SECURITIES AND EXCHANGE COMMISSION
17 CFR Part 240Release No. 34-68080; File No. S7-08-11RIN 3235 AL13Clearing Agency StandardsAGENCY
: Securities and Exchange Commission.
ACTION:
Final rule.
SUMMARY:
The Securities and Exchange Commission (“SEC” or “Commission”) is adoptingnew Rule 17Ad-22 in accordance with Section 17A of the Securities Exchange Act of 1934(“Exchange Act”), Section 763 of Title VII (“Title VII”) of the Dodd-Frank Wall Street Reformand Consumer Protection Act of 2010 (“Dodd-Frank Act”), and Section 805 of Title VIII (“TitleVIII”) of the Dodd-Frank Act. Rule 17Ad-22 establishes minimum requirements regarding howregistered clearing agencies must maintain effective risk management procedures and controls aswell as meet the statutory requirements under the Exchange Act on an ongoing basis.
EFFECTIVE DATE:
[INSERT DATE 60 DAYS AFTER DATE OF PUBLICATION IN THEFEDERAL REGISTER].
FOR FURTHER INFORMATION CONTACT:
Jeffrey Mooney, Assistant Director;Katherine Martin, Senior Special Counsel; Doyle Horn, Special Counsel; Stephanie Park, SpecialCounsel; or Justin Byrne, Attorney-Advisor; Office of Clearance and Settlement, Division of Trading and Markets, Securities and Exchange Commission, 100 F Street, NE, Washington, DC20549-7010 at (202) 551-5710.
2
SUPPLEMENTARY INFORMATION:
The Commission is adopting rules for the operationof a registered clearing agency that identify minimum standards designed to enhance theregulatory framework for clearing agency supervision.
TABLE OF CONTENTS
I. BackgroundA. Statutory Framework for the Regulation of Clearing Agencies1.
Introduction2.
Section 17A of the Exchange Act3.
The Dodd-Frank Acta.
Title VII of the Dodd-Frank Actb.
Title VIII of the Dodd-Frank ActB. International ConsiderationsII. Overview of Proposal and General Comments Received on the Proposing Release andCommission ResponseA. Summary of the Clearing Agency Standards Proposing ReleaseB. General Comments Received on the Proposing Release and the CommissionResponse1.
Timing of Implementation
2.
Special Attention to Risk Management Standards
3.
Coordinated U.S. Domestic and International Standards
4.
Appropriate Distinctions between Clearing Agencies
III. Description of Rule 17Ad-22A.
Overview and ScopeB.
Definitions – Rule 17Ad-22(a)C.
Risk Management Requirements for Central Counterparties: Rules 17Ad-22(b)(1)–(4)1.
Rule 17Ad-22(b)(1): Measurement and Management of Credit Exposures2.
Rule 17Ad-22(b)(2): Margin Requirements3.
Rule 17Ad-22(b)(3): Financial Resources4.
Rule 17Ad-22(b)(4): Model ValidationD.
Participant Access Standards for Central Counterparties: Rules 17Ad-22(b)(5)–(7)1.
Rule 17Ad-22(b)(5): Non-Dealer Member Access2.
Rule 17Ad-22(b)(6): Portfolio Size and Transaction Volume ThresholdsRestrictions3.
Rule 17Ad-22(b)(7): Net Capital RestrictionsE.
Record of Financial Resources and Annual Audited Financial Statements: Rules17Ad-22(c)(1)–(2)
31.
Rule 17Ad-22(c)(1): Record of Financial Resources for CentralCounterparties2.
Rule 17Ad-22(c)(2): Clearing Agency Annual Audited Financial StatementsF.
Minimum Standards for Clearing Agencies: Rules 17Ad-22(d)(1)–(15)1.
Rule 17Ad-22(d)(1): Transparent and Enforceable Rules and Procedures2.
Rule 17Ad-22(d)(2): Participation Requirements3.
Rule 17Ad-22(d)(3): Custody of Assets and Investment Risk 4.
Rule 17Ad-22(d)(4): Identification and Mitigation of Operational Risk 5.
Rule 17Ad-22(d)(5): Money Settlement Risks6.
Rule 17Ad-22(d)(6): Cost-Effectiveness7.
Rule 17Ad-22(d)(7): Links8.
Rule 17Ad-22(d)(8): Governance9.
Rule 17Ad-22(d)(9): Information on Services10.
Rule 17Ad-22(d)(10): Immobilization and Dematerialization of SecuritiesCertificates11.
Rule 17Ad-22(d)(11): Default Procedures12.
Rule 17Ad-22(d)(12): Timing of Settlement Finality13.
Rule 17Ad-22(d)(13): Delivery versus Payment14.
Rule 17Ad-22(d)(14): Risk Controls to Address Participants’ Failure to Settle15.
Rule 17Ad-22(d)(15): Physical Delivery RisksIV. Paperwork Reduction ActA.
Overview and Burden Estimate Comparison to Proposing ReleaseB.
Summary of Collection of Information, Use of Information and CommentsReceivedC. Total Initial and Annual Reporting and Recordkeeping BurdensD. Collection of Information is MandatoryE. ConfidentialityV. Economic AnalysisA.
OverviewB.
BaselineC.
Consideration of Costs, Benefits, and the Effect on Efficiency, Competition andCapital FormationVI. Regulatory Flexibility Act CertificationVII. Statutory Authority and Text of Rule 17Ad-22
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