Derivatives (MAOF) Clearing House: CPMI-IOSCO Disclosures

In April 2012, the Committee on Payment and Market Infrastructure (“CPMI”), which operates under the Bank for International Settlements (“BIS”), together with the Technical Committee of the International Organization of Securities Commissions (“IOSCO”), also “CPMI-IOSCO”, published a document of principles regulating the activities of financial market infrastructures – “Principles for Financial Market Infrastructure” (“PFMI”).

Moreover, in July 2017, additional guidelines were published relating to the relevant principles for CCP-type financial market infrastructures ("Final report - Resilience of central counterparties ("CCPs"): Further guidance on the PFMI").

The PFMI document contains 24 core principles (“the Core Principles”) relating to a broad range of aspects intended to ensure the proper management and financial stability of the financial market infrastructures, and as a result to ensure the stability of the relevant financial market served by these infrastructures.

Israel Securities Authority (ISA) adopted the Core Principles set forth by CPMI-IOSCO in the PFMI document and stipulates provisions that aim to ensure the proper operation and financial stability of the TASE Clearing House ("TASECH") and MAOF-CH (“the Clearing Houses’ Stability Directive”).

On June 29, 2017, ISA announced that MAOF-CH can be regarded as acting in accordance with the Core Principles.

In accordance with the Core Principles, MAOF-CH is required to evaluate and publish the manner in which it applies the Core Principles according to the valuation methodology and disclosure framework set by CPMI-IOSCO in December 2012 and in July 2017 ("Qualitative Disclosure").

In addition, as a Central Counterparty ("CCP"), MAOF-CH is also required to publish supplementary quantitative information for certain Core Principles according to the framework set in principles by CPMI-IOSCO in February 2015 ("Quantitative Disclosure").

According to the PFMI regulation described above, on December 31, 2017, MAOF-CH completed, for the first time, its self-assessment for 2017, and since then the Clearing House performs its self-assessment once every two years. At the end of the evaluation process, the highlights of the self-evaluation, which review the manner in which the principles are implemented by the Clearing House, are described and set forth for the benefit of the public in the disclosure document below.