ADVOKS GLOBAL · KENYA
The Capital Markets (Commodity Markets) Regulations
50. Scheme of arrangements on default
Edition: 2022-12-31 · In force
50. Scheme of arrangements on default
Where a member of a commodity exchange has failed to meet his clearing and settlement obligations or where a member of a commodity exchange has been declared a defaulter, a commodity exchange or a clearing house, may use the settlement guarantee fund and other monies of the concerned member to the extent necessary to fulfil his obligations in the following order—(a)any amount that may have been paid by the defaulting member in the form of a pre-trade deposit, but does not include a client's pre-trade deposit, or any other money deposited with or retained by a clearing house for the purpose of meeting the clearing and settlement obligations;(b)any amount that may have been deposited by the defaulting member towards additional deposit with the clearing house;(c)the proceeds, if any, recovered from auctioning or disposing of the member's membership rights vested in a commodity exchange, subject to deduction of the expenses relating or incidental to the auction or disposal, as the case may be;(d)the fines, penalties, interest or other income, if any, earned by investment or divestments of the settlement guarantee fund as may be decided by the Authority;(e)the contribution made by all classes of members in proportion to their deposit to the settlement guarantee fund, or where the deposit is deficient, the deficit in the amount shall be deposited in the Settlement Guarantee Fund;(f)the profits, if any, from returns on investments of the settlement guarantee fund; and(g)any other funds set aside by the commodities exchange.