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END OF DAY SETTLEMENT
Clearing Members are required to settle financial obligations to the CCP including margin obligations i.e., variation margin and initial margin (where applicable), payment of fees & dues, and other related payments on a daily basis or as may be determined by the CCP. Failure to meet any obligation for variation margin and initial margin may constitute an event of default under the published Clearing Member Rules.
FMDQ Clear carry out daily mark-to-market of Clearing Members open positions to determine the variation margin obligation due to / from each Clearing Member during the End-of-Day (“EOD”) procedure. In instances of extreme market volatility, intra-day mark-to-market of Clearing Members’ open positions may be carried out by FMDQ Clear for intra-day settlement of variation margin.
FMDQ Clear creates payment instructions for variation margin, initial margin (where applicable), fee and dues which are effected through a Settlement Agent, the Nigeria Inter-Bank Settlement System PLC via direct debit to the Clearing Member’s operating account with the Central Bank of Nigeria. Collection of payment obligation are executed daily in line which NIBSS collection window.
A ‘Summary Reports’ showing breakdown of all settlement obligations are availed to Clearing Members as part of End-of-Day procedure of FMDQ Clear.
For the physical settlement of fixed income spot and repo transactions, FMDQ Clear determines a net position per security for each Clearing Member. The net physical delivery obligation per Clearing Member and the corresponding net cash obligations are transmitted to FMDQ Depository Limited for processing.
FMDQ Depository Limited maintains four (4) settlement cycles for settlement of security and cash obligations in the fixed income spot and repo segment via its settlement system. FMDQ Depository provides settlement feedback to FMDQ Clear which are transmitted to Clearing Members
Physical settlement is not applicable to the ETD segment.