2.08C Qualifying Letter of Credit
For the purpose of Rules 2.08 and 2.08A, a Clearing Member may include one (1) or more qualifying letter(s) of credit deposited with the Clearing House in its calculation of aggregate resources subject to the total amount payable under the qualifying letter(s) of credit or 50% of its total risk requirement, whichever is lower. In the case of a Clearing Member admitted as a clearing member of the Clearing House and CDP, and which has deposited such qualifying letter(s) of credit with CDP, pursuant to the corresponding provisions in the CDP Clearing Rules, it need not deposit another qualifying letter(s) of credit with the Clearing House.
For the purpose of Rule 2.08C.1, a qualifying letter of credit is a legally enforceable and irrevocable letter of credit that:—2.08C.2.1 is made in favour of the Clearing House;2.08C.2.2 is issued by a bank approved by, and in a form acceptable to the Clearing House; and2.08C.2.3 does not include any letters of credit provided by the Clearing Member to satisfy Chapter 7 or Chapter 7A or any other requirement imposed by the Clearing House.
The Clearing House reserves the right to call on any of the qualifying letters of credit furnished pursuant to this Rules and apply the proceeds thereof in respect of the Clearing Member's default to the Clearing House and/or its common bond liability under Rule 7A.05 and 7A.06. In the case of a Clearing Member admitted as a clearing member of the Clearing House and CDP, the Clearing House shall have the discretion to apportion in any manner, the use of the proceeds between the Clearing House and CDP. In deciding on the apportionment, the Clearing House may, in consultation with CDP, take into account factors, including but not limited to, the amount owed by the Clearing Member to the Clearing House and CDP respectively.