Comment Deadline Set for SEC Proposal on Additional Clearing Agency Margining and Wind-Down Requirements
The comment deadline was officially set for the SEC's proposed (i) amendments to current requirements on clearing agencies' risk-based margin systems and (ii) new rule on the content of clearing agencies' recovery and wind-down plans ("RWP"). The July 17, 2023 comment deadline was published in the Federal Register.
As previously covered, the SEC proposed the new standards for covered clearing agencies ("CCAs") with the aim of strengthening the risk management and resilience of CCAs. The SEC proposal would (i) amend Exchange Act Rule Section 17A ("Clearing Agents and Transfer Authorities"), Exchange Act Rule 17Ad-22(e) ("Standards for clearing agencies"), Section 805 of the Payment, Clearing, and Settlement Supervision Act; and (ii) adopt Rule 17Ad-22, which sets forth the standards for covered clearing agencies registered with the SEC. If adopted, the proposal would:
- expand the existing CCA margin-related requirements by mandating that CCAs establish a risk-based margin system that includes the authority and operational capacity to monitor intraday exposures on an ongoing basis and, in defined circumstances, make intraday margin calls as frequently as circumstances warrant;
- require CCAs to have policies and procedures that would apply in the event that the CCA relies on substantive inputs from third parties to calculate margin using a risk-based margin system, including policies and procedures for when such inputs are not readily available or reliable; and
- specify nine requirements to be included in CCA's recovery and orderly wind-down plans. (The SEC recognized the uniqueness of each CCA but stated that certain elements should be universally included to ensure fitness for purpose and sufficient identification of RWPs.)
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