76. Whatever the set-up in the scam offers, the results are the same. For instance, a covered clearing agency may conclude when undertaking this analysis that key personnel could easily leave their organization in case of a recovery or wind-down scenario. 552. note 7, 81 FR at 70810. For service providers that are necessary for the covered clearing agency to provide its core payment, clearing, and settlement services, the failure of the service provider to perform its obligations could pose significant operational risks and have substantial effects on the ability of the covered clearing agency to perform its risk management function and facilitate prompt and accurate clearance and settlement. See15 U.S.C. Memorandum from Jeffrey M. Bandman, Acting Director, Division of Clearing and Risk, CFTC Letter No. [140] The alignment costs would depend on the extent of the enhancements the covered clearing agency makes to its RWP. The Inefficiency of Clearing Mandates The current practice of covered clearing agencies is to release excess margin to participants only once a day at a pre-scheduled time. Six provide central counterparty (CCP) services[95] DTCC,

documents in the last year, 1428 supra These benefits are expected to increase with the amount of change each covered clearing agency makes to align itself with the rule. OCC 2017 Notice, The Commission believes that certain covered clearing agencies would need to develop additional procedures, or refine existing procedures, that would apply when the specific substantive inputs used by a covered clearing agency are not readily available or reliable, in order to ensure that the covered clearing agency can continue to meet its requirements under Rule 17Ad22(e)(6). Click Here. See12 U.S.C. Because covered clearing agencies do not currently identify the staffing necessary to support critical services and how such staffing would continue during times of crisis, this new requirement likely would provide benefits to the market. If both those conditions occur, then the covered clearing agency would be considered a covered financial company.[47]
supra. FICC's GSD Rule 4, section 2a (regarding the intraday supplemental fund deposit); FICC's MBSD Rule 1 (defining intraday VaR and intraday mark-to-market charges) and Rule 4, section 2(b) (regarding the daily margin requirement) and section 3a (regarding the intraday requirements). 42. [] SCCP [] maintain[s] its registration as a clearing agency for possible active operations in the future.). See, e.g., 21. The initial cost is based on 20 hours for an assistant general counsel at $551 per hour; 40 hours for a compliance attorney at $432 per hour; 12 hours for a computer operations manager at $521 Dietrich Domanski, Leonardo Gambacorta, & Cristina Picillo, The remainder of this subsection discusses each of these elements in turn, explaining how some would make RWPs more effective in guiding the covered clearing agencies during times of recovery or wind-down while others would help participants and regulators better understand how the covered clearing agencies will prepare for and respond to stress. Start Printed Page 34711 Clearing Agency Governance and Conflicts of Interest Proposing Release, Exchange Act Release No. I did not receive email confirmation of my PCH Sweepstakes entry. The proposed rule would require ongoing monitoring and compliance activities with respect to the written policies and procedures created in response to the proposed rule.

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Kite Publishing Co Publishers Publishing Consultants Website 24 YEARS IN BUSINESS (320) 656-5862 1752 Cherry Ln Saint Cloud, MN 56304 2. Who do I contact if I am receiving recurring shipments? In this Issue, Documents Should Rule 17Ad22(e)(6)(iv) be amended to expand its scope to encompass other substantive inputs to a covered clearing agency's risk-based margin system?

Cloud, MN 56388-0099. See LCH SA also has the ability and authority to make intraday margin calls that are based on intraday positions and valuations.[131]. When analyzing the tools to be included in its RWP, a covered clearing agency generally should consider: (i) a description of the tools that the covered clearing agency would expect to use in each scenario; (ii) the order in which each tool would be expected to be used; (iii) the time frame within which the tool would be used; (iv) the governance and approval processes and arrangements within the covered clearing agency for the use of each of the tools available, including the exercise of any available discretion; (v) the processes to obtain any approvals external to the covered clearing agency (including any regulatory approvals) that would be necessary to use each of the tools available, and the steps that might be taken if such approval is not obtained; (vi) the steps necessary to implement the tools; (vii) the roles and responsibilities of all parties, including non-defaulting participants; (viii) whether the tool is mandatory or voluntary; and (ix) an assessment of the associated risks from the use of each tool to non-defaulting clearing members and their customers, linked financial market infrastructures, and the financial system more broadly. See15 U.S.C.

163. Standards for Covered Clearing Agencies Standards Proposing Release, Exchange Act Release No. What costs will be incurred by the participants and, when practicable, other stakeholders? Should the Commission identify additional circumstances that may warrant intraday margin calls beyond when the products cleared or markets served display elevated volatility? Box: City: Yes! Therefore, the Commission believes that the RWP also must identify and describe the process that the covered clearing agency uses to monitor and determine whether the criteria have been met, including the governance arrangements applicable to such process. See15 U.S.C. https://www.sec.gov/comments/s7-03-14/s70314-1594398-132354.pdf. Each covered clearing agency would incur costs to bring its RWP into alignment with the proposed rule. 8. The Commission also proposes to further specify that the procedures for when the price data or substantive inputs are not readily available or reliable shall include the use of price data or substantive inputs from an alternate source or the use of an alternate risk-based margin system that does not similarly rely on the same unavailable or unreliable substantive input. [80] How costly is it for covered clearing agencies to secure the use of alternate risk-based margin systems? 43. Further, the Commission also believes that the requirement to specify thresholds that would trigger intraday margin calls, if breached, could improve participants' ability to understand when they may be subject to additional margin calls and, therefore, to be able to prepare accordingly to provide additional financial resources in anticipation of additional margin calls. The Commission believes that this is an important element of a covered clearing agency's RWP, that is, to provide, in advance, a level of predictability as to how such measures would be implemented, which is important to participants as discussed in section III.B.e Specifically, the FDIC as receiver serves as the successor to the financial company, holding all rights, titles, powers, and privileges of the financial company and its assets, and of any stockholder, member, officer, or director of such company, and it takes title to the books, records, and assets of any previous receiver or other legal custodian of such covered financial company. Each covered clearing agency would incur costs to bring its RWP into alignment with the proposed rule. As stated in the baseline analysis, the RWPs differ in their degree of alignment with this proposed rule and the level of descriptiveness of service providers. see supra Simply including a plan for what a covered clearing agency would do in recovery is not sufficient, and a plan for one event does not serve as a substitute for the other. 141. https://www.bis.org/cpmi/publ/d162.pdf Specifically, Congress found that the proper functioning of the financial markets is dependent upon safe and efficient arrangements for the clearing and settlement of payments, securities, and other financial transactions.[3], In recognition of the importance of clearance and settlement to the securities markets, the Commission adopted 17 CFR 240.17Ad22(e) (Rule 17Ad22(e)), which sets forth standards for covered clearing agencies registered with the Commission. 67. available at https://www.brookings.edu/wp-content/uploads/2020/05/wp62_duffie_v2.pdf [156] To the degree that market participants view equity and fixed-income covered clearing agencies as more reliable venues for risk transfer, they may increase their activity and therefore signal a demand for more capital-creating securities. While the Commission has attempted to quantify economic effects where possible, much of the discussion of economic effects is qualitative in nature. For the purposes of this section: Affiliate [ ] BSECC [ ] maintain[s] its registration as a clearing agency with the Commission for possible active operations in the future.); Self-Regulatory Organizations; Stock Clearing Corporation of Philadelphia; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Suspension of Certain Provisions Due to Inactivity, Exchange Act Release No. The amendment to Rule 17Ad22(e)(6)(iv) may have a modest effect on competition because they are start-up costs that a new competitor would have to assume to enter into the covered clearing agency market. YP, the YP logo and all other YP marks contained herein are trademarks of YP LLC and/or YP affiliated companies. [168], Proposed Rule 17ad26 would also impose ongoing burdens on a respondent covered clearing agency. 83651 (Jul. [31] Evaluate whether the proposed collections of information are necessary for the proper performance of the Commission's functions, including whether the information shall have practical utility; 46. The Commission believes that the costs to modify plans that require changes, including those that need to be expanded to include additional rules, policies, procedures, or any other tool or resource would be modest because current RWPs already place some focus on timeliness as a desired feature. Exemption 8 of the Freedom of Information Act provides an exemption for matters that are contained in or related to examination, operating, or condition reports prepared by, on behalf of, or for the use of an agency responsible for the regulation or supervision of financial institutions. One of the RWPs has taken steps to ensure timely completion of a recovery or orderly wind-down. 1-800-566-4724. Our current Customer Service address of 101 Winners Circle Port Washington, NY 11050 is changing to: 101 Winners Circle Jericho, NY 11753 And our Headquarters is changing from 382 Channel Drive Port Washington, NY 11050 to: 300 Jericho Quadrangle, Dept. 92. documents in the last year. [135] means the actions of a covered clearing agency, consistent with its rules, procedures, and other ex ante contractual arrangements, to address any uncovered loss, liquidity shortfall, or capital inadequacy, whether arising from participant default or other causes (such as business, operational, or other structural weaknesses), including actions to replenish any depleted prefunded financial resources and liquidity arrangements, as necessary to maintain the covered clearing agency's viability as a going concern and to continue its provision of critical services. 4 (Feb. 2014), Identification and description of scenarios is essential to evaluating what is necessary to achieve a recovery of the clearing agency and, in the event that recovery fails, ensuring the orderly wind-down of the clearing agency and transfer of critical services to a new entity. The Commission is therefore proposing to amend Rule 17Ad22(e)(6)(iv) to expand its scope beyond the Commission preliminarily estimates that respondent covered clearing agencies would incur an aggregate one-time burden of approximately 903 hours to review existing policies and procedures and create new policies and procedures. where markets are unavailable or there are limited solvent counterparties); and the specific steps that the covered clearing agency would expect to take if the scenario occurs or appears likely to occur, including, without limitation, any governance or other procedures that may be necessary to implement the relevant tools or use the relevant resources and to ensure that such implementation occurs in sufficient time to achieve the intended effect.

e.g., See also infra, 22. It always has been and always will be. or Should the covered clearing agency be required to mandate that participants participate in testing? as amended by the RFA, generally requires the Commission to undertake a regulatory flexibility analysis of all proposed rules to determine the impact of such rulemaking on small entities.[174] The money they wired and incurs returned check charges, the results are the same Press is direct. See For the purposes of Commission rulemaking and as applicable to the proposed amendments to Rule 17Ad22 and the addition of proposed Rule 17ad26, a small entity includes, when used with reference to a clearing agency, a clearing agency that (i) compared, cleared, and settled less than $500 million in securities transactions during the preceding fiscal year, (ii) had less than $200 million of funds and securities in its custody or control at all times during the preceding fiscal year (or at any time that it has been in business, if shorter), and (iii) is not affiliated with any person (other than a natural person) that is not a small business or small organization.[177]. 108. Although the proposed rule amendment is with respect to Rule 17Ad22(e)(6), the Commission believes that these Rules present the best overall comparison to the current proposed rule amendment, in light of the nature of the changes needed to implement the proposal here and what was proposed in the Covered Clearing Agency Standards. With respect to the policies and procedures related to maintaining a viable plan for raising additional equity, the Commission stated that a viable plan generally should enable the covered clearing agency to hold sufficient liquid net assets to achieve recovery or orderly wind-down. escalation within the covered clearing agency, and it also generally should specify whether and to what extent the covered clearing agency may exercise discretion in its monitoring and determination whether the triggering criteria have been met. 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