(2)  The rules may authorise the taking of the same or similar action in relation to a member who appears to be likely to become unable to meet his obligations in respect of one or more market contracts.

    (3)  The rules must enable action to be taken in respect of all unsettled market contracts, other than those entered into by a recognised clearing house for the purposes of or in connection with the provision of clearing services for the exchange.

    (4)  As regards contracts entered into by the exchange for the purposes of or in connection with the provision of its own clearing services, the rules must contain provision corresponding to that required by paragraphs 9 to 11 below in the case of a UK clearing house.

    (5)  As regards other contracts the rules must contain provision complying with paragraphs 2 and 3 below.

    (2)  The rules must further provide—

(a)  for the sums so payable in respect of different contracts between the same parties to be aggregated or set off so as to produce a net sum, and

(b)  for the certification by or on behalf of the exchange of the net sum payable or, as the case may be, of the fact that no sum is payable.

(a)  parties to unsettled market contracts with a defaulter acting as principal are notified as soon as reasonably practicable of the default and of any decision taken under the rules in relation to contracts to which they are a party; and

(b)  parties to unsettled market contracts with a defaulter acting as agent and the defaulter's principals are notified as soon as reasonably practicable of the default and of the identity of the other party to the contract.

    (2)  If such provision is made, the exchange must have adequate procedures—

(a)  for designating the persons, or descriptions of person, in respect of whom action may be taken,

(b)  for keeping under review the question which persons or descriptions of person should be or remain so designated, and

(c)  for withdrawing such designation.

    (4)  The exchange must have adequate arrangements—

(a)  for bringing a designation or withdrawal of designation to the attention of the person or description of persons concerned, and

(b)  where a description of persons is designated, or the designation of a description of persons is withdrawn, for ascertaining which persons fall within that description.

    (2)  The rules may authorise the taking of the same or similar action where a member appears to be likely to become unable to meet his obligations in respect of one or more market contracts.

    (2)  The rules must further provide—

(a)  for the sums so payable by or to the defaulter in respect of different contracts to be aggregated or set off so as to produce a net sum;

(b)  for that sum—
(i)  if payable by the defaulter to the clearing house, to be set off against any property provided by or on behalf of the defaulter as cover for margin (or the proceeds of realisation of such property) so as to produce a further net sum, and


(ii)  if payable by the clearing house to the defaulter to be aggregated with any property provided by or on behalf of the defaulter as cover for margin (or the proceeds of realisation of such property); and

(c)  for the certification by or on behalf of the clearing house of the sum finally payable or, as the case may be, of the fact that no sum is payable.

(a)  the effecting by the clearing house of corresponding contracts in relation to unsettled market contracts to which the defaulter is a party;

(b)  the transfer of the defaulter's position under an unsettled market contract to another member of the clearing house;

(c)  the exercise by the clearing house of any option granted by an unsettled market contract.

This sub-paragraph applies with any necessary modifications in relation to a market contract which is not an agreement to sell.

    (3)  The reference in paragraph 9 to the rights and liabilities of a defaulter under or in respect of an unsettled market contract does not include, where he acts as agent, rights or liabilities of his arising out of the relationship of principal and agent.

    (2)  This is without prejudice to the requirements of any relevant regulations under section 55 of the [1986 c. 60.] Financial Services Act 1986 (clients' money).

    (2)  The reference in sub-paragraph (1) to default is to a person being unable to meet his obligations.