For efficient clearing & settlement of trades, Tanzania Mercantile Exchange (TMX) employs an automated clearing and settlement system with the Exchange’s Clearing Banks. TMX’s clearing and Settlement assumes a Central Counter Party (CCP) risk for all members’ trades. It establishes the net obligations of each member, informs the members of their daily net obligations and transfers cash funds and commodity ownership among members. TMX identified settlement banks includes:
- NMB Bank
- CRDB Bank
More banks will be added
Settlement Guarantee Fund will be made up by deposit or contribution by broker / dealer to the SGF. Tanzania Mercantile Exchange (TMX) will prescribe the norms from time to time, the procedures, the terms and conditions governing SGF, which may, inter-alia, specify the amount of contribution. SGF is a pool of assets used as a guarantee to the successful settlement of all trades executed on the exchange. In the event of a Broker / Dealer being unable to pay for his commitments, the SGF shall be used to meet the payment obligation of such intermediary. The SGF is intended to avoid the default of one Broker / Dealer producing a “snowballing” effect of defaults among other Broker / Dealer and their customers. In the unlikely event of a default, the SGF will act as an essential element of a comprehensive settlement-risk-containment system. Creation of an SGF provides the Exchange Clearing, Settlement and Depository framework with the resources to meet its obligations, even when a participant fails to make good on a payment obligation.