Default Management

CDCC's margining system is designed to ensure that in the event of default, the Corporation has sufficient margin to cover the defaulting Clearing Member's exposure. CDCC Rules, including its Default Manual, specify how default will be handled and how losses will be shared. The Default Manual describes CDCC's possible courses of action in case of a Clearing Member's default, including management of a default situation, authority, communication with a Clearing Member and implementation of remedies.

If a Clearing Member is unable to meet its obligations, CDCC uses resources at its disposal (i.e., collateral pledged in the Margin Fund, Difference Fund and Clearing Fund) in the form of highly liquid assets to offset any deficit incurred as a result of such default. In addition to these resources, CDCC has a standby collateralized line of credit of C$300 million to further ensure immediate access to liquid funds. The credit line is available no more than 30 minutes after CDCC pledges the defaulting Clearing Member's margin deposits to its creditor.