Common use of Stop Loss Limits Clause in Contracts

Stop Loss Limits. For the Oil Supply / Trading business areas, an aggregate threshold is set on cumulative margin losses for the combination of System Optimization and Discretionary positions on a monthly basis. The System Supply activities that directly support the oil system (primarily Xxxxxxx-owned terminals) requirements are not subject to a daily VaR limit. In contrast, the complete Natural Gas Supply / Trading positions are part of the daily VaR calculation, as they essentially represent the existing imbalances that exist within the daily position balancing activities, since there are no specific discretionary positions taken. For the purposes of the above thresholds, losses (or reserves) due to a counterparty’s failure to perform will be excluded. Both realized losses and unrealized (“xxxx to market”) losses in the Supply / Trading portfolios will be taken into account when computing the cumulative loss. For purposes of the threshold, the losses will begin to accumulate on the first day of a calendar month. A net loss from the prior calendar month will be carried forward and added to the current month’s losses. However, gains in the prior calendar month will not carry forward to the current month for stop loss purposes. After a month occurs with a positive margin, all carryforward losses from prior months for this calculation will be reset to zero. In addition, the carryforward losses from prior months are reset to zero following any month when a Stop Loss limit is breached (i.e. a MAT occurs). In an instance when the aggregate Stop Loss limit exceeds the President’s authority level, the Chief Risk Officer will also notify the AJI President on the background of the losses and any remedial actions.