Further Thoughts On Proposed Customer Clearing And Protection Of Customer Collateral Rules

As we discussed last month, the Canadian Securities Administrators released model provincial rules and related guidance in January in regards to customer clearing of OTC derivatives and the protection of customer collateral and positions. Specifically, the Model Customer Clearing Rule sets out the requirements for the treatment of customer collateral by clearing members (CMs), clearing intermediaries (CIs) and derivatives clearing agencies (DCAs). The Model Rule includes:

• requirements relating to the segregation and use of customer collateral for cleared transactions intended to ensure that customer collateral is protected particularly in the case of financial difficulties of a CM or CI;