Financial Markets Act, 2012 (Act No. 19 of 2012)RegulationsFinancial Markets Act RegulationsChapter VI : Central Counterparties12. Risk committee |
| (1) | A central counterparty must establish a risk committee, which must— |
| (a) | include at least representatives of its clearing members, and independent members of the controlling body; |
| (b) | ensure its advice is independent of any direct influence by the management of the central counterparty; |
| (c) | ensure that none of the groups of representatives have majority representation in the risk committee; and |
| (d) | advise the controlling body on any arrangements that may impact the risk management of the central counterparty, such as a significant change in its risk model, the default procedures, the criteria for accepting clearing members, the clearing of new classes of instruments, or the outsourcing of functions. |
| (2) | A central counterparty must— |
| (a) | clearly determine the mandate and the governance arrangements of the risk committee relating to its operational procedures, admission criteria and the election mechanism for risk committee members to ensure its independence; and |
| (b) | ensure that the risk committee— |
| (i) | is chaired by an independent member of the controlling body; |
| (ii) | reports directly to the controlling body; and |
| (iii) | holds quarterly meetings. |
| (3) | A central counterparty must, where possible, consult the risk committee on developments impacting the risk management of the central counterparty in a crisis. |
| (4) | Where the chairperson of the risk committee determines that a member has an actual or potential conflict of interest on a particular matter, that member may not be allowed to vote on that matter. |
| (5) | The risk committee may invite employees of the central counterparty and external independent experts to attend risk committee meetings in a non-voting capacity. |