Section 1.2 BEFORE re-enacted by BC Reg 136/2020, effective June 18, 2020.
Interpretation — affiliated entity, controlled entity and subsidiary entity
1.2 (1) In this Instrument, a person or company is considered to be an affiliated entity of another person or company if one is a subsidiary entity of the other or if both are subsidiary entities of the same person or company, or if each of them is a controlled entity of the same person or company.
(2) In this Instrument, a person or company is considered to be controlled by a person or company if
(a) in the case of a person or company,
(i) voting securities of the first-mentioned person or company carrying more than 50 percent of the votes for the election of directors are held, otherwise than by way of security only, by or for the benefit of the other person or company, and
(ii) the votes carried by the securities are entitled, if exercised, to elect a majority of the directors of the first-mentioned person or company;
(b) in the case of a partnership that does not have directors, other than a limited partnership, the second-mentioned person or company holds more than 50 percent of the interests in the partnership, or
(c) in the case of a limited partnership, the general partner is the second-mentioned person or company.
(3) In this Instrument, a person or company is considered to be a subsidiary entity of another person or company if
(a) it is a controlled entity of
(ii) that other and one or more persons or companies, each of which is a controlled entity of that other, or
(iii) two or more persons or companies, each of which is a controlled entity of that other; or
(b) it is a subsidiary entity of a person or company that is the other's subsidiary entity.
Section 1.3 BEFORE re-enacted by BC Reg 136/2020, effective June 19, 2020.
Interpretation — extended meaning of affiliated entity
1.3 For the purposes of the PFMI Principles, a person or company is considered to be an affiliate of a participant, the person or company and the participant each being described in this section as a "party", where,
(a) a party holds, otherwise than by way of security only, voting securities of the other party carrying more than 20 percent of the votes for the election of directors,
(b) in the event paragraph (a) is not applicable,
(i) a party holds, otherwise than by way of security only, an interest in the other party that allows it to direct the management or operations of the other party, or
(ii) financial information in respect of both parties is consolidated for financial reporting purposes.
Section 2.1 (2) and (4) BEFORE amended by BC Reg 136/2020, effective June 18, 2020.
(2) In addition to the requirement set out in subsection (1), an applicant that has a head office or principal place of business located in a foreign jurisdiction must
(a) certify that it will assist the securities regulatory authority in accessing the applicant's books and records and in undertaking an on-site inspection and examination at the applicant's premises, and
(b) certify that it will provide the securities regulatory authority, if requested by such authority, with an opinion of legal counsel that the applicant has, as a matter of law, the power and authority to
(i) provide the securities regulatory authority with prompt access to its books and records, and
(ii) submit to on-site inspection and examination by the securities regulatory authority.
(4) An applicant must inform the securities regulatory authority in writing of any material change to the information provided in its application, or if any of the information becomes materially inaccurate for any reason, as soon as the change occurs or the applicant becomes aware of any inaccuracy.
Section 2.1 (1) (b) BEFORE amended by BC Reg 136/2020, effective June 19, 2020.
(b) sufficient information to demonstrate that the applicant is in compliance with
(i) provincial and territorial securities legislation, or
(ii) the regulatory regime of a foreign jurisdiction in which the applicant's head office or principal place of business is located;
Section 2.2 (1) and (1) (h) BEFORE amended by BC Reg 136/2020, effective June 19, 2020.
(1) In this section, for greater certainty, a "significant change" includes, in relation to a clearing agency,
(h) any other matter identified as a significant change in the recognition terms and conditions.
Section 2.2 (3) BEFORE amended by BC Reg 136/2020, effective June 19, 2020.
(3) If a proposed significant change referred to in subsection (2) would affect the information set out in its PFMI Disclosure Framework Document filed with the securities regulatory authority, a recognized clearing agency must complete and file with the securities regulatory authority, concurrently with providing the written notice referred to in subsection (2), an appropriate amendment to its PFMI Disclosure Framework Document.
Section 2.3 (1) BEFORE amended by BC Reg 136/2020, effective June 19, 2020.
(1) A recognized clearing agency or exempt clearing agency that intends to cease carrying on business in the local jurisdiction as a clearing agency must file a report on Form 24-102F2 Cessation of Operations Report for Clearing Agency with the securities regulatory authority
(a) at least 180 days before ceasing to carry on business if a significant reason for ceasing to carry on business relates to the clearing agency's financial viability or any other matter that is preventing, or may potentially prevent, it from being able to provide its operations and services as a going concern, or
(b) at least 90 days before ceasing to carry on business for any other reason.
Section 2.5 (2) BEFORE amended by BC Reg 136/2020, effective June 19, 2020.
(2) A recognized clearing agency or exempt clearing agency must file interim financial statements that comply with the requirements set out in paragraphs 2.4 (2) (a) and (2) (b) with the securities regulatory authority no later than the 45th day after the end of each interim period.
Section 3.1 and 3.1 (b) BEFORE amended by BC Reg 136/2020, effective June 19, 2020.
PFMI Principles
3.1 A recognized clearing agency must establish, implement and maintain rules, procedures, policies or operations designed to ensure that it meets or exceeds PFMI Principles 1 to 3, 10, 13, 15 to 19, 20 other than key consideration 9, 21 to 23 and the following:
(b) if the clearing agency operates as a securities settlement system, PFMI Principles 4, 5, 7 to 9 and 12; and
Section 4.1 (2) (b) BEFORE amended by BC Reg 136/2020, effective June 19, 2020.
(b) not employees or executive officers of a participant or their immediate family members.
Section 4.3 (2) (a) BEFORE amended by BC Reg 136/2020, effective June 18, 2020.
(a) have full responsibility and authority to maintain, implement and enforce the risk management framework established by the clearing agency,
Section 4.3 (3) (f) BEFORE amended by BC Reg 136/2020, effective June 18, 2020.
(f) concurrently with submitting a report under paragraphs (c), (d) or (e), file a copy of such report with the securities regulatory authority.
Section 4.3 (1) BEFORE amended by BC Reg 136/2020, effective June 19, 2020.
(1) A recognized clearing agency must designate a chief risk officer and a chief compliance officer, who must report directly to the board of directors or, if determined by the board of directors, to the chief executive officer of the clearing agency.
Section 4.3 (2) (a) BEFORE amended by BC Reg 136/2020, effective June 19, 2020.
(a) have full responsibility and authority to maintain, implement and enforce the risk management framework established by the clearing agency,
Section 4.4 (4) (b) BEFORE amended by BC Reg 136/2020, effective June 19, 2020.
(b) not employees or executive officers of a participant or their immediate family members.
Section 4.4 (5) was added by BC Reg 136/2020, effective June 19, 2020.
Section 4.6 (a) (i) and (ii), (b) (ii) and (c) BEFORE amended by BC Reg 136/2020, effective June 19, 2020.
(i) an adequate system of internal controls over that system, and
(ii) adequate information technology general controls, including, without limitation, controls relating to information systems operations, information security, change management, problem management, network support and system software support,
(b) in accordance with prudent business practice, on a reasonably frequent basis and, in any event, at least annually
(ii) conduct capacity stress tests to determine the ability of that system to process transactions in an accurate, timely and efficient manner, and
(c) promptly notify the regulator or, in Québec, the securities regulatory authority of any material systems failure, malfunction, delay or security breach, and provide timely updates on the status of the failure, malfunction, delay or security breach, the resumption of service, and the results of the clearing agency's internal review of the failure, malfunction, delay or security breach.
Section 4.6 (d) was added by BC Reg 136/2020, effective June 19, 2020.
Section 4.7 (1) and (2) (part) BEFORE amended by BC Reg 136/2020, effective June 19, 2020.
(1) A recognized clearing agency must annually engage a qualified party to conduct an independent systems review and vulnerability assessment and prepare a report in accordance with established audit standards and best industry practices to ensure that the clearing agency is in compliance with paragraph 4.6 (a) and section 4.9.
(2) The clearing agency must provide the report resulting from the review conducted under subsection (1) to
Section 4.10 (g) BEFORE amended by BC Reg 136/2020, effective June 19, 2020.
(g) take appropriate measures to determine that the service provider to which a critical service or system is outsourced establishes, maintains and periodically tests an appropriate business continuity plan, including a disaster recovery plan;
Section 5.1 (1) BEFORE amended by BC Reg 136/2020, effective June 18, 2020.
(1) A recognized clearing agency or exempt clearing agency must keep books, records and other documents as are necessary to account for the conduct of its clearing, settlement and depository activities, business transactions and financial affairs and must keep those other books, records and documents as may otherwise be required under securities legislation.
Section 5.2 (1) and (2) BEFORE amended by BC Reg 136/2020, effective June 19, 2020.
"Global Legal Entity Identifier System" means the system for unique identification of parties to financial transactions developed by the LEI Regulatory Oversight Committee, and
"LEI Regulatory Oversight Committee" means the international working group established by the Finance Ministers and the Central Bank Governors of the Group of Twenty nations and the Financial Stability Board, under the Charter of the Regulatory Oversight Committee for the Global Legal Entity Identifier System dated November 5, 2012.
(2) For the purposes of any recordkeeping and reporting requirements required under securities legislation, a recognized clearing agency or exempt clearing agency must identify itself by means of a single legal entity identifier assigned to the clearing agency in accordance with the standards set by the Global Legal Entity Identifier System.
Section 5.2 (2.1) was added by BC Reg 136/2020, effective June 19, 2020.
Section 5.2 (3) BEFORE repealed by BC Reg 136/2020, effective June 19, 2020.
(3) If the Global Legal Entity Identifier System is unavailable to the clearing agency, all of the following apply:
(a) the clearing agency must obtain a substitute legal entity identifier that complies with the standards established by the LEI Regulatory Oversight Committee for pre-legal entity identifiers;
(b) the clearing agency must use the substitute legal entity identifier until a legal entity identifier is assigned to the clearing agency in accordance with the standards set by the Global Legal Entity Identifier System;
(c) after the holder of a substitute legal entity identifier is assigned a legal entity identifier in accordance with the standards set by the Global Legal Entity Identifier System, the clearing agency must ensure that it is identified only by the assigned identifier.
Section 6.1 (3) BEFORE amended by BC Reg 136/2020, effective June 19, 2020.
(3) Except in Ontario, an exemption referred to in subsection (1) is granted under the statute referred to in Appendix B of National Instrument 14-101 Definitions opposite the name of the local jurisdiction.
Form 24-102F1, paragraph 7 BEFORE amended by BC Reg 136/2020, effective June 18, 2020.
| 7. | The Clearing Agency designates and appoints the Agent as its agent upon whom may be served a notice, pleading, subpoena, summons or other process in any action, investigation or administrative, criminal, quasi-criminal, penal or other proceeding arising out of or relating to or concerning the activities of the Clearing Agency in ...................................... [province of local jurisdiction]. The Clearing Agency hereby irrevocably waives any right to challenge service upon its Agent as not binding upon the Clearing Agency. |
Form, paragraph 10 BEFORE amended by BC Reg 136/2020, effective June 18, 2020.
| 10. | Until six years after it has ceased to be a recognized or exempted by the securities regulatory authority, the Clearing Agency must file an amended submission to jurisdiction and appointment of agent for service of process at least 30 days before any change in the name or above address of the Agent. |
Form, text following "Consent to Act as Agent for Service" BEFORE amended by BC Reg 136/2020, effective June 18, 2020.
| I, ........................................................... [name of Agent in full; if a corporation, full corporate name] of ..................................................... [business address], hereby accept the appointment as agent for service of process of ................................................... [insert name of Clearing Agency] and hereby consent to act as agent for service pursuant to the terms of the appointment executed by ...................................................................... [insert name of Clearing Agency] on .............................................. [insert date]. |
| Dated: ............................................................. |
| ........................................................ Signature of Agent |
| ......................................................... Print name of person signing and, if Agent is not an individual, the title of the person |
Form 24-102F2, Exhibits B, C and D BEFORE amended by BC Reg 136/2020, effective June 18, 2020.
| Exhibit B |
| A list of all participants in Canada during the last 30 days prior to ceasing business as a clearing agency. |
| Exhibit C |
| A description of the alternative arrangements available to participants in respect of the services offered by the clearing agency immediately before the cessation of business as a clearing agency. |
| Exhibit D |
| A description of all links the clearing agency had immediately before the cessation of business as a clearing agency with other clearing agencies or trade repositories. |
Form, text that follows "CERTIFICATE OF CLEARING AGENCY" BEFORE amended by BC Reg 136/2020, effective June 18, 2020.
| The undersigned certifies that the information given in this report is true and correct. |
| DATED at .................................... this ..................... day of ........................................ 20........... |
| ........................................................ (Name of clearing agency) |
| ......................................................... (Name of director, officer or partner — please type or print) |
| ......................................................... (Signature of director, officer or partner) |
| .......................................................... (Official capacity — please type or print) |