MSC Staff Notice 2013-50
The Commodity Futures Act
Standards applicable to Clearing Houses
The Manitoba Securities Commission (Commission or We) is issuing this notice to clarify the
position of the Commission with respect to recent regulatory developments and the standards
being applied to the regulation of clearing houses recognized under The Commodity Futures Act
(CFA).
Section 16(1) of the CFA permits the Commission to designate a recognized clearing house for
the purpose of conducting clearing activities for a commodity futures exchange.
Currently there is only one clearing house, ICE Clear Canada, Inc. recognized under the CFA
as the clearing house for ICE Futures Canada, Inc. The Commission is the primary regulator
which oversees the activities of both the clearing house and the exchange.
Recent Regulatory Developments
The Bank for International Settlement’s Committee on Payment and Settlement Systems and
the Technical Committee of the International Organization of Securities Commissions (CPSS-
IOSCO) published Principles for Financial Market Infrastructures in April 2012
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(the “report”).
These principles, commonly known as PFMIs, set out risk management standards to be applied
to the regulation and oversight of financial market infrastructures.
In addition, on December 18, 2013 the Commission published a rule and companion policy for
comment under The Securities Act. As stated in the Notice, proposed MSC Rule 24-503
Clearing Agency Requirements would set out certain requirements in connection with the
application process for recognition as a clearing agency, or for exemption from the recognition
requirement. The Rule also sets out ongoing requirements for recognized clearing agencies
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Report available at: www.bis.org/publ/cpss101a.pdf
under The Securities Act. The proposed rule is based largely on the PFMIs as set out in the
report. The Notice was concurrently published with notices issued by the Ontario Securities
Commission, the Autorité des marchés financiers, and other members of the Canadian
Securities Administrators (CSA). The comment period expires on March 12, 2014. It is the
intention of the Commission to continue to coordinate the development of the rule and
companion policy with other members of CSA.
The Commission also anticipates developing a rule and policy for the regulation of clearing
houses under the CFA. We are of the view that this would best be accomplished after
completion of the Clearing Agency Requirements rule under The Securities Act. In order to
assist in the development of a rule and policy regulating clearing houses under the Act,
interested parties are encouraged to provide any comments to the proposed rule under The
Securities Act during the comment period.
Any rule proposed under CFA will be published for comment as required in the rule making
regulation.
Current regulation and oversight of clearing houses
The Commission is currently applying applicable PFMI standards as set out in the report to the
regulation and oversight of clearing houses recognized under the CFA. We will continue to
monitor new regulatory developments to ensure the Commission continues to apply the most
current standards.
Please refer your comments or questions to:
Douglas R. Brown
Director
The Manitoba Securities Commission
204-945-0605
Doug.Brown@gov.mb.ca
Paula White
Manager, Compliance and Oversight
The Manitoba Securities Commission
204-945-5195
Paula.White@gov.mb.ca
December 18th, 2013.
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