Financial Markets Act, 2012 (Act No. 19 of 2012)RegulationsFinancial Markets Act RegulationsChapter VI : Central Counterparties40.5 Stress testing40.5.3 Stress testing - liquid financial resources |
| (1) | A central counterparty’s stress-testing programme of its liquid financial resources must ensure that the liquid financial resources are sufficient in accordance with the requirements set out in Regulation 40. |
| (2) | A central counterparty must have— |
| (a) | clear and transparent rules and procedures to address insufficient liquid financial resources highlighted by its stress tests to ensure settlement of payments obligations; |
| (b) | clear procedures for using the results and analysis of its stress tests to evaluate and adjust the adequacy of its liquidity risk management framework and liquidity providers. |
(3)
| (a) | The stress testing scenarios used in the stress testing of liquid financial resources must consider the design and operation of the central counterparty, and include all entities that might pose material liquidity risk to it. |
| (b) | The stress tests must consider any strong linkages or similar exposures between its clearing members, including other entities that are part of the same group, and assess the probability of multiple defaults and the contagion effect among its clearing members that such defaults may cause. |