The Canadian Securities Administrators (CSA) is introducing new requirements for clearing agencies and formalizing their oversight arrangements in an effort to bolster the integrity and oversight of financial market infrastructure.
The CSA published rules on Thursday that aim to adopt international standards for organizations that operate as central counterparties (CCPs), central securities depositories, or settlement systems. Those international standards are set out in principles that the International Organization of Securities Commissions and the Committee on Payments and Market Infrastructure developed in 2012, which aim to enhance the safety and efficiency of financial market infrastructure, limit systemic risk and foster financial stability.
“These harmonized standards will support resilient and cost-effective clearing agency operations, which in turn promote financial stability and orderly capital markets,” says Louis Morisset, the CSA’s chairman and president and CEO of the Autorité des marchés financiers (AMF), in a statement.
The new rule is scheduled to take effect on Feb. 17, 2016. At the same time, the CSA also published proposed amendments to accompanying policy guidance, which was developed jointly by the CSA and the Bank of Canada, that would also introduce international standards related to recovery and orderly wind-down planning by CCPs. Those proposed changes are out for a 60-day comment period, ending Feb. 1, 2016.
In addition, eight of the provincial securities regulators — including those in Ontario, Quebec, Alberta, British Columbia, Saskatchewan, Manitoba, New Brunswick and Nova Scotia — signed a memorandum of understanding (MOU) that sets out how they will co-operate and co-ordinate their oversight of clearing agencies, trade repositories and matching service utilities. The MOU will take effect once it receives government approval.
Under the MOU, a single regulator, or a group of regulators, will take the lead in conducting direct oversight of financial infrastructure firms. This arrangement aims to avoid regulatory duplication and inconsistent requirements. The agreement also enhances co-ordination for processing the applications from firms that are seeking regulatory recognition.
“This MOU reflects our collective commitment to co-operative oversight, information sharing and consultation,” Morisset says. “The co-ordinated oversight model will help reduce the compliance burden on the entities that provide market infrastructure.”