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Questionnaire for CDS CCPs on Protection of Customer Initial Margin - page 18 / 32





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  • ii.

    Whether the CM has the right to rehypothecate or cause liens to be placed on Dealer Margin, and if so, whether any such liens have been subordinated or waived; and

  • v.

    Whether investment of Dealer Margin in interest-bearing instruments or vehicles (e.g., overnight sweeps into repos) is permitted or required, and if so, in what types of instruments or vehicles.

    • 1.

      Who obtains the economic benefit of investment of Dealer Margin in permitted instruments? Who bears the risk of loss?

  • b.

    Dealer Margin Held at a Custodian (Whether the Custodian is Holding for the CM or the Customers) – If the CM will hold Dealer Margin at a custodian, please detail all aspects of the custodial arrangement that are relevant from a customer protection standpoint, specifically addressing the following:

  • i.

    The manner in which the custodian holds the Dealer Margin, distinguishing to the extent applicable between various types of Dealer Margin (e.g., securities or cash), and identifying in particular:

    • 1.

      On whose behalf the custodian is holding the property – the CM or the customers;

  • 2.

    Whether Dealer Margin securing the positions of a particular CDS customer will be segregated from (i) the Dealer Margin posted by other CDS customers and (ii) the property of other custodial claimants of the custodian or instead, commingled in a single omnibus account (either for CDS customers or custodial claimants of the custodian generally);

    • a.

      In whose name(s) has/have the account(s) been established?

  • 3.

    Whether Dealer Margin securing customer positions will be segregated from Dealer Margin securing the proprietary positions of CMs; and

  • 4.

    Any operational practices (whether voluntary or mandated by regulators) relevant to the analysis of customer


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