SEC aims to enhance resilience of covered clearing agencies
The US Securities and Exchange Commission (SEC) recently unveiled a series of proposed rule changes designed to fortify the resilience and recovery capabilities of covered clearing agencies. The measures aim to enhance the integrity of clearing services during times of heightened stress.
SEC Chair, Gary Gensler underscored the critical role played by well-regulated and well-managed clearing houses in mitigating risk for investors, issuers, and the markets as a whole. He expressed his support for the proposal, designed to bolster the resiliency of this vital aspect of market infrastructure.
The proposal encompasses several key requirements. First, it stipulates that covered clearing agencies must establish comprehensive policies and procedures to monitor intraday exposure continuously. This includes equipping them with the authority and operational capacity to make intraday margin calls whenever necessary, such as during breaches of risk thresholds specified by the clearing agency or in response to elevated volatility in cleared products or served markets. Second, the proposal addresses the use of substantive inputs in the risk-based margin system of covered clearing agencies, particularly when such inputs are not readily available or reliable.
Additionally, the proposal introduces a new rule mandating covered clearing agencies to develop robust recovery and wind-down plans, building upon the existing requirement. It outlines nine essential elements that must be incorporated into these plans, further fortifying their effectiveness.
Stakeholders are encouraged to provide their feedback during the public comment period, which will remain open for 60 days following the publication of the proposal on the SEC website or 30 days following its publication in the Federal Register, whichever is longer.
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