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  • CSD-4 CSD-4 Business Rules of a Licensed Clearing House and Licensed Central Depository

    • CSD-4.1 CSD-4.1 Business Rules of Licensed Clearing Houses and Licensed Central Depositories

      • CSD-4.1.1

        The CBB may prescribe the matters that a licensed clearing house or licensed central depository shall make provision for in the business rules of the licensed clearing house or licensed central depository.

        Amended: April 2016

      • CSD-4.1.2

        A licensed clearing house or licensed central depository shall, in line with CBB Law, and to the satisfaction of the CBB, make provision in its business rules for continuing requirements for each member or depository participant, including requirements that the member is a Category 1 Investment Firm licensed by the CBB.

        Amended: April 2016

      • CSD-4.1.3

        A licensed clearing house or licensed central depository shall, in line with CBB Law, make provision in its business rules and to the satisfaction of the CBB for continuing requirements for each member or depository participant, including requirements relating to the terms and conditions under which transactions will be cleared, settled or deposited, including but not limited to:

        (a) The legal obligations and rights of the licensed clearing house and members relating to the clearing and settlement of transactions;
        (b) The legal obligations and rights of the licensed clearing house or central depository and members or depository participants relating to payments, including netting of obligations, distribution of entitlements, assumption of obligations and method of payment.
        Amended: April 2016

      • Business Rules of a Licensed Clearing House and Licensed Central Depository Have Effect as Contract

        • CSD-4.1.4

          The business rules of a licensed clearing house and licensed central depository shall be deemed to be, and shall operate as, a binding contract:

          (a) Between the licensed clearing house and licensed central depository and each issuer of securities;
          (b) Between the licensed clearing house and licensed central depository and each member or depository participant;
          (c) Between each issuer of securities and each member or depository participant; and
          (d) Between each member or depository participant and every other member or depository participant.
          Amended: April 2016

    • CSD-4.2 CSD-4.2 Content of Rules of Licensed Clearing Houses and Licensed Central Depositories

      • CSD-4.2.1

        A licensed clearing house and licensed central depository shall, in line with CBB Law, make provision in its business rules and to the satisfaction of the CBB for:

        (a) Continuing requirements for each member, including requirements:
        (i) Relating to the proper conduct of the member or depository participant when participating in any clearing or central depository facility operated by the licensed clearing house or licensed central depository;
        (ii) That the member has sufficient financial resources (capital adequacy) to reasonably fulfil all its financial obligations arising out of its activities of any clearing or central depository facility operated by the licensed clearing house or licensed central depository;
        (iii) That facilitate the monitoring by the licensed clearing house or licensed central depository of the compliance of the member or depository participant with the business rules of the licensed clearing house or licensed central depository; or
        (iv) That provide for the expulsion, suspension or disciplining of the member or depository participant for a contravention of the business rules of the licensed clearing house or licensed central depository;
        (b) The class or classes of transactions that may be cleared, settled, or deposited on any facility that it operates;
        (c) Matters relating to risks in the operation of any clearing or central depository facility that it operates;
        (d) The handling of defaults, including the financial resources available to support the default of a member or depository participant, and the taking of proceedings or any other action against a member or depository participant which has failed, or appears to be unable, or is likely to become unable, to meet the member's or depository participant's obligations for all unsettled or open market contracts to which the member or depository participant is a party;
        (e) The carrying on of business of the licensed clearing house or licensed central depository with due regard to the interests and protection of the investing public.
        (f) The granting of security interests to the clearing house or central depository or to other members or depository participants pursuant to the business rules, including a decertification of the collateral charged and the obligations secured;
        (g) The default rules which provide for the taking of proceeding or other action if a member or depository participant appears to be unable, or likely to become unable to meet his obligations in respect of all unsettled or open market contracts to which he is a party;
        (h) The rules and procedures governing how losses will be shared in the event that a defaulting firm's collateral fails to cover its exposure, including the maintenance and utilization of the Settlement Guarantee Fund; and
        (i) The legal relationships between the central depository and each depository participant, and between members or depository participants, inter se.
        Amended: April 2016

      • CSD-4.2.2

        A licensed clearing house or licensed central depository shall not make any amendment to its business rules, unless it complies with such requirements as the CBB may prescribe.

        Amended: April 2016

    • CSD-4.3 CSD-4.3 Business Rules Specific to a Licensed Central Depository

      • CSD-4.3.1

        The content of the rules of the central depository must include:

        (a) The terms and conditions under which transactions will be conducted on a central depository;
        (b) The qualifications and standards for participation;
        (c) The process and criteria for the admission, suspension and termination of depository participants;
        (d) A decertification of the structure of the services;
        (i) The legal obligations and rights of the central depository and depository participants arising from the use of the services, including any indemnity;
        (ii) The legal obligations and rights of the central depository and depository participants relating to the holding of securities by the depository on behalf of depository participants, as recorded in accounts maintained by the central depository for depository participants;
        (iii) The decertification of the risk control mechanisms including system-operating caps, lines of credit, and depository participant funds;
        (iv) The criteria for determining the type of collateral, and for calculating the amount of the collateral, to be charged by a depository participant with respect to a collateral pool or a depository participant fund;
        (v) The process to be followed in the event of a depository participant suspension, and the realisation under the security interests and guarantees granted to the central depository;
        (vi) The process for adopting and amending the business rules, and for prescribing and amending the procedures and user guides; and
        (vii) The legal obligations and rights of the central depository and depository participants relating to confidentiality and use of information; and
        (e) The class or classes of transactions that may be conducted on a central depository.
        Amended: April 2016

    • CSD-4.4 CSD-4.4 Amendment of Business Rules

      • CSD-4.4.1

        A licensed clearing house or licensed central depository which intends to amend its business rules shall, prior to making the amendment, notify the CBB of:

        (a) The proposed amendment;
        (b) The purpose of the proposed amendment; and
        (c) The date on which the amendment is proposed to come into force.
        Amended: April 2016

      • CSD-4.4.2

        The licensed clearing house or licensed central depository shall, prior to notifying the CBB under rule CSD-4.4.1, consult its members and depository participants on the proposed amendment, unless the proposed amendment would have limited impact on its members or depository participants.

        Amended: April 2016

      • CSD-4.4.3

        Subject to Paragraphs CSD-4.4.4 and CSD-4.4.6, an amendment shall not come into force unless the notification referred to in rule CSD-4.4.1 is submitted at least 21 days before the date on which the amendment is proposed to come into force.

        Amended: April 2016

      • CSD-4.4.4

        The CBB may, on its own initiative or on the application of the licensed clearing house or licensed central depository, by notice in writing to the licensed clearing house or licensed central depository, allow an amendment to come into force before the expiry of the period of 21 days referred to in rule CSD-4.4.3.

        Amended: April 2016

      • CSD-4.4.5

        The CBB may, subject to Paragraph CSD-4.4.6, within 21 days after the receipt of the notification referred to in rule CSD-4.4.1, by notice in writing to the licensed clearing house or licensed central depository, disallow, alter or supplement the whole or any part of the proposed amendment and, thereupon, such whole or part of the proposed amendment, as the case may be:

        (a) Where it is disallowed, shall not come into force; or
        (b) Where it is altered or supplemented, shall come into force as altered or supplemented accordingly.
        Amended: April 2016

      • CSD-4.4.6

        The CBB may, in its discretion, by notice in writing to the licensed clearing house or licensed central depository, vary the period specified in Paragraph CSD-4.4.5, and where the period in that paragraph is extended, the amendment shall not come into force before the expiry of the extended period.

        Amended: April 2016

      • CSD-4.4.7

        This requirement shall not apply to any periodic amendment made by a licensed clearing house or licensed central depository to the initial margin requirement, or maintenance margin requirement of a market contract which it imposes on its members or depository participants, where such amendment is made in response to a change in the historical or anticipated volatility or co-relation of any market contract.

        Amended: April 2016

      • CSD-4.4.8

        Any reference to an amendment to a business rule shall be construed as a reference to a change to the scope of, or to any requirement, obligation or restriction under the business rule, whether the change is made by an alteration to the text of the rule or by any other notice issued by, or on behalf of, the licensed clearing house or licensed central depository.

        Amended: April 2016

    • CSD-4.5 CSD-4.5 Non-Compliance with Business Rules Not to Substantially Affect Rights of Person

      • CSD-4.5.1

        Any failure by a licensed clearing house or licensed central depository to comply with this Module or its business rules in relation to a matter, shall not prevent the matter from being treated, for the purposes of this Module, as done in accordance with the business rules, so long as the failure does not substantially affect the rights of any person entitled to require compliance with the business rules.

        Amended: April 2016

    • CSD-4.6 CSD-4.6 Determination of Position Limits

      • CSD-4.6.1

        A licensed clearing house shall determine, from time-to-time, based on such criteria or methodology as may be established by the licensed clearing house with the approval of the CBB, position limits in respect of any futures contract cleared by a member of the licensed clearing house.

      • CSD-4.6.2

        The position limits under rule CSD-4.6.1 may include limits on a person holding or controlling positions, separately or in combination, net long or net short, for the purchase or sale of a futures contract or an option for the futures contract on a futures equivalent basis.

      • CSD-4.6.3

        The licensed clearing house:

        (a) Shall require a person, or any person acting for him pursuant to an express or implied agreement or understanding, who holds or controls net long or net short positions in any futures contract in excess of the position limits determined under rule CSD-4.6.1 to trade under such conditions and restrictions as the licensed clearing house considers necessary to ensure compliance with the position limits determined under that paragraph; and
        (b) May require such person referred to in (a) above to do any one or more of the following actions:
        (i) Cease any further increase in his position;
        (ii) Liquidate his position to comply with the position limits determined under rule CSD-4.6.1, within such time as may be determined by the licensed clearing house; or
        (iii) Be subject to higher margin requirements in respect of his position.

      • CSD-4.6.4

        In Paragraph CSD-4.6.2, ''futures equivalent basis'' means the basis by which an option is adjusted by the risk factor or delta coefficient of that option, such risk factor or delta coefficient being calculated at the close of trading on the last day on which that option was traded, or at such other time as the CBB may determine.

        Amended: April 2016

      • CSD-4.6.5

        The CBB may provide directions for changing the position limits imposed by a licensed clearing house where market conditions or the interest of investors warrant such directions.