Section 42Sec./Art. 42

Registration of Clearing Agencies. - 42.1. Any clearing agency may be registered as such with the Commission under the terms and conditions hereinafter provided in this Section, by filing an application for registration in such form and containing such information and supporting documents as the Commission by rule shall prescribe, including the following:

(a) An undertaking to comply and enforce compliance by its participants with the provisions of this Code, and any amendments thereto, and the implementing rules or regulations made or to be made thereunder, and the clearing agencys rules;

(b) The organizational charts of the Exchange, its rules of procedure, and list of its officers and participants;

(c) Copies of the clearing agencys rules.

42.2. No registration of a clearing agency shall be granted unless the rules of the clearing agency include provision for:

(a) The expulsions, suspension, or disciplining of a participant for violations of this Code, or any other Act administered by the Commission, the rules, regulations, and orders thereunder, or the clearing agencys rules;

(b) A fair procedure for the disciplining of participants, the denial of participation rights to any person seeking to be a participant, and the prohibition or limitation of any person from access to services offered by the clearing agency;

(c) The equitable allocation of reasonable dues, fees, and other charges among participants;

(d) Prevention of fraudulent and manipulative acts and practices, promotion of just and equitable principles of trade, and, in general, protection of investors and the public interest;

(e) The transparent, prompt and accurate clearance and settlement of transactions in securities handled by the clearing agency; and

(f) The establishment and oversight of a fund to guarantee the prompt and accurate clearance and settlement of transaction executed on an exchange, including a requirement that members each contribute an amount based on their and a relevant percentage of the daily exposure of the (4) largest trading brokers which adequately reflects trading risks undertaken or pursuant to another formula set forth in Commission rules or regulations or order, upon application: Provided, however, That a clearing agency engaged in the business of securities depository shall be exempt from this requirement.

42.3. In the case of an application filed pursuant to this section, the Commission shall grant registration if it is finds That the requirements of this code and the rules and regulations thereunder with respect to the applicant have been satisfied, and shall deny registration if it does not make such finding.

42.4. Upon appropriate application in accordance with the rules and regulations of the Commission and upon such terms as the Commission may deem necessary for the protection of investors, a clearing agency may withdraw its registration or suspend its operation or resume the same.