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