36. Application for a licence to establish or operate a clearing house

the efficient provision of clearing facilities in relation to securities that are cleared through its clearing facilities;

the requirement for entering into contracts with clearing members under which they would agree to be bound by the rules of the licensed clearing house;

the admission of clearing members to the clearing house including transparent and non discriminatory criteria for such admission;

the effective regulation and supervision of its clearing members that use its clearing facilities;

conditions relating to the acceptance of guarantees or collateral, from clearing members and for the efficient management of such guarantees or collateral;

the establishment of a Settlement Guarantee Fund and the implementation of a prudent risk management system;

the obligations of clearing members and minimum requirements with regard to capital, internal audit and risk management;

the fair and efficient settlement of disputes -

between the clearing house and its clearing members; and

between clearing members;

the expulsion, suspension, and disciplining of clearing members including the power or authority of the licensed clearing house to impose penalties for the failure of clearing members to comply with the rules of the licensed clearing house;

the specification of the class or the classes of securities that may be cleared and settled using its facilities;

the inclusion of default rules to facilitate–

the initiation of default proceedings if a clearing member has failed to meet its obligations under the clearing rules and the risk management procedures to deal with a clearing member who appears to be unable, or is likely to become unable to meet its obligations;

the governing of collateral including the depositing and efficient creation and realization of guarantees or collateral provided by a defaulting clearing member in the event of default or bankruptcy of such member; and

the uninterrupted services of the clearing house under circumstances relating to sub-paragraphs (i) and (ii) above or any other circumstances that threatens the solvency of a clearing house;

the time for entering settlement orders into the settlement system and the time when such orders become final and irrevocable;

the time of counterparty substitution;

the netting arrangements, the finality of settlements and any other obligations relevant to a licensed clearing house which acts as a central counterparty or otherwise.