The Financial Sector Conduct Authority (FSCA) and the Prudential Authority (PA) have published Joint Standard 1 of 2021 – Requirements relating to Central Counterparty License Applications (the Joint Standard). The Joint Standard stipulates the requirements that an applicant for a Central Counterparty (CCP) license in terms of the Financial Markets Act, 2012 (FMA) must comply with to be licensed and the information that must be contained in such an application.

CCPs are clearing houses that interpose themselves between counterparties to transactions in securities, and have become increasingly important due to the mandatory central clearing of over-the-counter derivative products.

The FMA regulations relating to CCPs contain stringent governance, prudential and conduct requirements. In terms of the FMA, a clearing house performing the functions of a CCP must be licensed as a CCP and must comply with the requirements as set out in the FMA and the regulations by 1 January 2022. The information that must accompany such an application includes:

• administrative information;
• founding documents of the applicant;
• additional information which must be contained in an application for a CCP license;
• details of the compensation funds of the applicant; and
• proof of compliance with the requirements under the FMA Regulations.

To read the Joint Standard, click here. To read the Statement of need and intended operation of the Joint Standard, click here. 

Requests for more information may be submitted via e-mail to FSCA.RFDStandards@fsca.co.za for the attention of Mr Eugene Du Toit and PA-Standards@resbank.co.za for the attention of Dr Janet Terblanche.