The framework establishes processes for managing settlement exceptions, participant obligations and enforcement actions while maintaining market integrity and operational resilience.
Default handling mechanisms differ across settlement models and are aligned with the respective contract specifications.
Objectives
• Support settlement continuity
• Preserve orderly market operations
• Enable timely resolution of settlement events
• Strengthen market confidence
• Promote operational resilience
T+0 Spot Contracts – Default Management
Fully Pre-Funded Settlement Framework
T+0 Spot Contracts operate under a fully pre-funded settlement model.
Prior to order placement:
• Sellers are required to provide 100% advance pay-in of Bullion Depository Receipts (BDRs)
• Buyers are required to provide 100% advance pay-in of Funds
Since both sides of settlement obligations are fulfilled upfront, the T+0 settlement model substantially eliminates settlement default risk.Accordingly:
• Settlement defaults are generally not expected under normal operations
• Settlement completion is supported through periodic settlement cycles
• Ownership transfer and fund settlement occur upon completion of settlement processing
This framework supports high settlement certainty and efficient market operations.
T+2 Spot Contracts – Default Management
Settlement Obligation Management
For T+2 Spot Contracts, settlement obligations are completed within the prescribed settlement cycle in accordance with contract specifications.
In the event of non-fulfilment of settlement obligations or operational exceptions, the Exchange may implement prescribed default handling measures.
Default management actions may include:
• Monitoring and management of settlement obligations
• Recovery and settlement completion procedures
• Financial charges and penalties where applicable
• Participant restrictions
• Other prescribed settlement actions
Settlement events are handled in accordance with applicable Exchange and Clearing procedures.
Futures Contracts – Default Management
Settlement and Position Default Handling
For Futures Contracts, default management supports orderly handling of participant obligations throughout the contract lifecycle including daily settlement and final settlement.
In the event of settlement failures, non-fulfilment of obligations or participant default, prescribed procedures may be initiated.
Default handling measures may include:
• Settlement completion procedures
• Position management and close-out actions
• Recovery processes
• Participant restrictions
• Other actions as prescribed under applicable rules and procedures
The framework supports continuity of clearing and orderly contract settlement.
Penalties and Enforcement
IIBX may impose prescribed actions in cases of settlement failures, operational non-compliance or participant defaults.
Actions may include:
• Financial Charges
• Settlement Failure Penalties
• Participant Restrictions
• Suspension of Market Access
• Regulatory and Disciplinary Actions
Applicable measures shall be governed by Exchange and Clearing Bye-Laws, Rules, Regulations and operational procedures.