Clearing Operations

Clearing Operations Overview

Clearing is a process to guarantee and confirm the transactions prior to settlement between the Participants, to establish final positions for settlement. Muqassa clears exchange traded transactions on open offer basis, where Muqassa places itself between the counter parties at the time of matching.

List of Markets and Products Cleared:

Market

Products

Saudi Stock Exchange (Tadawul) exchange traded derivatives market

MT30 Index Futures

Account Structure and Account Types

Following accounts are used by Muqassa for trade, position, margin and collateral management.

  • Trade and Position Accounts:

Members House Trade and Position Account Accounts used to trade and keep related position for Member`s own transactions.

House Market Maker Trade and Position Account can also be opened for Members for market making activities.

Client Trade and Position Account (Net/Gross) – Muqassa offers two types of client trade and position accounts. First one is the Net Client Trade and Position Account, where positions taken on the same contract with opposite sides will be closed automatically by Muqassa. The other one is the Gross Client Trade and Position Account, where positions taken on the same contract with opposite sides will be kept in the account until it is closed by the Member.

  • Margin and Collateral Accounts:

Member House collateral account: Account used to keep collateral against the margin requirement calculated for Member`s own positions at House -Trade and Position Accounts.

Client Collateral Accounts: Two types of client collateral accounts are offered:

Individual Client Collateral Account: Account that is used to keep collateral of an individual Client. The collateral at this account shall only be used to cover the margin requirement calculated for the positions of the Client. This account could be opened upon the request of the Member.

Omnibus Client Collateral Account: Account that is used to keep collateral of multiple Clients. The collateral at this account shall only be used to cover the margin requirement calculated for the positions of the same group of Clients. This is the standard account opened for each Member.

Give Up/Take UP

Give-up is the transfer of a trade or multiple trades from one clearing Member to another clearing member. Take-up is the acceptance of transfer of trades as part of a give-up transfer. Take-up is the acceptance of transfer.

Rectify Trade

Members can rectify any trade within the days & time restriction set by Muqassa.

Rectify can include changing the account number or splitting quantity into several new trades.

Settlement

Muqassa calculates daily variation margin for all open positions. Calculation takes place at the end of every business day using the Daily Settlement Price or Final Settlement Price, determined by the Exchange.

Variation margin settlement is conducted on a daily basis through the collateral accounts, i.e. Variation margin is either debited or credited to the collateral accounts directly.

Collateral

Muqassa is accepting SAR cash as collateral. Collateral should be transferred by the Member to Muqassa`s account at the central bank (SAMA).

Member can withdraw collateral within the timeframes specified. Internal collateral transfer between Member accounts at Muqassa is possible. 

Collateral Investment

Muqassa invests collateral in accordance with the investment policy. Certain portion of the interest received is deposited to member collateral accounts based on the entitlement.

Daily Cycle

The following table summarizes daily clearing activities for Tadawul derivatives market:

Explanation

Time

Clearing System Open

08:00

Clearing Hours

08:00-16:00

Settlement of Previous Day Variation Margin

09:30

Intraday Margin Calculation Start

10:00

Deadline for Final End of Day Margin Call Cover

11:00

Final Intraday Margin Call

13:30

End of Day Margin Calculation and End of Day Margin Call Issuance

16:10

All Clearing House Reports available

16:30

Deposit of Cash collateral

09:00-15:30

Withdrawal of Cash collateral

11:00-15:30

Rectify Trade Deadline

Trade date until 16:00

Give-Up Trade; Take-up Trade Deadline

Trade date until 16:00