Newedge applaudes SGX for examining ways to strengthen the SGX-DC default resolution process. In particular, we support SGX's efforts to provide clearing members with a greater understanding of their potential liability in the event of default by another clearing member.
That said, we have a number of comments: First, we believe strongly that clearing members should not be liable for losses associated with contracts of a type they do not clear. Second, we believe that the proposed rule providing SGX-DC with the discretion to suspend clearing members based on their failing to settle their financial obligations on unrelated exchanges - without their having actually defaulted on such obligations - is not sufficiently tied to risk and provides an opportunity for the clearinghouse to exclude or restrict clearing members' activities inappropriately.