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Article 31
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When a securities firm uses funds from the cash management account to engage in repo transactions, if a repo transaction involves pooling of funds from two or more customers, and if the transaction is subject to early termination due to early termination of agreement by any of the customers involved, the securities firm shall obtain written consent from the counterparty to the transaction. In the case of a transaction involving partial termination of agreement, interest shall be paid, based on the original agreed interest rate, on the funds used to enter into a subsequent repo transaction with the same counterparty to replace the original transaction. If a new repo-style transaction agreement is entered into for that purpose, it shall have the same expiry date and interest rate as the original agreement as if it were not terminated early. The same shall not apply, however, if without detriment to customer interests the securities firm otherwise reaches or has reached an agreement with the non-terminating customer(s).
The preceding paragraph shall also apply when a securities firm uses funds from the cash management account to engage in repo transactions with the securities firm itself.
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