| (1) | To establish the legal basis of its functions, a central counterparty must have rules, policies, procedures and contracts that— |
| (a) | are clear, understandable and consistent with relevant laws, including these Regulations; |
| (b) | are accurate, up to date and readily available to the Authority, other supervisory authorities, clearing members and where appropriate their clients; |
| (c) | provide certainty, with respect to the central counterparty’s— |
| (i) | interests in, and rights to use and dispose of, collateral; |
| (ii) | authority to transfer ownership rights or property interests; and |
| (iii) | rights to make and receive payments, |
despite the insolvency of its clearing members, clearing members’ clients, or custodian; and
| (d) | are binding on third parties and legally enforceable when the central counterparty is implementing its plans for recovery or orderly winding-up. |
| (2) | In developing its rules, policies, procedures and contractual arrangements, a central counterparty must consider relevant regulatory principles, industry standards and market protocols and clearly indicate where such practices have been incorporated. |
| (3) | If a central counterparty has a netting arrangement in place, it must be enforceable in terms of valid legal agreements. |
| (4) | A central counterparty must, where applicable— |
| (a) | analyse any foreign legal requirements applicable to the rendering of its functions; |
| (b) | identify the extent to which those requirements are in conflict with the Act and other applicable South African legislation; |
| (c) | develop a policy describing how conflicting provisions will be resolved in full compliance with the Act and other applicable legislation; and |
| (d) | in cases of uncertainty, obtain a legal opinion confirming the enforceability of its policies, procedures and contracts. |
