Canadian securities regulators proposed to adopt international standards as the minimum criteria for clearing agencies to be recognized under applicable Canadian securities laws or to be exempt from recognition (i.e., foreign clearing agencies conducting business in Canada). The international standards are those articulated in the “Principles for Financial Market Infrastructure” adopted by Committee on Payment and Settlement Systems by the Bank of International Settlements in April 2012 (click here to access). The clearing agencies impacted by this proposal are clearinghouses, or central counterparties (so-called “CCPs”), central securities depositories and securities settlement systems. Although there is much parallelism between the proposed Canadian standards and the PFMIs, there are some differences. For example, the Canadian proposal will require Canadian clearinghouses to use a “reasonable portion” of their own capital prior to using the collateral or other prefunded resources of non-defaulting members to cover losses from defaulting participants—a so-called “skin-in-the-game” requirement. According to a notice by the Canadian Securities Administrators, such a requirement “…promotes risk culture and is a positive signal to the clearing agency’s participants that the owners of the CCP have an equal stake in ensuring the robustness of CCP’s risk management.” Comments to the proposal will be accepted through February 10, 2015.