CDS Clearing & Depository Services Inc. (CDS) is proposing to augment its ability to deal with emergency situations that could imperil its systems, or the Canadian capital markets generally.
The Toronto-based clearing firm is proposing rule amendments that would give its management the authority to take action, “to ensure the safe, fair and efficient operation of its systemically important clearing operations,” it says.
The new authority would give CDS management the authority to take action to prevent, correct or alleviate an emergency situation, such as: declining to enter into any transactions; suspending a participant; suspending operations generally; effecting close-out or liquidation processes; and, taking other “reasonable action” to preserve the integrity of capital markets.
“This proposed rule amendment provides CDS with the necessary flexibility to make, and act upon, decisions expeditiously, prudently and in a manner that is consistent with the public interest to avoid or mitigate harm to CDS, its participants or Canadian capital markets,” it says in the proposals.
The proposed changes would also bring CDS’ rules in line with principles that were recently adopted by global policymakers in an effort to ensure the resilience of financial market infrastructures.
Comments on the proposed amendments are due in 30 days.