The Individual Fund may be requested by the CCP to Clearing Members or Direct Clearing Clients. Likewise, in accordance with Article 29.3 of BME CLEARING´s Rulebook, the Non-Clearing Members of a General Clearing Member when the latter has been declared in Default must post and Individual Fund.
The purpose of the Individual Fund is to cover BME CLEARING’s risk in relation to the Clearing Members. It can be only used to manage a default by that Clearing Member.
There are two different classes of Individual Funds, based on the Default Waterfall:
- Individual Funds specific to a Segment: which in case of enforcement of the funds the priority will be to cover the outstanding debit balance of the segment to which they were assigned, and only the remaining amounts would be used to cover the outstanding debit balances in other segments.
- Generic Individual Funds, which will be used after the Default Fund contribution of the defaulting Member in each Segment with an outstanding debit balance, and which will be distributed on a pro-rata basis amongst the Segments with outstanding debt balances from the Defaulting Member.
BME CLEARING may require an Individual Fund from Clearing Members in the manner and in the cases established by Circular. In any event, the following Members must post an Individual Fund:
- clearing Members that manage Omnibus accounts. BME CLEARING shall establish, in the Circular “Individual Fund” of each Segment, the amount to be posted by these Clearing Members.
- clearing Members exceeding their Position or Trade limits set forth by BME CLEARING.
- to enable an entity to be admitted as a Clearing Member if its own resources do not meet the minimum capital requirements established in the CCP's rules.
- to cover the stress test risk whenever their risk obtained in the stress test results are higher than the set parameters as established in the “Stress Test of the Default Fund” Circular.
- BME CLEARING may establish in the General Conditions of a specific Segment an additional minimum Individual Fund, to be specified in the corresponding Individual Fund Circular of the Segment.