Termination of membership in a clearing agency

Is it permissible for the clearing agency to terminate the membership of one of its members?

This question is answered by a securities attorney at Al-Rashed, Al-Hadlaq and Al-Roudan Group Advocates and Legal Consultants.

According to the rules of the Kuwait Clearing Company, the clearinghouse shall have the right, in the event of a violation of these rules or any condition of the provided service, to terminate the membership of any clearing member in one or more or all of the services or facilities available by the clearing to its member, by sending a notice of no less than a period of time for 30 days.

Any member of the clearinghouse has the right to terminate his membership in all services or facilities or any of them available to him by the clearinghouse by sending a written notice of no less than 30 days.

The termination shall take effect upon the expiry of the notice period, or when the clearing member has no additional obligations or responsibilities to the clearing agency by the clearing member in respect of the related services or facilities, whichever is later.

The clearing may immediately terminate the membership of a clearing member by written notice in one or more or all of its services or facilities, in the following cases:

– The clearing considers at its absolute discretion that any delay in terminating the membership of the clearing member will be materially harmful or harmful to the interest of the clearing house or any of the dealers, or will negatively affect any of its operations, services or facilities.

– The clearing member stops practicing its business or an essential part of it as a result of a clearing decision, or the clearing member is subject to a suspension decision by a supervisory authority to which it is subject, or the occurrence of a major default or secondary default situation, or if the clearing agency considers, according to its sole discretion, that the occurrence of such Status imminent or expected.

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