To become a clearing member, a firm must meet the qualification requirements the central counterparty sets (at JSCC, acquisition standards and maintenance standards) and receive its approval. Because a central counterparty may incur losses if a clearing member defaults, it requires high creditworthiness and keeps monitoring members, such as their financial condition, after approval.
A customer that is not a clearing member asks a clearing member to clear, and uses the central counterparty through that clearing member. The PFMI call a party that participates directly in a central counterparty a direct participant, and a party that uses it through a direct participant an indirect participant.
JSCC calls a clearing member a clearing participant.