Financial Markets Act, 2012 (Act No. 19 of 2012)RegulationsFinancial Markets Act RegulationsChapter VI : Central Counterparties17. Efficiency, disclosure and transparency |
| (1) | A central counterparty must— |
| (a) | be efficient and effective in meeting the requirements of its clearing members and the markets it serves, with regard to choice of a clearing and settlement arrangement, operating structure, scope of products cleared, settled, or recorded; and use of technology and procedures; |
| (b) | have clearly defined goals and objectives that are measurable and achievable, such as in the areas of setting minimum service levels, risk-management expectations, and business priorities; |
| (c) | have established mechanisms for the regular review of its efficiency and effectiveness; |
| (d) | use, or at a minimum accommodate, relevant internationally accepted communication procedures and standards in order to facilitate efficient payment, clearing, settlement, and recording; |
| (e) | have clear and comprehensive rules and procedures and must provide sufficient information to enable clearing members and their clients to have an accurate understanding of the risks, fees, and other material costs they incur by participating in the central counterparty; |
| (f) | provide all necessary and appropriate documentation and training to facilitate clearing members’ and their clients understanding of the central counterparty’s rules and procedures and the risks they face from participating in the central counterparty; |
| (g) | on a quarterly basis disclose to its clearing members and the Authority the price information used to calculate its end of day exposures to its clearing members; |
| (h) | make publically available and free of charge— |
| (i) | information as well as any material changes thereto regarding its governance arrangements, including— |
| (aa) | its organisational structure as well as key objectives and strategies; |
| (bb) | key elements of the remuneration policy; |
| (cc) | key financial information including its most recent audited financial statements; |
| (ii) | information regarding— |
| (aa) | relevant business continuity information; |
| (bb) | all relevant information on its design and operations as well as on the rights and obligations of clearing members and clients, necessary to enable them to identify clearly and understand fully the risks and costs associated with using the central counterparty’s functions and services; |
| (cc) | the central counterparty’s current clearing functions, including detailed information on what it provides under each function; |
| (dd) | information on the central counterparty’s risk management systems, techniques and performance, including information on financial resources, investment policy, price data sources and models used in margin calculations; |
| (ee) | the legislation governing— |
| (AA) | the contracts concluded by the central counterparty with clearing members and, where practicable, clients; |
| (BB) | the contracts that the central counterparty accepts for clearing; |
| (CC) | any interoperability arrangements; |
| (DD) | the use of collateral and default fund contributions, including the liquidation of positions and collateral and the extent to which collateral is protected against third party claims; |
| (iii) | information regarding eligible collateral and applicable haircuts; |
| (iv) | the operational and technical requirements relating to the communication protocols covering content and message formats it uses to interact with third parties; |
| (v) | the volumes of the cleared transactions for each class of instruments cleared by the central counterparty on an aggregate basis; and |
| (vi) | a list of all current clearing members, including admission, suspension and exit criteria for clearing membership. |
| (2) | Subject to the approval of the Authority, where any of the information may put the business secrecy or the safety and soundness of the central counterparty at risk, a licensed central counterparty may disclose that information in a manner that prevents or reduces those risks or not disclose such information as agreed with the Authority. |
| (3) | A licensed central counterparty must complete and publicly disclose responses to the Committee on Payments and Market Infrastructures and International Organisation of Securities Commissions Disclosure framework for financial market infrastructures every two years. |
| (4) | A licensed central counterparty must have a communication plan which documents how the Authority, the controlling body, senior management, and relevant stakeholders will be adequately informed during a crisis. |
| (5) | A licensed central counterparty must ensure that scenario analysis, risk analysis, reviews and results of monitoring and tests be reported to the Authority and the controlling body. |
| (6) | Information to be disclosed to the public by the central counterparty must be accessible on its website. |