Key facts
- Clearing members are pushing back against JSCC's proposed consolidation of default funds.
- The proposal involves merging the commodities default fund with larger funds for financial futures.
- Members cite significant differences in risk, liquidity, and market participants between the segments.
The Japan Securities Clearing Corporation (JSCC) is facing opposition from its clearing members regarding its plans to merge its default fund for commodities with the larger default funds designated for financial futures. Members argue that the distinct risk profiles, liquidity characteristics, and market participants in the commodities and financial futures segments necessitate keeping their respective default funds segregated.
This pushback highlights concerns that consolidating these funds could expose the system to unforeseen risks due to the inherent differences between the two market types. The members believe that any proposal for consolidation must thoroughly evaluate whether mutualisation of these distinct risk pools remains appropriate.