OCC Requests Comment on Updates to Standards for Clearing Members

The OCC requested comment on a proposal to amend its standards for clearing members, including expanding the scope of financial institutions eligible to apply for membership.

Under the Proposal, the OCC would:

• expand the list of institutions that can apply for a clearing membership to include (i) U.S. national banks registered with the OCC for full-service operations, (ii) U.S. state-chartered banks that are members of the Federal Reserve System and (iii) certain non-U.S. banks;
• expand the available regulatory authorizations that may be granted to each institution type;
• streamline its review and admission procedures for membership applications;
• authorize its Risk Committee to (i) examine books, records and workpapers of applicants to assess an applicant’s qualifications and (ii) approve or disapprove applicants for clearing membership;
• raise the capital floor to (i) at least $500 million in Tier 1 Capital for eligible banks and (ii) at least $10 million for all other types of eligible institution;
• amend event-based and periodic reporting requirements for members, such as requiring members to notify the OCC within 30 days if its independent auditor (i) issues a qualified opinion of the member’s financial statements or (ii) identifies a material weakness within the member’s internal controls for financial reporting;
• permit members to maintain records in accordance with their respective regulatory agency and any additional requirements the OCC may impose; and
• raise operational capability standards.