Strate’s business is to provide post-trade securities services to clients in its financial markets (referred to as the CSD function). Strate’s clients are CSD Participants, who in some cases, are also its shareholders. Strate also operates as a regulatory authority and that involves supervising compliance by Participants with the Financial Markets Act, CSD Rules and Directives (known as the enforcement and supervisory function, undertaken by STRATE Supervision).
How does it reconcile these roles as both player and referee?
Chinese Walls have been established between the two functions (CSD or commercial function versus the supervisory function) to avoid confidential information obtained as a result of its statutory powers as a regulator being used, or being seen to be used, to provide Strate’s CSD activities with an unfair advantage.
It is confidential information obtained while performing the enforcement and supervisory function by STRATE Supervision that needs to be protected by ‘Chinese Walls’ from reaching external parties or staff involved in the CSD function.
Chinese Walls are the various structures, procedures and processes that have been put in place for the past decade to ensure that confidential information is not shared with parties other than the Strate Regulatory and Supervisory Committee, the FSB or co-regulators under the terms of agreed-upon information sharing arrangements.
While the Chinese Walls structures prevents STRATE Supervision from sharing confidential Participant related information with Strate (as the CSD), there are no confidentiality barriers in respect of Strate sharing information with STRATE Supervision where a Participant is believed to be contravening the Financial Markets Act, CSD Rules and Directives or introducing risk into the market.
In the January of every year, the “Chinese walls Manual” is reconsidered, reviewed for continued effectiveness and is reiterated to all staff of Strate and STRATE Supervision. The Manual is reviewed, updated where necessary and posted to the Strate website as a public document. To view the latest version, visit STRATE Supervision’s website by clicking here.