CDS Clearing & Depository Services Inc. (CDS) is proposing changes to its rules that would allow it to disclose confidential information about market participants in certain circumstances, and to deal with emergency situations more effectively.

The amendments proposed in Thursday’s OSC Bulletin set out the situations in which CDS would be permitted to disclose participants’ otherwise confidential information to regulators, issuers and their agents, other participants and third parties.

It is proposing to add new sections to its rules, which would authorize CDS to release a participant’s confidential information when it is legally required to be provided to, or requested in writing by, CDS’ own regulator; when a material risk event occurs, such as a breach of CDS rules, a loss of securities, or a market participant loss, that may give rise to material risk to the CDS system; and, in cases where CDS becomes involved in litigation.

A notice spelling out the proposed changes, indicates that in the case of a material risk event, CDS will inform its own regulators of the event, and, possibly the regulators of the firm involved and other firms who are affected by the event.

The section being proposed to permit CDS to disclose relevant confidential information to other market participants that become involved in litigation (where CDS is also party to a lawsuit), provides that the participant has the opportunity to appeal the proposed disclosure before it is made.

The notice indicates that the proposed amendments will affect all participants, and are being proposed “in order to reduce material risks within CDSX and to permit affected participants and regulators to respond effectively and in a timely manner to an actual or potential risk for the benefit of the securities and financial markets in general.”

Separately, CDS also proposed rule amendments that would allow CDS management to exercise powers normally only available to its board, “in the event of substantial and imminent risk of material harm” to CDS, market participants, or the Canadian capital markets generally. This would allow management to deal with potential emergency situations without waiting for board approval.

Both proposals are out for 30-day comment periods.