[Section 52(1) substituted by section 290, item 34(a) of Schedule 4, of the Financial Sector Regulation Act, 2017 (Act No. 9 of 2017), Notice No. 853, GG 41060, dated 22 August 2017 - effective 9 February 2018 (Notice R. 99, GG 41433, dated 9 February 2018)]
| (2) |
The clearing house rules must provide— |
| (a) |
for the manner in which and the terms and conditions subject to which transactions in listed and unlisted securities must be cleared or settled or cleared and settled through the clearing house; |
| (b) |
for equitable criteria for authorisation and exclusion of clearing members and, in particular, that no person may be admitted as a clearing member or allowed to continue such person’s business as a clearing member unless the person— |
| (i) |
is of good character and high business integrity or, in the case of a corporate body, is managed by persons who are of good character and high business integrity; and |
| (ii) |
complies or, in the case of a corporate body, is managed by persons or employs persons who comply with the standards of training, experience and other qualifications required by the clearing house rules; |
| (c) |
must provide for an orderly process by which a clearing member ceases to be a clearing member; |
| (d) |
for the authorisation and criteria for authorisation of the clearing services or settlement services or both clearing services and settlement services that a clearing member may provide and the type of securities for which a clearing member may provide clearing services or settlement services or both, and if there are different categories of — |
| (i) |
clearing members, for the authorisation and criteria for authorisation of the clearing services or settlement services or both clearing services and settlement services that each category of clearing member may provide; |
| (ii) |
securities, for the authorisation and criteria for authorisation of the categories in respect of which a clearing member may provide one or more clearing services or settlement services or both clearing services and settlement services; |
| (i) |
for the capital adequacy, guarantee and risk management requirements with which a clearing member must comply; |
| (ii) |
that capital adequacy, guarantee and risk management requirements must be prudent although they may differ in respect of different categories of clearing members or different activities of a clearing member’s business; |
| (f) |
if there are different categories of clearing members, for the restriction of the activities of such categories subject to different conditions; |
| (g) |
for the monitoring of settlement obligations of clearing members and their clients; |
| (h) |
for the circumstances in which the clearing house may refuse to settle or clear a transaction in securities; |
| (i) |
for the manner in which the clearing house monitors compliance by its clearing members with this Act, the clearing house rules and the clearing house directives; |
| (j) |
for the manner in which a clearing member is required to conduct its business generally; |
| (i) |
recording of transactions cleared or settled by the clearing house; and |
| (ii) |
monitoring of compliance by clearing members with this Act, and the clearing house rules and clearing house directives; |
| (l) |
for the manner in which complaints against a clearing member or officer or employee of a clearing member must be investigated; |
| (m) |
for the equitable and expeditious resolution of disputes between clearing members and between clearing members and their clients in respect of the clearing or settlement of transactions in listed and unlisted securities, |
| (n) |
for a process whereby complaints by clearing members against the clearing house in respect of the exercise of functions by the clearing house may be made, considered and responded to; |
| (o) |
for the steps to be taken by the clearing house, or a person to whom the clearing house has delegated its investigative and disciplinary functions, to investigate and discipline a clearing member or officer or employee of a clearing member who contravenes or fails to comply with the clearing house rules, the interim clearing house rules or the clearing house directives and for a report on the disciplinary proceedings to be furnished to the Authority within 30 days after the completion of such proceedings; |
| (p) |
for the manner in which a clearing member, officer or employee of a clearing member who is believed to— |
| (i) |
be able to furnish any information on the subject of any investigation referred to in this subsection; or |
| (ii) |
have in such person’s possession or under such person’s control any document which has bearing upon that subject, may be required to appear before a person conducting an investigation, to be interrogated or to produce such document; |
| (q) |
where appropriate, in respect of the insurance, guarantee, compensation fund or other warranty referred to in section 51, for— |
| (i) |
the persons who must contribute to maintain such insurance, guarantee, compensation fund or other warranty; |
| (ii) |
the amount of the fee imposed by the clearing house for this purpose; |
| (iii) |
different categories of claims that may be brought against the insurance, guarantee, compensation fund or other warranty; |
| (iv) |
restrictions on the amount of any claim; |
| (v) |
the control and administration of the insurance, guarantee, compensation fund or other warranty; |
| (vi) |
the ownership of the insurance, guarantee, compensation fund or other warranty; |
| (r) |
that clearing members must disclose to clients the fees for their services, which disclosure must give the specific monetary amount for each service rendered; or if such amount is not pre-determinable, the basis of the calculation; |
| (s) |
for the purposes for which, and the process by which, a clearing house may issue clearing house directives; |
| (u) |
for the administration of securities and funds held for own account or on behalf of a client by a clearing member, including the settlement of unsettled transactions, under insolvency proceedings in respect of that clearing member; and |
[Section 53(2)(u) substituted by section 290, item 34(b) of Schedule 4, of the Financial Sector Regulation Act, 2017 (Act No. 9 of 2017), Notice No. 853, GG 41060, dated 22 August 2017 - effective 9 February 2018 (Notice R. 99, GG 41433, dated 9 February 2018)]
| (v) |
for the authority of, and the manner in, and circumstances under which— |
| (i) |
a clearing house may limit the revocation of any settlement instruction given by a clearing member or client; |
| (ii) |
a clearing member or its client may revoke any settlement instruction before the point in time when settlement instructions become irrevocable as determined in the clearing house rules, but prior to settlement; |
| (iii) |
a clearing house or a clearing member may terminate transactions on the commencement of insolvency proceedings; |
| (w) |
for the recording by a clearing member of transactions or positions cleared by that clearing member through the clearing house; |
| (x) |
circumstances and manner in which a clearing member may advertise or canvass for business; |
| (y) |
refusal by a clearing house to accept securities issued by any particular issuer with due regard to the clearing and settlement arrangements of an exchange for transactions in those securities; |
| (z) |
for the segregation and portability of funds and securities held as collateral; |
| (aa) |
that clearing members must notify the clearing house as soon as it commences an insolvency proceeding or an insolvency proceeding is commenced against it; and |
[Section 53(2)(z) and (aa) substituted by section 290, item 34(c) of Schedule 4, of the Financial Sector Regulation Act, 2017 (Act No. 9 of 2017), Notice No. 853, GG 41060, dated 22 August 2017 - effective 9 February 2018 (Notice R. 99, GG 41433, dated 9 February 2018)]
| (bb) |
in the case of a central counterparty, for the default procedures to be followed, including close-out procedures, in the event of a default of a clearing member; |
[Section 53(2)(bb) inserted by section 290, item 34(d) of Schedule 4, of the Financial Sector Regulation Act, 2017 (Act No. 9 of 2017), Notice No. 853, GG 41060, dated 22 August 2017 - effective 9 February 2018 (Notice R. 99, GG 41433, dated 9 February 2018)]
| (2A) |
Regulations or standards may prescribe additional matters to those listed in subsection (2) that must be contained in the clearing house rules. |
[Section 53(2A) inserted by section 290, item 34(e) of Schedule 4, of the Financial Sector Regulation Act, 2017 (Act No. 9 of 2017), Notice No. 853, GG 41060, dated 22 August 2017 - effective 9 February 2018 (Notice R. 99, GG 41433, dated 9 February 2018)]
| (3) |
Despite subsection (2), the rules of a clearing house only need to provide for matters relating to settlement if the clearing house is licensed to settle transactions in securities. |
[Section 53(4)(a) substituted by section 290, item 34(f) of Schedule 4, of the Financial Sector Regulation Act, 2017 (Act No. 9 of 2017), Notice No. 853, GG 41060, dated 22 August 2017 - effective 9 February 2018 (Notice R. 99, GG 41433, dated 9 February 2018)]
| (b) |
If the clearing house rules provide for the approval of external clearing members to be clearing members of the clearing house, the rules must, in accordance with paragraph(a), provide for the identification of those clearing services or settlement services, or both, that will be authorised and regulated by the clearing house in terms of the clearing house rules and those that will be authorised and regulated by the supervisory authority of the country under whose laws the external clearing member is authorised and supervised. |
| (5) |
A clearing house may, with the approval of the Authority, make clearing house rules on matters additional to those listed in subsection (2). |
| (a) |
Any rules made in terms of subsection (2)(a), (2)(u) or 2(v) must have due regard for, and not be in conflict with, any applicable depository rules. |
| (b) |
Any rules made in terms of subsection (2)(v) must have due regard for, and not be in conflict with, section 8 of the National Payment System Act. |
| (7) |
A clearing house rule made under this section is binding on— |
| (ii) |
the clearing members of the clearing house, |
| (iii) |
the officers and employees of the clearing house and its clearing members, and |
| (iv) |
clients of the clearing members. |
National Environmental Management Act, 1998 (107 of 1998)
