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IM Segregation Election Notification

 
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IMPORTANT: ACTION REQUIRED

NOTIFICATION OF RIGHT TO SEGREGATION OF INITIAL MARGIN
POSTED IN RESPECT OF UNCLEARED SWAPS PURSUANT TO CFTC RULE 23.701

This notification (the "CFTC IM Segregation Right Notice") is being provided by The Northern Trust Company1 in respect of our swap trading relationship with our counterparties (each, a "Counterparty" or "you") pursuant to Commodity Futures Trading Commission ("CFTC") rule 23.701.

In accordance with CFTC rule 23.701, we hereby notify you that, to the extent you post Initial Margin (as defined in CFTC rule 23.700) ("IM") in respect of any swap (as defined by CFTC rules) between us that is not submitted for clearing (each, an "Uncleared Swap"), you have the right to elect that IM be segregated ("IM Segregation") in accordance with the requirements set forth in CFTC rules 23.702 and 23.703 (the "CFTC Segregation Regime").

PLEASE NOTE THAT FAILURE TO RESPOND TO THIS NOTICE WITHIN TEN (10) BUSINESS DAYS FROM THE DATE HEREOF WILL BE DEEMED TO BE YOUR ELECTION NOT TO REQUIRE THE SEGREGATION OF INITIAL MARGIN. IF YOU SUBSEQUENTLY ELECT TO REQUIRE IM SEGREGATION IN ACCORDANCE WITH CFTC RULES 23.702 AND 23.703, SUCH ELECTION WILL APPLY TO UNCLEARED SWAPS ENTERED INTO WITH NORTHERN TRUST AFTER WE RECEIVE YOUR CFTC IM SEGREGATION ELECTION LETTER.

We need to obtain your election, as soon as possible in order to satisfy our obligations under CFTC rules, to either:

  • require IM Segregation in accordance with the CFTC Segregation Regime. Note: If you choose this election, certain documentation, including a tri-party custodial agreement that meets the requirements of the CFTC Segregation Regime, must be put in place and costs for such segregation will apply. Choosing this election may prevent us from entering into new Uncleared Swaps with you until such documentation is in place;2 or
  • not require IM Segregation in accordance with the CFTC Segregation Regime. Note: If you choose this election, you are free to make or retain other arrangements for IM Segregation. This election will not impact your existing segregation arrangements or negotiations, if any.
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1References in this notice to "our", "us" or "we" are references to The Northern Trust Company.
2Please note that any existing custodial arrangements, whether legally required or bargained for independently, may not contain certain terms required to be included under the CFTC Segregation Regime and therefore may need to be revised if IM Segregation in accordance with the CFTC Segregation Regime is elected. Parties wishing to elect IM Segregation in accordance with the CFTC Segregation Regime may wish to consult with legal counsel as to the potential impact on trading in Uncleared Swaps with us and whether an election to not require IM Segregation in accordance with CFTC Segregation Regime is preferable until such time as a mutually acceptable tri-party custodial arrangement is executed. As further described in this notice, you may exercise your right to change your election at any time.

Please complete the CFTC IM Segregation Election Letter available at:
https://www.northerntrust.com/cftc-im-segregation-election-notice

For the avoidance of doubt, your election to require or not to require IM Segregation in accordance with the CFTC Segregation Regime will apply solely with respect to any Uncleared Swap that is entered into after delivery of such election letter to us at SwapDealerInfo@ntrs.com. Your election may be changed at any time by delivery of written notice to us at SwapDealerInfo@ntrs.com. Any such changed election will supersede any prior election with respect to any Uncleared Swap that is entered into after delivery of such changed election.

If you have any questions regarding this notice, please contact us at SwapDealerInfo@ntrs.com. Please also refer to www.northerntrust.com/swaps and the CFTC Initial Margin Segregation Fact Sheet for additional detail regarding this notice.

The Northern Trust Company