8011-01P
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100400; File Nos. SR-DTC-2024-003; SR-FICC-2024-006; SR-NSCC-2024003]
Self-Regulatory Organizations; The Depository Trust Company; Fixed Income Clearing
Corporation; National Securities Clearing Corporation; Order Instituting Proceedings to
Determine Whether to Approve or Disapprove a Proposed Rule Change to Amend the
Clearing Agency Risk Management Framework
June 21, 2024.
I.

INTRODUCTION
On March 11, 2024, The Depository Trust Company (“DTC”), Fixed Income Clearing

Corporation (“FICC”), and National Securities Clearing Corporation (“NSCC,” each a “Clearing
Agency,” and collectively, the “Clearing Agencies”), filed with the Securities and Exchange
Commission (“Commission”) proposed rule changes SR-DTC-2024-003, SR-FICC-2024-006,
and SR-NSCC-2024-003, respectively (each, a “Proposed Rule Change, and collectively, the
“Proposed Rule Changes”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(“Act” or “Exchange Act”)1 and Rule 19b-4 thereunder.2 The Proposed Rule Changes were

15 U.S.C. 78s(b)(1).

17 CFR 240.19b-4.

published for comment in the Federal Register on March 26, 2024.3 The Commission has
received comments on the changes proposed.4
On May 14, 2024, pursuant to Section 19(b)(2) of the Exchange Act,5 the Commission
designated a longer period within which to approve, disapprove, or institute proceedings to
determine whether to approve or disapprove the Proposed Rule Change.6 The Commission is
instituting proceedings, pursuant to Section 19(b)(2)(B) of the Exchange Act,7 to determine
whether to approve or disapprove the Proposed Rule Change.
II.

SUMMARY OF THE PROPOSED RULE CHANGE
A. Background
The Clearing Agency Risk Management Framework (“Framework”) provides an outline

for, among other things, how each of the Clearing Agencies comprehensively manages the risks,
including the legal, credit, liquidity, operational, general business, investment, custody, and other
risks, that arise in or are borne by it.
On December 13, 2023, the Commission adopted rules under the Act to amend the
standards applicable to covered clearing agencies providing central counterparty services for
transactions in U.S. Treasury securities to require policies and procedures be reasonably
designed to ensure that the covered clearing agency has appropriate means to facilitate access to

See Securities Exchange Act Release No. 99802 (Mar. 20, 2024), 89 FR 21118 (Mar. 26,
2024) (File No. SR-DTC-2024-003) (“DTC Notice of Filing”); Securities Exchange Act
Release No. 99805 (Mar. 20, 2024), 89 FR 21068 (Mar. 26, 2024) (File No. SR-FICC2024-006) (“FICC Notice of Filing”); Securities Exchange Act Release No. 99803 (Mar.
20, 2024), 89 FR 21091 (Mar. 26, 2024) (File No. SR-NSCC-2024-003)(“NSCC Notice
of Filing”) (collectively, “Notices of Filing”).

Specifically, the Commission received comments on the FICC Notice of Filing, and the
comments are available at https://www.sec.gov/comments/sr-ficc-2024006/srficc2024006.htm.

15 U.S.C. 78s(b)(2).

See Notices of Filing, supra note 3.

15 U.S.C. 78s(b)(2)(B).

clearance and settlement services of all eligible secondary market transactions in U.S. Treasury
securities, including those of indirect participants.8 The adopted rules also require that these
policies and procedures be reviewed annually by the board of directors of such covered clearing
agencies for U.S. Treasury securities.9 Currently, FICC is the only Clearing Agency providing
clearance and settlement services to the U.S. Treasury securities market.
B. Proposed Rule Changes
The Proposed Rule Changes would amend the Framework to: (i) describe generally
Clearing Agency participant and industry stakeholder outreach in the development and
evaluation of new programs or risk management practices; (ii) provide for the annual review of
FICC’s Government Securities Division (“GSD”) access models by FICC’s Board of Directors;
and (iii) make other conforming and clean up changes to the text of the Framework. Other than
those described in (iii), these changes would be set forth in a new section 3.4 “Solicitation of
Participant and Stakeholder Views,” consisting of two subsections described below.
First, new subsection 3.4.1 (General Solicitation of Views) would codify an existing
practice, that is, that the Clearing Agencies routinely solicit their participants’ and other industry
stakeholders’ views when developing and evaluating products, services, or risk management
practices so they may best meet the industry’s needs.10 This new subsection would describe
several ways that the Clearing Agencies may seek the views of participants and stakeholders,
including, but not limited to, targeted outreach to firms expected to be impacted by a proposal,
widely distributed surveys, ad hoc forums, and standing and temporary advisory councils

See Securities Exchange Act Release No. 99149 (Dec. 13, 2023), 89 FR 2714 (Jan. 16,
2024) (S7-23-22) (Standards for Covered Clearing Agencies for U.S. Treasury Securities
and Application of the Broker-Dealer Customer Protection Rule with Respect to U.S.
Treasury Securities).

17 CFR 240.17Ad-22(e)(18)(iv)(C).

See DTC Notice of Filing, supra note 3, 89 FR at 21119; FICC Notice of Filing, supra
note 3, 89 FR at 21069; NSCC Notice of Filing, supra note 3, 89 FR at 21092.

assembled to consider issues relevant to a proposal. The subsection would also identify the
stakeholders that may participate in such advisory councils, including for example,
representatives from transfer agents, liquidity providers, market infrastructures, institutional and
retail investors, customers of the Clearing Agencies’ participants, securities issuers, and
securities holders. The Clearing Agencies state that the proposed changes in sub-section 3.4.1 do
not create any particular obligation for the Clearing Agencies to conduct such outreach in any
circumstance.11
Second, the Clearing Agencies proposed new sub-section 3.4.2 (Required Solicitation of
Views – Annual Review of GSD Access Models) in connection with the recently adopted
requirement, noted above, that the Board of Directors of all covered clearing agencies serving the
U.S. Treasury securities market conduct an annual review of their policies and procedures to
ensure that they have appropriate means to facilitate access to clearance and settlement services
of all eligible secondary market transactions in U.S. Treasury securities, including those of
indirect participants. To address the new requirement, the new subsection would provide that
FICC would establish an advisory council which would assist in the annual review of GSD’s
access models. The advisory council will be comprised of participants, their customers, and other
industry stakeholders. This annual advisory council review of GSD’s access models would
precede an annual review of GSD’s access models by the FICC Board, which would also be
required by this new subsection.12 The new subsection would require that the annual review
include the following: (1) document any instance in which FICC treats transactions differently
and confirm that any variation in treatment is both necessary and appropriate; (2) consider
whether to enable GSD’s Netting Members to submit eligible transactions for clearance and
settlement that have been executed by two indirect participants of FICC/GSD (“done-away”); (3)

Id.

17 CFR 240.17Ad-22(e)(18)(iv)(C).

consider the volumes and proportion of the markets that are being centrally cleared through
different access models; and (4) consider whether it is appropriate to develop and propose an
additional category or categories of Netting Members to the GSD Rules to reflect the types of
legal entities that applied to be a Netting Member over the prior 12 months and did not fit into
one of the existing Netting Member categories.
i.

Other Conforming and Clean Up Changes
Third, the Proposed Rule Changes would make other conforming, non-substantive

changes to the release to reflect the inclusion of the new subsections described above and to
remove the defined term “Management Committee” wherever referenced and replace it with
“senior management committee” while maintaining the current makeup and responsibilities of
the current Management Committee, as described in the Framework. The Clearing Agencies
state that the Proposed Rule Changes would allow the Framework to continue to be accurate
notwithstanding any future name changes to the committee.13 Other minor grammatical and
clean up changes would also be made to the Framework.
III.

PROCEEDINGS TO DETERMINE WHETHER TO APPROVE OR
DISAPPROVE THE PROPOSED RULE CHANGE AND GROUNDS FOR
DISPPROVAL UNDER CONSIDERATION
The Commission is instituting proceedings pursuant to Section 19(b)(2)(B) of the

Exchange Act to determine whether the Proposed Rule Changes should be approved or
disapproved.14 Institution of proceedings is appropriate at this time in view of the legal and
policy issues raised by the Proposed Rule Changes. Institution of proceedings does not indicate
that the Commission has reached any conclusions with respect to any of the issues involved.
Rather, the Commission seeks and encourages interested persons to comment on the Proposed

See DTC Notice of Filing, supra note 3, 89 FR at 21120; FICC Notice of Filing, supra
note 3, 89 FR at 21070; NSCC Notice of Filing, supra note 3, 89 FR at 21093.

15 U.S.C. 78s(b)(2)(B).

Rule Changes, which would provide the Commission with arguments to support the
Commission’s analysis as to whether to approve or disapprove the Proposed Rule Changes.
Pursuant to Section 19(b)(2)(B) of the Exchange Act,15 the Commission is providing
notice of the grounds for disapproval under consideration. The Commission is instituting
proceedings to allow for additional analysis of, and input from commenters with respect to, the
Proposed Rule Changes’ consistency with Section 17A of the Exchange Act16 and the rules
thereunder, including the following provisions:
•

Section 17A(b)(3)(F) of the Exchange Act,17 which requires, among other things, that the
rules of a clearing agency are designed to promote the prompt and accurate clearance and
settlement of securities transactions, to assure the safeguarding of securities and funds
which are in the custody or control of the clearing agency or for which it is responsible,
as well as to foster cooperation and coordination with persons engaged in the clearance
and settlement of securities transactions; and to protect investors and the public interest;

•

Rule 17ad-22(e)(2) under the Exchange Act,18 which requires that a covered clearing
agency establish, implement, maintain, and enforce written policies and procedures
reasonably designed to provide for governance arrangements that: (i) are clear and
transparent; (ii) clearly prioritize the safety and efficiency of the covered clearing agency;
(iii) support the public interest requirements in Section 17A of the Exchange Act (15
U.S.C. 78q-1) applicable to clearing agencies, and the objectives of owners and
participants; (iv) establish that the board of directors and senior management have
appropriate experience and skills to discharge their duties and responsibilities; (v) specify

Id.

15 U.S.C. 78q-1.

15 U.S.C. 78q-1(b)(3)(F).

17 CFR 240.17ad-22(e)(2).

clear and direct lines of responsibility; and (vi) consider the interests of participants'
customers, securities issuers and holders, and other relevant stakeholders of the covered
clearing agency;
•

Rule 17ad-22(e)(3)(i) under the Exchange Act,19 which requires that a covered clearing
agency establish, implement, maintain, and enforce written policies and procedures
reasonably designed to maintain a sound risk management framework for
comprehensively managing legal, credit, liquidity, operational, general business,
investment, custody, and other risks that arise in or are borne by the covered clearing
agency, which includes risk management policies, procedures, and systems designed to
identify, measure, monitor, and manage the range of risks that arise in or are borne by the
covered clearing agency, that are subject to review on a specified periodic basis and
approved by the board of directors annually;

•

Rule 17ad-22(e)(18)(iv)(C) under the Exchange Act,20 which requires that a covered
clearing agency establish, implement, maintain, and enforce written policies and
procedures reasonably designed to ensure that it has appropriate means to facilitate access
to clearance and settlement services of all eligible secondary market transactions in U.S.
Treasury securities, including those of indirect participants, which policies the U.S.
Treasury securities covered clearing agency board of directors reviews annually; and,

•

Rule 17ad-25(j) of the Exchange Act,21 which requires each registered clearing agency
establish, implement, maintain and enforce written policies and procedures reasonably
designed to solicit, consider, and document its consideration of the views of participants

17 CFR 240.17ad-22(e)(3)(i).

17 CFR 240.17ad-22(e)(18)(iv)(C).

17 CFR 240.17ad-25(j)

and other relevant stakeholders of the registered clearing agency regarding material
developments in its governance and operations on a recurring basis.
IV.

PROCEDURE: REQUEST FOR WRITTEN COMMENTS
The Commission requests that interested persons provide written submissions of their

views, data, and arguments with respect to the issues identified above, as well as any other
concerns they may have with the Proposed Rule Changes. In particular, the Commission invites
the written views of interested persons concerning whether the Proposed Rule Changes are
consistent with Section 17A(b)(3)(F)22 and Rules 17Ad-22(e)(2), 17ad-22(e)(3)(i), 17ad22(e)(18)(iv)(C), and 17ad-25(j)23 of the Exchange Act, or any other provision of the Exchange
Act, or the rules and regulations thereunder. Although there do not appear to be any issues
relevant to approval or disapproval that would be facilitated by an oral presentation of views,
data, and arguments, the Commission will consider, pursuant to Rule 19b-4(g) under the
Exchange Act,24 any request for an opportunity to make an oral presentation.25
The Commission asks that commenters address the sufficiency of FICC’s statements in
support of the Proposed Rule Changes, which are set forth in the Notices of Filing26 in addition
to any other comments they may wish to submit about the Proposed Rule Changes.

15 U.S.C. 78q-1(b)(3)(F).

17 CFR 240.17ad-22(e)(2), (e)(3)(i), and (e)(18)(iv)(C), and 17 CFR 240.17ad-25(j).

17 CFR 240.19b-4(g).

Section 19(b)(2) of the Exchange Act grants to the Commission flexibility to determine
what type of proceeding—either oral or notice and opportunity for written comments—is
appropriate for consideration of a particular proposal by a self-regulatory organization.
See Securities Act Amendments of 1975, Senate Comm. on Banking, Housing & Urban
Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975).

See Notice of Filing, supra note 3.

Comments may be submitted by any of the following methods:
Electronic Comments:
•

Use the Commission’s internet comment form
(http://www.sec.gov/rules/sro.shtml); or

•

Send an e-mail to rule-comments@sec.gov. Please include file numbers SR-DTC-2024003; SR-FICC-2024-006; SR-FICC-2024-003 on the subject line.

Paper Comments:
•

Send paper comments in triplicate to Secretary, Securities and Exchange Commission,
100 F Street, NE, Washington, DC 20549-1090.
All submissions should refer to file numbers SR-DTC-2024-003; SR-FICC-2024-006;

SR-FICC-2024-003. This file number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently, please use only one
method. The Commission will post all comments on the Commission’s Internet website
(https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the Proposed Rule Changes that are filed with the
Commission, and all written communications relating to the Proposed Rule Changes between the
Commission and any person, other than those that may be withheld from the public in
accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and
printing in the Commission’s Public Reference Room, 100 F Street, NE, Washington, DC 20549
on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will
be available for inspection and copying at the principal office of FICC and on FICC’s website
(www.dtcc.com/legal/sec-rule-filings).
Do not include personal identifiable information in submissions; you should submit only
information that you wish to make available publicly. We may redact in part or withhold entirely
from publication submitted material that is obscene or subject to copyright protection.

All submissions should refer to File Numbers SR-DTC-2024-003; SR-FICC-2024-006;
SR-FICC-2024-003 and should be submitted on or before [INSERT DATE 21 DAYS AFTER
DATE OF PUBLICATION IN THE FEDERAL REGISTER]. Rebuttal comments should be
submitted by [INSERT DATE 35 DAYS AFTER DATE OF PUBLICATION IN THE
FEDERAL REGISTER].
For the Commission, by the Division of Trading and Markets, pursuant to delegated
authority.27
Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-14064 Filed: 6/26/2024 8:45 am; Publication Date: 6/27/2024]

17 CFR 200.30-3(a)(31).