ADVOKS GLOBAL · KENYA
Central Depositories Act
5B. Default process rules
Edition: 2023-12-11 · In force
5B. Default process rules
(1)The default process rules made under section 5A(1)(d) shall provide for the actions which a central depository may take against a central depository agent that has failed, or has become unable or is likely to be unable to meet its obligations for all unsettled or open market contracts to which it is a party and shall in particular, to—(a)enable the settlement of all the defaulter’s contracts;(b)provide, for the purpose of paragraph (a), such sum of money payable by or to the defaulter, in relation to each contract, if this is required after taking into account all the rights and liabilities of the defaulter under or in respect of the contracts in question;(c)enable all sums of money payable by or to the defaulter as determined in accordance with paragraph (b) to be aggregated or set-off to produce a net sum, if any, payable by or to the defaulter;(d)provide, if any, the net sum referred to in paragraph (c), is payable to the defaulter, that all property of the defaulter which is either subject to a market charge or which has been provided as market collateral shall cease to be subject to the market charge, without prejudice to any other form of charge to which it may be subject, or to be market collateral, without prejudice to its provision as any other form of collateral, as the case may be; and(e)provide for the certification by the central depository, of any net sum referred to in paragraph (c) payable to the defaulter, or of any further net sum referred to in paragraph (d) payable by or to the defaulter, as the case may be, or if there is no such sum, the certification by the central depository of that fact.(2)Where a central depository commences a default process, all subsequent action taken under its rules for settlement of market contracts to which the defaulter is party, shall be treated as taken under the default rules.