MEX Madagascar establishes a Settlement Guarantee Fund, thereby offering guaranteed clearing and book entry settlements by assuming counter-party risks.

The Settlement Guarantee Fund is created through contribution of its trading members. This fund absorbs losses not covered by margin deposits of the defaulted member. The clearing house ensures this by settling the default transactions by properly compensating the traders paying the amount of difference at the closing out rate.

What is the 'Trade Guarantee Fund'?

The main objectives of Trade Guarantee fund are (a) to guarantee settlement of bonafide transactions of the associates of the Exchange (b) thereby, to inculcate confidence in the minds of market participants' (c) to protect the interest of the investors. All the associates of the Exchange are required to make initial contribution towards trade guarantee fund of the Exchange.