| (1) | A central counterparty must allow for fair and open, and non-discriminatory access to its functions, including by direct and, where relevant, indirect clearing members and other market infrastructures, based on reasonable risk-related membership and participation requirements, which must— |
| (a) | be consistent with the requirements with which the clearing house rules must comply as contemplated under section 53(2)(b) of the Act; |
| (b) | be justified in terms of the safety and efficiency of the central counterparty and the markets it serves; |
| (c) | be tailored to and commensurate with the central counterparty’s specific risks; |
| (d) | be publicly disclosed; |
| (e) | be commercially reasonable and designed to support interconnectivity with other market infrastructures and service providers; and |
| (f) | allow it to gather basic information about indirect clearing clients in order to identify, monitor and manage any material risks to the central counterparty arising from such participation arrangements. |
| (2) | A central counterparty— |
| (a) | may impose additional requirements to ensure that its clearing members have the capacity to act for indirect clearing clients; |
| (b) | must publically disclose the prices and fees of each service provided separately, including discounts and rebates and the conditions to benefit from those reductions, as well as its policies on any available discounts; |
| (c) | must identify dependencies between clearing members and indirect clearing clients that might affect the central counterparty; |
| (d) | must identify indirect clearing clients— |
| (i) | responsible for a significant proportion of transactions processed by the central counterparty; and |
| (ii) | whose transaction volumes or values are large relative to the capacity of the clearing member through which they access the central counterparty, |
in order to manage the risks arising from these transactions;
| (e) | must establish concentration limits on exposures to indirect clearing clients, where appropriate; |
| (f) | must review risks arising from tiered participation arrangements on a monthly basis and must take mitigating action when appropriate; and |
| (g) | must, where a clearing member’s default would leave the central counterparty with a potential credit exposure related to an indirect clearing client’s positions, ensure it understands and manages the exposure it would face. |
