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An FMI should have clear and comprehensive rules and procedures and should provide sufficient information to enable participants to have an accurate understanding of the risks, fees, and other material costs they incur by participating in the FMI. All relevant rules and key procedures should be publicly disclosed.

23.0 Summary

CLS Bank recognizes the need for transparency, and appreciates the need for participants to comprehend fully the risks of participating in the Settlement Service. To facilitate this, CLS Bank maintains comprehensive rules and procedures, made available to the Members and, where appropriate, to the public.

On its corporate (public) website, the CLS group makes public (in English), a significant amount of information about the CLS group entities and the Settlement Service, such as the Rules, the December 2011 CLS Bank Core Principles Self-Assessment, certain market data, regulatory and oversight information (including details on the CLS Oversight Committee and CLS Bank’s comments submitted in response to relevant regulatory consultation documents), information on the Eligible Currencies, governance information, annual reports and accounts, CLS Bank-specific best practices, the CLS Risk Appetite Statement, and press releases.

Key Consideration 1. An FMI should adopt clear and comprehensive rules and procedures that are fully disclosed to participants. Relevant rules and key procedures should also be publicly disclosed.

23.1 Disclosure

CLS Bank has clear and comprehensive rules and procedures that are fully disclosed to its participants. The key rules and procedures of the Settlement Service are set forth in the Rules, which are publicly disclosed on the CLS group corporate (public) website. The Member Handbook, which describes certain operational procedures, policy statements and other information and instructions relating to CLS Bank, CLS Services and its Members, is readily available to all Members through a secure member website. The Rules and Member Handbook are also provided to Liquidity Providers, the Federal Reserve and the CLS Oversight Committee.

The Rules and Member Handbook enable Members to understand how the Settlement Service works, to assess financial and other risks of participation in the CLS system, and to understand their and CLS Bank’s roles and obligations.

23.1.1 The Rules and Member Handbook

The Rules set forth the foundation of the Settlement Service, and the rights and obligations among Members, CLS Bank and CLS Services, including:

� criteria for membership in CLS Bank;

� criteria for the inclusion of a currency in the Settlement Service;

� scope of liability of CLS Bank and CLS Services and indemnification obligations of the Members;

� responsibility of Members for payment instructions, and deadlines for amending and rescinding payment instructions;

� procedures for handling events that may disrupt processing of payment instructions;

� validation requirements and risk management tests applied to payment instructions;

� obligations with respect to Pay-In Schedules, and Pay-In Calls issued to Settlement Members;

� consequences of failure to satisfy such obligations;

� manner in which Pay-Outs are made by CLS Bank to Settlement Members;

� circumstances under which CLS Bank may draw on its liquidity facilities;

� responsibilities of the failing Settlement Member(s) arising from such draw;

� loss sharing arrangements; and

� reasons for which CLS Bank may take remedial action against or terminate a Member (including appeal processes).

The Member Handbook contains additional details concerning matters addressed in the Rules, including:

� overview of the connectivity architecture of the CLS system;

� methodology by which CLS Bank calculates currency-specific Short Position Limits and Member-specific Aggregate Short Position Limits;

� methodology for calculating volatility-based, currency-specific haircuts; and rates used to calculate USD Base Currency Equivalents;

� details as to how Members receive information regarding their respective payment instructions and accounts;

� approximate operational times and deadlines for processes such as the issuance of Initial and Revised Pay-In Schedules, commencement of the settlement period, completion of settlement, completion of funding, and Currency Close Deadline;

� funding procedures, including minimum Pay-In and Pay-Out requirements;

� requirements necessary to be met by Liquidity Providers;

� details of loss sharing arrangements;

� current pricing policy, fees assessed for failure to fund, and applicable interest rates.

CLS Bank has a clear process for proposing and implementing amendments to the Rules and Member Handbook, as discussed under Principle 1. The approval process for creating or amending key procedures is governed by the Policy Framework, detailed under Principle 2.

Key Consideration 2. An FMI should disclose clear descriptions of the system’s design and operations, as well as the FMI’s and participants’ rights and obligations, so that participants can assess the risks they would incur by participating in the FMI.

23.2 CLS System Description

The Member Handbook provides an overview of the connectivity architecture of the CLS system, as well as details as to how Members receive information regarding their respective payment instructions and accounts. As discussed under Principle 3, Principle 7 and Principle 17, CLS Bank discusses the CLS system design and participant rights and obligations in multilateral and bilateral forums, and requires all prospective and current Members and Liquidity Providers to participate in extensive testing and trialing to ensure they understand the CLS system design and demonstrate an ability to recover in a timely fashion.

Key Consideration 3. An FMI should provide all necessary and appropriate documentation and training to facilitate participants’ understanding of the FMI’s rules and procedures and the risks they face from participating in the FMI.

23.3 Participant Understanding

CLS Bank facilitates its Members’ understanding of its Rules and procedures and the risks they face from settling payment instructions in the CLS system through frequent and regular contact with Members and other participants in the CLS ecosystem to discuss the Settlement Service and related issues, including risks resulting from participation in the Settlement Service, in a variety of forums as discussed under Principle 3. If participant behavior demonstrates a lack of understanding of the Rules, such as failure to successfully complete testing as discussed under Principle 7, CLS Bank will engage the Member and/or relevant regulators to ensure corrective actions are taken.

If any Member action or other issue affects the CLS system, this information is communicated to the Members by CLS Bank in accordance with well-established procedures, detailed under Principle 17.

Key Consideration 4. An FMI should publicly disclose its fees at the level of individual services it offers as well as its policies on any available discounts. The FMI should provide clear descriptions of priced services for comparability purposes.

23.4 Fees Disclosure

CLS Bank plans to publicly disclose certain elements of its pricing policy, and a high level summary of the pricing policy is included under Principle 21. The pricing policy is also currently an exhibit to the Member Handbook, and is therefore disclosed to all Members. Amendments to the pricing policy are disclosed to Members in accordance with the process for disclosing other amendments to the Member Handbook, described above and detailed under Principle 1.

Key Consideration 5. An FMI should complete regularly and disclose publicly responses to the CPSS-IOSCO Disclosure framework for financial market infrastructures. An FMI also should, at a minimum, disclose basic data on transaction volumes and values.

23.5 Disclosure and Monthly Data

This Disclosure is published on the CLS group corporate (public) website in line with the CPSS-IOSCO Disclosure framework. CLS Bank also posts data on transaction values and volumes on its corporate website on a monthly basis.