account Structure

Muqassa uses the following account structures and types for trade, position, margin and collateral management:

Overview

Clearing is a process to guarantee and confirm the transactions prior to settlement between the Participants, to establish final positions for settlement. Muqassa clears exchange traded transactions on an open offer basis, where Muqassa places itself between the counterparties at the time of matching.

Products types

Product detail MSCI Tadawul 30 Index Single Stock Futures (SSFs) Single Stock Option (SSOs)
Definition: MT30 Index Futures, an index futures contract based on the MSCI Tadawul 30 Index (MT30).
For more information click Link
 		 SSFs contracts represent an agreement made between a buyer and a seller who are obligated to complete a transaction at a date in the future. Its value is derived from the value of a stock (underlying asset).
For more information click Link
 		 SSOs are contracts that give the owner the right but not the obligation to buy or sell an underlying asset at an agreed-upon price and date.
For more information click Link
 
Settlement type (Cash/physical settlement): Cash settled Cash settled Mark to market is Cash settled and physical settled if option is exercised
Exercise type (options) – American/European: N/A N/A American Option
Settlement cycle (period): Mark to market: T+1 Mark to market: T+1 •    Mark to market: T+1
•    Physical delivery: E+3 (Exercise date+3)

account Structure

Muqassa uses the following account structures and types for trade, position, margin and collateral management:

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Trade And Position Accounts

Members House Trade and Position Account

Used to trade and keep related positions for members’ own transactions

House Market Maker Trade and Position Account

Can also be opened for Members for market making activities If the exchange has a market making polices.

Client Trade and Position Account (Net/Gross)

- Net Client Trade and Position Account, where positions taken on the same contract with opposite sides will be closed automatically by Muqassa. - Gross Client Trade and Position Account, where positions taken on the same contract with opposite sides will be kept in the account until it is closed by the Member.

Margin & Collateral Accounts

Member House collateral account:

Account used to keep collateral against the margin requirement calculated for Member`s own positions at House -Trade and Position Accounts.

Individual Client Collateral Account:

Account that is used to keep collateral of an individual Client. The collateral at this account shall only be used to cover the margin requirement calculated for the positions of the Client. This account could be opened upon the request of the Member.

Omnibus Client Collateral Accounts

which are used to keep collaterals for a group of clients. The collateral in these accounts is only used to cover the margin requirements calculated for the positions of that group of clients. This is the standard type of account offered to each new member.

Cash / Physical Settlement

Cash settlement is a settlement method used in certain futures and options contracts upon expiration or exercise where the seller of the financial instrument does not deliver the actual (physical) underlying asset but instead transfers the associated cash position.

Physical Settlement is a settlement method used in certain futures and options contracts upon expiration or exercise where the seller of the financial instrument delivers the actual (physical) underlying asset.

Exercise / Assignment

Exercise means to activate the right to buy or sell the underlying asset specified in the option contract.

Assignment is the process in options trading that involves fulfilling the obligations of an option contract.

Give Up / Take Up

Give-up is the transfer of a trade or multiple trades from one clearing member to another clearing member. Take-up is the acceptance of transfer of trades as part of a give-up transfer.

Rectify Trade

Members can rectify any trade within timeframe restrictions outlined by Muqassa. Rectifying includes changing account numbers or breaking a trade up into several new trades. 

Settlement

Muqassa calculates a daily variation margin for all open positions. Calculation takes place at the end of every business day using the Daily Settlement Price or Final Settlement Price, determined by the Saudi Exchange.

Variation margin settlement is conducted on a daily basis through the collateral accounts, i.e. variation margin is either debited or credited to the collateral accounts directly.

Collateral

Muqassa accepts SAR cash as collateral. Collateral should be transferred by the member to Muqassa’s account at the Saudi Central Bank (SAMA).

  • Collateral Investment

Muqassa invests collateral in accordance with its investment policy. A portion of the interest received is deposited into member collateral accounts based on their entitlement.

  • Collateral withdrawal and transfer 

Members can withdraw collateral within timeframe restrictions outlined by Muqassa. Also, Members can also transfer collateral to other members.

Fees

Index Futures Settlement SAR 30 payable on each contract settled on expiry day.
Index Futures Clearing SAR 10 payable on each contract cleared
Single Stock Futures Settlement  (0.0003), which is equal to (3) basis points of the executed transaction value settled on contract expiry. 
Single Stock Futures Clearing (0.00009), which is equal to (0.9) basis points of the executed transaction value. 
Single Stock Option Clearing 0.72 SAR per contract
Exercise Or Assignment fees 2.40 SAR per contract

Daily Cycle Time

The following table summarizes daily clearing activities for the derivatives market:

Particulars Time (KSA)
Clearing operations timings 08:00-16:00 Same Day
Settlement of end of day variation margin 09:30 Next day
Deposit of cash collateral 09:00-15:30 Same Day
Starts Intraday margin calculation 10:00
Deadline for final end of day margin call cover 11:00
Withdrawal of cash collateral 11:00-15:30 Same Day
Final intraday margin call 13:30
Rectify trade deadline

(16:00) Trade date
Give-up /Take-up of trades deadline (16:00) Trade date
End of day margin calculation and margin call issuance 16:30
Clearing house reports availability 16:30
 Default fund contribution (resize)  Notification date +3 working days
Options Exercise (Till Expiry Date)  9:30 -16:00
Options Deny (On Expiry Date) 9:30 -16:00

FAQs

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What types of memberships does Muqassa offer?

Muqassa offers three types of memberships: 

  1. Direct Clearing member (DCM) 
  2. General Clearing member (GCM) 
  3. Non-Cleaning Member (NCM): Members who do not wish to be/cannot be any of the above membership types. However, NCMs have to appoint only one GCM to clear their transactions.

What Is Clearing?

Clearing is the process of guaranteeing and confirming transactions prior to settlement. A clearing house, like Muqassa, acts as an intermediary between two parties to a securities trade, by becoming the buyer to each seller and the seller to each buyer. We become responsible for guaranteeing the settlement of the transaction – meaning the trading parties no longer need to worry about the counterparty risk. 

What is the scope of Muqassa’s clearing guarantee?

Through its risk management mechanisms, Muqassa can guarantee settlement between its members and the obligations fulfilled by each party prior to settlement.

Who are the clearing members?

Clearing members are entities who are responsible for clearing securities traded by the entity and its clients. 

Will Muqassa clear all securities traded on the Saudi Exchange?

Yes, Muqassa clears all securities listed on the Saudi Exchange, however it holds the right to exempt certain securities from clearing, subject to CMA approval. Muqassa can also clear securities traded off the market.