Clearing agencies subject to new CSA requirements as of February 2016

7 décembre 2015

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The Canadian Securities Administrators (CSA) published National Instrument 24-102 Clearing Agency Requirements (NI 24-102) and its Companion Policy in final form – the amendments were first proposed in November 2014.  Most of the amendments are expected to come into force in February 2016.  According to the CSA, the objective of NI 24-102 is to impose new requirements on recognized clearing agencies that operate as a central counterparty, central securities depository or securities settlement system.

NI 24-102 provides a framework for clearing agency recognition, including making an application and completing the initial filings of information (including initial financial statements).  According to the CSA, as a general matter, an entity that is carrying on, or proposing to carry on, business in Canada as a clearing agency and that is systemically important to Canada’s  capital markets, or that is not subject to comparable regulation by another regulatory body elsewhere, will generally be required to be recognized.  Among other matters, NI 24-102 also addresses governance requirements, including board composition requirements and the designation and functions of a chief risk officer and a chief compliance officer, requirements to maintain books and records, participation requirements and rules governing technology and outsourcing matters.

The requirements under NI 24-102  and its Companion Policy are generally based on the Principles for Financial Market Infrastructures (PFMI) developed by the Committee on Payment and Settlement Systems (CPSS) of the Bank for International Settlements and the Board of the International Organization of Securities Commissions (IOSCO) and explicitly incorporate by reference some of those principles. The PFMI set out in the April 2012 CPSS/IOSCO consultative report are considered to be minimum international standards for payment, clearing and settlement systems which must be implemented globally to strengthen core financial infrastructures and markets (including derivatives markets) and critical market infrastructures, and to limit systemic risks.

In addition, the CSA have published for comment proposed amendments to the Companion Policy.  The proposed amendments would incorporate guidance developed jointly between the CSA and the Bank of Canada in respect of the international standards describe in the PFMI report.

In a related development, eight Canadian securities commissions signed a Memorandum of Understanding Respecting the Oversight of Clearing Agencies, Trade Repositories and Matching Service Utilities (MOU) in order to cooperate and coordinate their oversight of clearing agencies, trade repositories and matching service utilities.  The underlying objective is to promote safety and efficiency and manage systemic risk.

The amendments are expected to come into force on February 17, 2016 with some provisions coming into force on December 31, 2016.  The CSA will be accepting comments on the proposed amendments to the Companion Policy until February 1, 2016.  For further information, please consult the press release issued by the CSA regarding the MOU, the CSA Notice of Approval and Notice and Request for Comments and our previous post on ASC Blanket Order 24-502 granting a temporary exemption from the clearing agency recognition requirement.

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