OSC gets tough on clearing agencies

Implementing global standards will make the necessary reforms to OTC derivatives, in line with G-20 commitments.

OSC gets tough on clearing agencies

Ontario clearing agencies are prepping to run tighter ships as the OSC moves to adopt global standards for Ontario financial market infrastructures.

The OSC released for comment, Wednesday, the local Rule 24-503 Clearing Agency Requirement, which outlines new FMI requirements for clearing agencies serving securities and derivative markets under the Ontario Securities Act. The rule also provides an OSC framework for the recognition and exemption of clearing agencies conducting business in Ontario.

The proposal – which stemmed from the report Principles for Financial Market Infrastructures released by the Committee on Payment and Settlement Systems (CPSS) and the International Organization of Securities Commissions (IOSCO) in 2012 – would require clearing agencies to raise their international standards for payment, clearing and settlement systems. The move falls in line with the G-20 commitments, aiming to improve Canada’s financial stability by implementing over-the-counter (OTC) derivative reforms.

“It is important that we maintain high standards for Ontario clearing agencies to ensure they are well placed to withstand financial shocks,” said Howard I. Wetston, chair and CEO of the OSC in a release.  “Fostering robust infrastructure will strengthen the resiliency of Ontario’s capital markets.”standards for payment, clearing and settlement systems."

The OSC is working with those clearing agencies affected by the new standards as they assess their operations and develop plans to address gaps that fail to meet the global standards.

The rule is open for comment until March 19, 2014. Visit OSC’s website at www.osc.gov.on.ca.