§ 190.17. Calculation of net equity.
479 words·~2 min read·
/us/cfr/t17/s§ 190.17·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
(a)Net equity-separate capacities and calculations.
(1)If a member of the clearing organization clears trades in commodity contracts through a commodity contract account carried by the debtor as a customer account for the benefit of the clearing member's public customers and separately through a house account, the clearing member shall be treated as having customer claims against the debtor in separate capacities with respect to the customer account and house account at the clearing organization, and by account class. A member shall be treated as part of the public customer class with respect to claims based on any commodity customer accounts carried as "customer accounts" by the clearing organization for the benefit of the member's public customers, and as part of the non-public customer class with respect to claims based on its house account.
(2)Net equity shall be calculated separately for each separate customer capacity in which the clearing member has a claim against the debtor, i.e., separately by the member's customer account and house account and by account class.
(b)Net equity---application of debtor's loss allocation rules and procedures. (1)(i) The calculation of a clearing member's net equity claim shall include the full application of the debtor's loss allocation rules and procedures, including the default rules and procedures referred to in § 39.16 and, if applicable, § 39.35 of this chapter.
(ii)The calculation in paragraph (b)(1)(i) of this section will include, with respect to the clearing member's house account, any assessments or similar loss allocation arrangements provided for under those rules and procedures that were not called for before the filing date, or, if called for, have not been paid. Such loss allocation arrangements shall be applied to the extent necessary to address losses arising from default by clearing members.
(2)Appropriate adjustments shall be made to the net equity claims of the clearing members that are so entitled under the following circumstances: Where the debtor's loss allocation rules and procedures would entitle clearing members to additional payments of cash or other property due to---
(i)Portions of mutualized default resources that are prefunded, or assessed and collected, but in either event not used; or
(ii)The debtor's recoveries on claims against others (including, but not limited to, recoveries on claims against clearing members who have defaulted on their obligations to the debtor).
(c)Net equity---general. Subject to paragraph
(b)of this section, net equity shall be calculated in the manner provided in § 190.08, to the extent applicable.
(d)Calculation of funded balance. Funded balance means a clearing member's pro rata share of customer property other than member property (for accounts for a clearing member's customer accounts) or member property (for a clearing member's house accounts) with respect to each account class available for distribution to customers of the same customer class, calculated in the manner provided in § 190.08(c) to the extent applicable.