SETTLEMENT BANK AGREEMENT FOR NORD POOL CLEARING (EURO CASH SYSTEM) b... ( the Bank or "the Settlement Bank"),

Transcription

1 Clearing Agreement I SETTLEMENT BANK AGREEMENT FOR NORD POOL CLEARING (EURO CASH SYSTEM) Entered into on... between a. Nord Pool Clearing ASA (Nord Pool Clearing) b.... ( the Bank or "the Settlement Bank"), hereinafter called the Parties. 1. INTRODUCTION Nord Pool Clearing is a clearing house authorised by the Norwegian Ministry of Finance in accordance with the Norwegian Securities Trading Act Chapter 6. The Settlement Bank is a credit institution authorised by the (NAME OF LICENSE AUTHORITY) in accordance with the applicable laws in (NAME OF JURISDICTION). As a clearing house Nord Pool Clearing is by law responsible for organising cash settlement and cash collateralisation for transactions cleared by Nord Pool Clearing ( Clearing Transactions ). Nord Pool Clearing has established a reporting and settlement system in Euro ("the Euro Cash System") with various European banks participating as Settlement Banks. Further, Nord Pool Clearing has entered into an "Agreement concerning the function as Concentration Bank in respect of settlement through Nord Pool Clearing" where the functions of the Concentration Bank is outlined. The Bank wishes to participate in the Euro Settlement Bank System as a Settlement Bank, and the Parties have on this basis entered into this Settlement Bank Agreement ("this Agreement"). Under this Agreement, the Settlement Bank is entitled to open Euro Cash Accounts in the name of all participants of Nord Pool Clearing, and to link such accounts to the Euro Cash System by establishing a Settlement Bank Account with the Concentration Bank. The relationship between the Parties is further regulated in the Clearing Rules issued by Nord Pool Clearing ("the Clearing Rules") relevant to the respective Clearing Transactions. In case of conflict between this Agreement and the Clearing Rules, this Agreement prevails. Definitions and abbreviations in the Clearing Rules shall have the same meaning in this Agreement and are given capital first letter.

2 2/10 2. SETTLEMENT BANK ACCOUNT WITH CONCENTRATION BANK The Settlement Bank shall open a Settlement Bank Account with the Concentration Bank as further regulated in Appendix I to this Agreement ("Settlement Bank Account Agreement"). Nord Pool Clearing shall have a right of disposal over the Settlement Bank Account, entitling Nord Pool Clearing to debit the Settlement Bank Account according to Section 7 below. 3. SUSPENSE ACCOUNT IN SETTLEMENT BANK The Settlement Bank shall open a suspense account in the Settlement Bank as further regulated in Appendix I to this Agreement ( Settlement Bank Account Agreement ). Nord Pool Clearing shall have a right of disposal over the suspense account, entitling Nord Pool Clearing to debit the suspense account according to Section 7 below. 4. PLEDGED CASH ACCOUNTS IN SETTLEMENT BANK 4.1 General The Settlement Bank may open Pledged Cash Accounts in the name of General Clearing Members and/or Clearing Members and/or Clearing Clients of Nord Pool Clearing (called the "Account Holder"). Before an Account Holder may start using a Pledged Cash Account, the Settlement Bank and the Account Holder shall sign a written "Pledged Cash Account Agreement" for each Pledged Cash Account, in the form of Appendix II to this Agreement. The Pledged Cash Account Agreement shall be issued in three originals, one for the Account Holder, one for the Settlement Bank and one for Nord Pool Clearing. The Settlement Bank shall sign and send Nord Pool Clearing its original version as soon as a signed version is received from the Account Holder. The Settlement Bank may complete and issue further additions to the Pledged Cash Account Agreement. Any additions must be submitted to Nord Pool Clearing before implementation. Nord Pool Clearing may only withhold approval to the extent necessary for the safeguard of its interests. The Settlement Bank has no obligation to submit its business terms to Nord Pool Clearing. The Settlement Bank shall notify Nord Pool Clearing as soon as the Pledged Cash Account has been opened. Such notification is regarded as given when the Pledged Cash Account is included on the list of all Pledged Cash Accounts in the Settlement Bank. Technical requirements for each Settlement Bank shall be according to Appendix VI. When including a Pledged Cash Account on this list, the Settlement Bank is deemed to confirm to Nord Pool Clearing that all the above conditions have been satisfactorily fulfilled. 4.2 First priority pledge and right of disposal for Nord Pool Clearing

3 3/10 According to the Pledged Cash Account Agreement, the balance in the Pledged Cash Account will be pledged in favour of Nord Pool Clearing, who will also be granted an unconditional and irrevocable right of disposal of the balance in the Pledged Cash Account. Accordingly Nord Pool Clearing may instruct the Settlement Bank to debit the Pledged Cash Account. The Settlement Bank may not oppose such instruction or conduct any trial whatsoever of the validity of such instructions. 4.3 Secondary rights of pledge and disposal The Account Holder may dispose of any excess balance in the Pledged Cash Account, and may also give other parties second priority pledge or second priority rights of disposal. The Settlement Bank shall notify Nord Pool Clearing of such liens. The exercise of the rights referred to in first paragraph is subject to the following conditions: a. A debit transaction may not bring the balance in the account to be lower than the Total Cash Requirement in Section 6 unless authorised in writing by Nord Pool Clearing. b. Any right of disposal for others than Nord Pool Clearing (including the Account Holder) shall terminate with immediate effect if Nord Pool Clearing has (i) informed the Settlement Bank of such a termination or of a foreclosure of the pledge on the Pledged Cash Account, or (ii) in case of an automatic foreclosure according to section 5 below. c. The person debiting the account must submit evidence of his right to the Settlement Bank, who shall verify that the debit does not infringe letter a. and b. above. 5. NON-PLEDGED CASH ACCOUNTS IN SETTLEMENT BANK 5.1 General A General Clearing Member, Clearing Member or Clearing Client may alternatively open a Non-Pledged Cash Account in the Settlement Bank, by signing a Non-Pledged Cash Account Agreement in the form of Appendix III. The provisions in section 4.1 are also applicable to opening of a Non-Pledged Cash Account. 5.2 First right of disposal for Nord Pool Clearing Nord Pool Clearing has right of disposal pursuant to the Non-Pledged Cash Account Agreement. Accordingly, Nord Pool Clearing is entitled to instruct the Settlement Bank to debit the Non-Pledged Cash Account. The Settlement Bank may not object to such instructions or conduct any trial whatsoever of the validity of the debit instruction.

4 4/ Secondary rights of disposal The Account Holder has a right to dispose of any excess balance in the Non-Pledged Cash Account after the Total Cash Requirement in section 6 has been met, and may grant similar rights to any third party. In respect of such dispositions the following applies: a. The Settlement Bank shall rank debit orders issued by Nord Pool Clearing over other non-executed debit order, irrespective of whether the other order was first received. b. The Settlement Bank shall immediately notify Nord Pool Clearing if the Account Holder wishes to debit the account for an amount reducing the balance to below the Total Cash Requirement in section 6 below, and shall not execute any debit if not approved by Nord Pool Clearing. 6. TOTAL CASH REQUIREMENT Nord Pool Clearing will once a day each Settlement Day calculate a Total Cash Requirement for each Euro Cash Account, as the sum of a. The part of the Collateral Call for the linked Clearing Account to be covered by cash deposits, b. The Daily Cash Settlement Amount for the linked Clearing Account, c. Any other claims to be settled on the relevant Euro Cash Account or to be secured by cash deposits to this account. Nord Pool Clearing may at any time alter the Total Cash Requirement, with effect from the time the new Total Cash Requirement has been received by the Settlement Bank according to section 7 below. The Settlement Bank shall apply the Total Cash Requirement latest stipulated by Nord Pool Clearing, and may not itself review the amount thereof. The Settlement Bank shall on every Clearing Day notify Nord Pool Clearing of the closing balance on the proceeding Clearing Day for all Euro Cash Accounts. As early as possible and no later than a.m. each Clearing Day, the Settlement Bank shall confirm to Nord Pool Clearing by fax, by electronic means or in writing, that each Euro Cash Account have a minimum balance that meets the Total Cash Requirement last received. The confirmation shall be stamped and signed by an authorised bank officer. In case a Pledged Cash Account at a.m. on any Clearing Day does not have a minimum credit balance that covers the Total Cash Requirement, Nord Pool Clearing is deemed to automatically foreclose the pledge without any further notification. In such a case the Settlement Bank is obliged to freeze the Pledged Cash Account at a.m. for any debits in favour of other parties than Nord Pool Clearing. The foreclosure is automatically terminated

5 5/10 if the Total Cash Requirement is once again fulfilled, unless Nord Pool Clearing in the meantime has reported in writing that it maintains the foreclosure. In case a Non-Pledged Cash Account at a.m. on any Clearing Day does not have a minimum credit balance that covers the Total Cash Requirement, the Settlement Bank shall immediately notify Nord Pool Clearing thereof. 7. DAILY CASH SETTLEMENT Daily Cash Settlements shall be executed in accordance with Appendix IV: 1. The Daily Cash Settlement Amount for each Euro Cash Account, and the net amount for all Euro Cash Accounts opened in this Settlement Bank (hereinafter called "the Net Bank Amount"), shall be calculated and reported by Nord Pool Clearing to the Settlement Bank for every Clearing Day. 2. The Net Bank Amounts shall be copied to the Concentration Bank. 3. Nord Pool Clearing shall instruct the Concentration Bank to debit the Settlement Bank Accounts with the Concentration Bank for the Net Bank Amount due to or due from the respective Settlement Bank. 4. The Settlement Bank shall cover any debit on its Settlement Bank Account from its suspense account. This transfer shall be conducted according to Appendix IV. Any delays exceeding cut off may generate a fee. 5. The Daily Cash Settlement of the Cash Accounts shall be further conducted by the Settlement Bank the same Clearing Day and value date. 6. Nord Pool Clearing shall in the reports under Item 1 identify the total fee to be paid to Nord Pool ASA and Nord Pool Clearing from the Euro Cash Accounts in each Settlement Bank. This fee shall be separated from the Daily Cash Settlement Amount and be credited accounts opened by Nord Pool ASA and Nord Pool Clearing with the Concentration Bank. The Settlement Bank shall under no circumstances, stop or delay the process of Daily Cash Settlements covered by deposits in the Cash Accounts. The Settlement Bank shall report to Nord Pool Clearing if a Euro Cash Account does not hold sufficient funds to cover the Daily Cash Settlement Amount reported. Nord Pool Clearing shall then call for payment (with the same day and same value date) under guarantees provided, provide funds for settlement or reverse the settlement instructions.

6 6/10 8. COMMUNICATION AND NOTIFICATIONS Instructions from and communication between Nord Pool Clearing and the Settlement Bank under this Agreement shall take place through the addresses specified in Appendix V. 9. LIABILITY AND INDEMNITY The Settlement Bank is not liable towards the Account Holder or any third party for any loss or damage arising from a rejection of an instructed debit from the Account Holder or from a transaction made by Nord Pool Clearing on a Euro Cash Account. Nord Pool Clearing shall indemnify the Settlement Bank of all and any liability brought upon the Settlement Bank as a result of such events, and shall pay all the expenses of defending the Settlement Bank against such claims. The Settlement Bank shall forthwith transfer the handling of such claims to Nord Pool Clearing and no expenses may be incurred without the written approval of Nord Pool Clearing. The defaulting party is liable to the non-defaulting party for any direct loss arising from breach of its obligations under this Agreement with Appendices. However, a defaulting party is not liable if a breach is owing to circumstances beyond its control or to lockouts, strikes and other industrial disputes, provided the defaulting party: (a) (b) (c) could not have avoided the effect by taking precautions which having regard to all matters known to it before the occurrence of the circumstances and all relevant actions it ought reasonably to have taken but did not take, has used reasonable endeavours to mitigate the effect and to carry out its obligations under this Agreement in any other way that is reasonably practicable, and has promptly notified the other party of the nature and extent of the circumstances outside control. 10. PROFESSIONAL SECRECY - DISCLOSURE The parties have a mutual obligation to keep secret all matters coming to their knowledge by virtue of this agreement according to the same rules that apply to the party from which the information derived. The professional secrecy does not prevent the use of relevant information in connection with any dispute before the courts of law or in respect of public authorities. If the Account Holder defaults on any agreement related to Clearing Rules and the Settlement Bank is informed thereof, the Settlement Bank shall promptly notify Nord Pool Clearing in writing. If the Account Holder is suspended or excluded from Clearing in accordance with the Clearing Rules, Nord Pool Clearing shall promptly notify the Settlement Bank in writing.

7 7/ CHOICE OF LAW AND JURISDICTION Any dispute arising from this agreement shall be settled in accordance with Norwegian law, with Oslo City Court as the agreed venue. 12. TERMINATION AND CANCELLATION Either party may terminate this agreement by at three months written notice. Either party may immediately terminate the agreement if the other party is in default or does not meet the requirement in this Agreement or its Appendices. Following termination by Nord Pool Clearing, all Pledged Cash Account Agreements and Non-Pledged Cash Account Agreements in the Settlement Bank are deemed to be terminated. This Agreement with Appendices shall apply until all the Cash Accounts have been closed or their balances transferred to other accounts. Place/Date Place/Date The Settlement Bank Nord Pool Clearing ASA Each of the parties and the Concentration Bank shall keep one original of this agreement. Appendix: I Settlement Bank Account Agreement (between Concentration Bank and Settlement Bank) II Security Collateral Agreement (Clearing Agreement C) III Non-Pledged Cash Account Agreement (Clearing Agreement D) IV Processing events time schedule V Addresses for communication VI Technical Requirements

8 8/10 APPENDIX IV Processing events time schedule: C.E.T. (final): The Settlement Banks shall report the closing balance for Euro Cash Accounts in the Settlement Bank to Nord Pool Clearing. This balance is registered in Nord Pool Clearing's systems and is the basis for a report comparing the Total Cash Requirement C.E.T. (final): Nord Pool Clearing shall send to the Settlement Bank one or more Financial Statements including this day's (i) Daily Cash Settlement Amount and (ii) Collateral Call for each Euro Cash Account opened in the Settlement Bank, and (iii) the Net Bank Settlement for this Settlement Bank C.E.T.: Nord Pool Clearing shall instruct the following payment instructions through the Concentration Bank that converts these instructions to SWIFT MT101/103: (i) To debit/credit the Settlement Bank Accounts in the Concentration Bank with the Net Bank Settlements. (ii) To debit/credit the Net Bank Amount between the Settlement Bank Account in the Concentration Bank and the suspense account in the Settlement Bank. This transaction zero balances the Settlement Bank Account in the Concentration Bank and shall under no circumstances be delayed or stopped C.E.T.: * The Settlement Banks shall debit/credit the Euro Cash Accounts within the Settlement Bank as instructed by Nord Pool Clearing in the C.E.T. report. The counter transaction will be on the suspense account within the Settlement Bank C.E.T. (final): As early as possible, and not later than C.E.T., the Settlement Bank shall confirm to Nord Pool Clearing that their clients have met the Collateral Calls or any default situations. * This is an option that can be delivered to the Settlement Bank as SWIFT messages. The alternative is manual procedures.

9 9/10 APPENDIX V Addresses for communication: 1. The reports and confirmations referred to in Appendix IV shall be sent to the following electronic addresses, in SWIFT format: a. Nord Pool Clearing.. b. The Settlement Bank.. 2. All other communications under the Agreement shall be to the following addresses: a. Nord Pool Clearing ASA Postboks 373 NO 1326 LYSAKER b. The Settlement Bank....

10 10/10 APPENDIX VI Technical requirements: To operate as a Settlement Bank the following technical requirements have to be fulfilled before being approved as Settlement Bank: The Bank has to be a SWIFT member (or operate via an approved SWIFT Bank) The Bank has to handle SWIFT messages within cut off time - MT 101, - MT 103, - MT 940 The Bank has to sign a standard MT 101 agreement with the client for each Cash Account established. The Bank has to sign a standard MT 940 agreement with the client for each Cash Account established.