Security deposits are the most commonly used tool to ensure timely and proper fulfillment of obligations under exchange contracts between exchange trade participants as well as service contracts between exchange trade participants and BUCE (Exchange Service Contracts).
A security deposit is a sum of money transferred to BUCE by an exchange trade participant and kept at BUCE’s sub-account as collateral to prevent the other party to the contract from defaulting on its obligations (or in case of an Exchange Service Contract – to ensure that an exchange trade participant pays the exchange fee in due time and amount).
Security deposits guarantee that exchange trade participants:
- Draw up and register exchange contracts in accordance with BUCE rules and regulations
- Submit lists of executed exchange transactions after each trading session.
- Pay exchange fees on executed exchange transactions in compliance with the Exchange Service Contract.
- Contractual commitments and the collateralization of their fulfillment by the exchange broker for the benefit of the customer.
- Honor other commitments in accordance with the Deposit Agreement (a supplement to the Exchange Service Contract).
Security deposit rates and their minimal amounts vary depending on the group of commodities. The amount payable as a security deposit under an exchange contract is usually equal to its rate times the amount of commodities to be sold or bought and cannot be less than the established minimal amount.
However, in a bid to lower the entry barriers to the exchange market of the Republic of Belarus and make its electronic trading platforms more attractive, BUCE has introduced a number of concessions. One of them is that now in order to be admitted to a trading session, an exchange trade participant must only provide a security deposit sufficient to guarantee payment of an exchange fee for an executed exchange transaction. For non-Belarusian company, it is 450 EUR/ 500 USD/ 40 000 RUB/ 3 500 CNY/ 1 400 BYN.