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Guide to Guarantee Fund
2010-03-05

I.Introduction

Guarantee Fund is jointly contributed by Clearing Members in accordance with the rules of China Financial Futures Exchange (“Exchange”) to address the default risks of Clearing Members. If the Guarantee Fund of a Clearing Member is adjusted or utilized in accordance with the Measures of China Financial Futures Exchange on Risk Control, the Clearing Member should make additional contribution to its Dedicated Guarantee Fund Account it opened at a bank as required. Any Clearing Member that fails to contribute to the Guarantee Fund within the specified time limit will be dealt with in accordance with the Measures of China Financial Futures Exchange on Dealing with Violations and Breaches.

II.Procedures for Contributing Basic Guarantee Fund

1. Upon its admission to the Exchange, a Clearing Member should contribute the Basic Guarantee Fund through the Clearing Department of the Exchange by drawing a check, promissory note, credit voucher or other bank draft against its own funds account.

2. Once the corresponding bank confirms the receipt of the funds, the Clearing Department will process the contribution of Basic Guarantee Fund for the Clearing Member.

III.Procedures for Contributing Additional Guarantee Fund after Quarterly Adjustment

1. On the first trading day of each quarter, the Exchange determines the share of the Guarantee Fund to be contributed by each Clearing Member based on overall market conditions, and sends a Guarantee Fund Adjustment Notice and a Guarantee Fund Statement to each Clearing Member via the Member Service System. 

2. Any Clearing Member that has a Guarantee Fund shortfall should deposit the required additional amount in its Dedicated Guarantee Fund Account it opened at a bank no later than the close of the morning session on the fifth trading day of each quarter.

3. After the close of the morning session on the fifth trading day of each quarter, the Clearing Department of the Exchange transfers any excess amount in the Guarantee Fund to, and deducts any required additional amount from, the Clearing Member’s Dedicated Guarantee Fund Account it opened at a bank.

IV.Procedures for Contributing Additional Guarantee Fund after Utilization or Apportionment

1. If the Guarantee Fund contributed by a Clearing Member is utilized or apportioned according to the Measures of China Financial Futures Exchange on Risk Control, the Exchange will send a Guarantee Fund utilization or apportionment statement together with the Guarantee Fund Statement as of the day to the Clearing Member via the Member Service System.

2. After the Guarantee Fund of a Clearing Member is utilized or apportioned, the Clearing Member should deposit the required additional amount in its Dedicated Guarantee Fund Account it opened at a bank as per the original contribution standards before the close of the morning session on the fifth trading day following the utilization date.

3. After the close of the morning session on the fifth trading day, the Clearing Department of the Exchange transfers any required additional amount from the Clearing Member’s Dedicated Guarantee Fund Account it opened at a bank through the corresponding bank.