5830. Hedge agreements

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    1. In determining the margin relief available for a guaranteed client account pursuant to subsection 5824(1), a Dealer Member may exclude the following offsetting position hedges from the margin calculation:

       

      Long position

       

      Short position

      (i)

      a long security position (other than an option, futures contract or foreign exchange contract position) held in the account of a guarantor that guarantees an account of another client of a Dealer Member in accordance with sections 5820 through 5825.

      and

      a short position in the same security, held in the guaranteed client account.

      (ii)

      a long convertible security position (including warrants, rights, shares and installment receipts) held in the account of a guarantor that guarantees an account of another client of a Dealer Member in accordance with sections 5820 through 5825.

      and

      a short position in the underlying security, held in the guaranteed client account.

    2. A Dealer Member must not accept a client account hedge for the purposes of subsection 5830(1), unless it obtains a written hedge agreement from the guarantor, in a form acceptable to IIROC, that:

      1. authorizes the Dealer Member to use any and all securities, other than options, futures contracts or foreign exchange contracts, held in long positions in the guarantor’s account to hedge any and all short positions in the guaranteed client account to eliminate the margin required on those securities in the client account,

      2. provides that if a security position that hedges a short position is sold and creates a margin deficiency in the guaranteed account, the guarantor agrees that the Dealer Member may restrict the guarantor’s ability to withdraw cash or securities from its account or otherwise restrict the guarantor’s ability to enter into transactions in that account until the deficiency has been rectified, and

      3. provides that the guarantor agrees that the terms of the hedge agreement must remain in effect as long as any hedge positions between the two accounts remain in effect.

    5831. - 5839.  Reserved.

    There is no history log for this rule.

    There is no history log for this rule.