Guaranty Fund Structure

In order to preserve the integrity of the Clearing House in the event of member default, a Guaranty Fund is set up to cover the potential losses that may arise from members’ default. The Guaranty Fund is sized, using stress tests based on scenarios that are extreme but plausible, to be sufficient to cover potential losses according to MAS’s requirements. It is monitored daily and recalculated monthly based on the previous 60 days data. Member contributions are based on the relative initial margin and delivery margin requirement subject to a minimum contribution.

In the unlikely event of members’ default, APEX Clear’s Guaranty Fund waterfall is as follows:

1) Defaulting Clearing Member’s Margin Collateral and Guaranty Fund contribution and other assets placed with APEX Clear;

2) 60% of APEX Clear’s mandatory contribution to the Guaranty Fund (APEX 1st loss layer)

3) Guaranty Fund contribution of surviving Clearing Members shared equally up to US$500,000 each (Surviving CM 1st loss layer)

4) Remaining 40% of APEX Clear’s mandatory contribution to the Guaranty Fund (APEX 2nd loss layer)

5) Remaining Guaranty Fund contributions (if any) of surviving clearing members as contributed on the date of Declared Default; (Surviving CM 2nd loss layer)

6) Any excess contribution to the Guaranty Fund (if any) by APEX Clear (APEX 3rd loss layer)