Settlement, or 16

17 impose specific conditions on the registration of Trade Legs for Clearing and Settlement, or impose additional conditions which the Clearing House deems appropriate and notifies in writing to the Clearing Member. The Clearing Member shall be informed in writing of the reasons for any such action Before exercising any powers set out in Clause 2.4.2, the Clearing House may, but is not obliged to, enter into consultations with the Clearing Member which may result in the Clearing House specifying the latest date and time limit on which the Clearing Member must have remedied the situation The Clearing House can decide to temporarily suspend the Clearing Member's membership with immediate effect if the Clearing House determines that the Clearing Member has breached a provision of the Clearing Rule Book or if in the opinion of the Clearing House, acting in good faith, the Clearing Member is unable or likely to become unable to meet its payment obligations or other obligations to the Clearing House. The Clearing Member must inform its Non-Clearing Members accordingly. The Clearing Member shall be informed in writing of the reasons for suspension. A suspension can apply for a maximum period of six months When a Clearing Member's membership is suspended, the Clearing House shall suspend the registration of any new Trade Legs in the Clearing Member's name. However, the Clearing House may decide to only suspend the registration of any new Trade Legs which increase the Clearing Member's Open Position. The Clearing Member will continue to be required to provide Collateral and settle Open Positions as they fall due Suspension or termination of membership shall be promptly notified to the other Clearing Members by publication in a Notice. The Clearing House will also promptly notify the Operator of the Commodity Market(s) concerned. The Clearing Member shall inform its Non-Clearing Members accordingly. 3. NON-CLEARING MEMBERS 3.1 GCM-appointment Agreement A General Clearing Member may clear Principal Transactions and settle corresponding Trade Legs for one or more Non-Clearing Members provided that the General Clearing Member has entered into a GCM-appointment Agreement with each such Non-Clearing Member and provided that the General Clearing Member has not been suspended and that its membership has not been terminated The Clearing House shall not be liable towards any Non-Clearing Member for any damage arising from or in connection with the GCM-appointment Agreement. 3.2 Relationship with the Clearing Member Pursuant to the GCM-appointment Agreement, the Principal Transactions concluded by a Non- Clearing Member on a Commodity Market will be concluded by such Non-Clearing Member on its own behalf. Upon registration of the Trade Leg by the Clearing House novation occurs. As a result of such novation, all rights and obligations of the Non-Clearing Member are discharged and, simultaneously, new, identical rights and obligations are undertaken by the General Clearing Member vis-à-vis the Clearing House and the General Clearing Member will be liable towards the Clearing House for the obligations arising from the Trade Legs Pursuant to the GCM-appointment Agreement, the OTC Transactions entered into by the Non- Clearing Member will be novated into Trade Legs by registration of such Trade Legs by the Clearing House. As a result of such novation, all rights and obligations of the Non-Clearing Member are discharged and, simultaneously, new, identical rights and obligations are undertaken by the General Clearing Member vis-à-vis the Clearing House upon registration by the Clearing House and the General Clearing Member will be liable towards the Clearing House for the obligations arising from the Trade Legs. 17

18 4. RIGHTS AND OBLIGATIONS OF THE CLEARING MEMBERS 4.1 General obligations A Clearing Member shall, on a continuous basis: a) meet the membership requirements set out in Paragraph 2.2; b) inform the Clearing House immediately if it no longer continues to meet the membership requirements set out in Paragraph 2.2 or has reason to believe that it will not do so; c) act with due care and diligence vis-à-vis the Clearing House, the relevant Commodity Market(s) and the other Clearing Members; d) comply with the Clearing Rule Book; e) fulfil all obligations pursuant to the Clearing Rule Book which have become due and payable; f) give notice to the Clearing House as soon as reasonably practicable if the Clearing Member is of the opinion that it will fail or may fail or has failed to satisfy any payment or delivery obligation when due or if an Event of Default occurs or is likely to occur; g) comply with the technical requirements of the Clearing and Settlement System and immediately notify the Clearing House of any irregularity in the Clearing and Settlement System; h) comply with any requirement of the Clearing House with regard to the Clearing or Settlement of a Trade Leg; i) comply with any obligation that may arise from applicable legislation and/or regulations, as amended from time to time, including, but not limited to, requirements imposed by or on behalf of competent regulatory authorities and requirements imposed by the Clearing House in order for the Clearing House to assure the proper functioning of the Clearing and Settlement; j) comply with any rule imposed by the Clearing House; k) respect and comply with the established operating procedures; l) refrain from any action that may jeopardise the proper functioning of the Clearing and Settlement System; m) ensure that those assigned to its clearing activities are competent and appropriately trained to do so; n) ensure prompt and complete fulfilment of all its obligations towards the Clearing House, amongst which but not limited to timely payment of any amount charged to it by the Clearing House; o) inform the Clearing House in writing about any fact or circumstances which may affect its legal status or organisation, or its activities as Clearing Member; and p) inform the Clearing House in writing of any change in the information communicated by or on behalf of the Clearing Member to the Clearing House The Clearing Member represents and warrants with respect to each Trade Leg to the Clearing House that the relevant Instruments and funds are at its disposal. The Clearing House may fully rely on the foregoing warranty and the Clearing Member shall fully indemnify and hold the Clearing House harmless for any damages incurred by the Clearing House as a result of this reliance. 4.2 Corporate organisation A Clearing Member may locate the human and technical resources needed to carry on its clearing and back office activities wherever it chooses, provided that such activities are carried out in a country, in the sole opinion of the Clearing House, in which on-site inspections by or on behalf of the Clearing House are practicable and permitted by applicable laws and regulations A Clearing Member may subcontract all or part of its clearing activities to another Clearing Member or to a company within its group with the prior authorisation of the Clearing House, provided that such arrangements shall not release the subcontracting Clearing Member of any of its obligations under the Clearing Rule Book. The request for authorisation must provide all appropriate details as to the organisation, structure and procedures of the subcontractor and as to the means of control and supervision available to the subcontracting Clearing Member The subcontracting Clearing Member will ensure that the subcontractor will provide the same information to the Clearing House as may be required from a Clearing Member pursuant to the 18

19 Clearing Rule Book. To that effect the Clearing House may request in advance a written undertaking by the subcontractor which will include a provision authorising the Clearing House and any Person acting on its behalf to perform inspections at the premises in which the clearing activities will actually take place A Clearing Member that relies on an outside contractor to operate its systems agrees to inform the Clearing House of the control mechanisms pertaining to the contents and the continuity of the hardware and software used or made available by the contractor. Such communications do not constitute approval by the Clearing House nor do they release the Clearing Member of any of its obligations and liabilities under the Clearing Rule Book. The Clearing Member alone is responsible towards the Clearing House for the proper execution of operations. 4.3 Record keeping The Clearing Member must keep accurate and full accounting records of all Principal Transactions and corresponding Trade Legs which it registers for Clearing and Settlement The Clearing House will keep accurate and full accounting records of all the Principal Transactions that have been registered for Clearing that have resulted in the Settlement of the Trade Leg The Clearing Member is required to keep all data relating to its clearing activity electronically for at least five years and must make the data available in an electronic format to the Clearing House upon demand throughout that period The Clearing House will keep all data relating to Principal Transactions that have been registered for Clearing that have resulted in the Settlement of the Trade Leg for at least five years. 4.4 Information Any obligation of Clearing Members to provide information also covers information about the Non- Clearing Members for which it performs clearing and settlement services. This includes the identity, trading activities and Principal Transactions of the Non-Clearing Members The Clearing Member shall respond to all requests for information from the Clearing House concerning its clearing activities and exposure to general and financial risks within five Business Days A Clearing Member must, within three months of the date on which its annual accounts are published provide the Clearing House with: (i) (ii) audited financial statements balance sheet, profit and loss account, and notes to the annual financial statements, in each case prepared in the English, Dutch, French or German language, and audited consolidated financial statements balance sheet, profit and loss account, and notes to the financial statements which includes the consolidated affiliates of the Clearing Member, in each case prepared in the English, Dutch, French or German language. In addition, the Clearing House may at its discretion require the provision of such documents of the ultimate or immediate parent company of the Clearing Member Upon request of the Clearing House, Clearing Members shall send the Clearing House information relating to: (i) (ii) (iii) the holders of a direct or indirect shareholding in the Clearing Member s capital to the direct or indirect participation in the capital is ten per cent or more and/or the holders of the right to exercise, directly or indirectly, ten per cent or more of the voting rights in the Clearing Member or the right to exercise, directly or indirectly, equivalent control in the Clearing Member; an updated description of the technical resources and personnel that are assigned to clearing functions; a description of the structure and procedures in place, particularly in regard to the audit and back office functions. 19