MIR 4.9 MIR 4.9 Physical delivery
A Recognised Clearing House incurring obligations that require physical delivery of physical instruments or commodities must:(a) provide adequate information to its Members and other participants using its facilities relating to its obligations with respect to physical delivery of the physical instruments or commodities. Such information must also be made publicly available;(b) identify, monitor, and manage the risks associated with such physical deliveries; and(c) identify, monitor, and manage the risks and costs associated with the storage and delivery.
A Recognised Clearing House must have adequate arrangements, including service agreements, which enable it to meet its physical delivery obligations.
Where a Recognised Clearing House matches participants that have delivery and receipt obligations, the Recognised Clearing House would not need to be involved with the physical storage and delivery process but it should monitor the participants' performance and to the extent practicable, ensure the participants have the necessary systems and resources to be able to fulfil their physical delivery obligations:
The legal obligations for delivery should be clearly expressed in the Business Rules, Default Rules, and any related agreements, including provisions to specify, for instance:(a) whether the receiving participant should seek compensation from the Recognised Clearing House or the delivering participant in the event of a loss; and(b) if the Recognised Clearing House holds margin on the matched participants, such margin will only be released until the Recognised Clearing House confirms that both participants have fulfilled their obligations.