Chapter 04 · Section 4.1

Protection Against Default

Let us now establish how the protection against default works. The clearing fund is only used to settle clearing members'claims if other funds available were not sufficient.

Which of the following will be used (if available) before the clearing fund?

• a) The defaulting clearing member's margin deposit.
  Yes. That is why margins are required. It is actually unlikely that these margins will be insufficient in case of default. Nevertheless, should that money not be enough, the clearing fund is used. Continue
  b) Other clearing member's margin deposits.

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