Notice2023-25106
Self-Regulatory Organizations; Fixed Income Clearing Corporation; Order Approving Proposed Rule Change Relating to the GSD and MBSD Schedules of Haircuts for Eligible Clearing Fund Securities
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
November 15, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 88 Issue 219 (Wednesday, November 15, 2023)</title>
</head>
<body><pre>
[Federal Register Volume 88, Number 219 (Wednesday, November 15, 2023)]
[Notices]
[Pages 78404-78407]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-25106]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98882; File No. SR-FICC-2023-014]
Self-Regulatory Organizations; Fixed Income Clearing Corporation;
Order Approving Proposed Rule Change Relating to the GSD and MBSD
Schedules of Haircuts for Eligible Clearing Fund Securities
November 8, 2023.
I. Introduction
On September 22, 2023, Fixed Income Clearing Corporation (``FICC'')
filed with the Securities and Exchange Commission (``Commission'')
proposed rule change SR-FICC-2023-014 to modify the GSD and MBSD
Schedules of Haircuts for Eligible Clearing Fund Securities, and to
remove them and the related concentration limits from the respective
Rules, and make other clarifying changes (``Proposed Rule Change''),
pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder.\2\ The Proposed Rule Change
was published for comment in the Federal Register on October 4,
2023.\3\ The Commission has received no comments on the Proposed Rule
Change. For the reasons discussed below, the Commission is approving
the Proposed Rule Change.\4\
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 985925 (Sept. 28,
2023), 88 FR 68803 (Oct. 4, 2023) (File No. SR-FICC-2023-014)
(``Notice of Filing'').
\4\ Capitalized terms not defined herein are defined in the GSD
Rulebook (``GSD Rules''), available at https://www.dtcc.com/~/media/
Files/Downloads/legal/rules/ficc_gov_rules.pdf, or the MBSD Rulebook
(``MBSD Rules''), available at https://www.dtcc.com/~/media/Files/
Downloads/legal/rules/ficc_mbsd_rules.pdf.
---------------------------------------------------------------------------
II. Background
FICC is a central counterparty (``CCP''), which means it interposes
itself as the buyer to every seller and seller to every buyer for the
financial transactions it clears. FICC's Government Securities Division
(``GSD'') provides CCP services for the U.S. Government securities
market, and FICC's Mortgage Backed-Securities Division (``MBSD'')
provides CCP services for the U.S. mortgage-backed securities
markets.\5\ As such, FICC is exposed to the risk that one or more of
its members may fail to make a payment or to deliver securities.
---------------------------------------------------------------------------
\5\ GSD and MBSD maintain separate sets of rules, margin models,
and clearing funds.
---------------------------------------------------------------------------
A key tool that FICC uses to manage its credit exposures to its
members is the daily collection of margin (referred to as ``Required
Fund Deposit'' in the GSD and MBSD Rules) from each member.\6\ The
aggregated amount of all GSD and MBSD members' margin constitutes the
GSD Clearing Fund and MBSD Clearing Fund. The objective of the GSD and
MBSD Clearing Funds is to mitigate potential losses to FICC associated
with liquidating a member's portfolio in the event FICC ceases to act
for that member (hereinafter referred to as a ``default'').\7\ FICC
would be able to access the Clearing Fund should a defaulting member's
own margin be insufficient to satisfy losses to FICC caused by the
liquidation of that member's portfolio.
---------------------------------------------------------------------------
\6\ See GSD Rule 4 and MBSD Rule 4, supra note 4 (requiring
members to make Required Fund Deposits to the GSD and MBSD Clearing
Funds, as applicable, with the amount of each member's deposit being
determined by FICC in accordance with these rules).
\7\ The GSD Rules and MBSD Rules each identify when FICC may
cease to act for a member and the types of actions FICC may take.
For example, FICC may suspend a firm's membership with FICC or
prohibit or limit a member's access to FICC's services in the event
that member defaults on a financial or other obligation to FICC. See
GSD Rule 21 (Restrictions on Access to Services) and MBSD Rule 14
(Restrictions on Access to Services), supra note 4.
---------------------------------------------------------------------------
A member may provide its required margin in the form of cash or an
open account indebtedness secured by Eligible Clearing Fund
Securities.\8\ Eligible Clearing Fund Securities are defined to include
certain agency, mortgage-backed, and Treasury securities.\9\ These
securities are valued based on the prior Business Day's closing market
price, less a haircut, and may be subject to a concentration limit.\10\
FICC states that haircuts are used to protect FICC and its members from
price fluctuations, i.e., if FICC is required to liquidate collateral
of an insolvent member and such collateral is worth less at the time of
liquidation than when it is pledged to FICC.\11\ FICC also states that
concentration limits are intended to reduce FICC's risk by limiting the
percentage of certain types of Eligible Clearing Fund Securities
pledged by members to secure the Clearing Fund deposits, because when a
member's portfolio contains large net unsettled positions in a
particular group of securities with a similar risk profile or in a
particular asset type, such securities could present additional risk to
FICC.\12\
---------------------------------------------------------------------------
\8\ See GSD Rule 4, Section 3 (Form of Deposit) and MBSD Rule 4,
Section 3 (Form of Deposit), supra note 4.
\9\ See GSD Rule 1 and MBSD Rule 1 (defining what constitutes
Eligible Clearing Fund Securities and the components thereof, which
are Eligible Clearing Fund Agency Securities, Eligible Clearing Fund
Mortgage-Backed Securities, and Eligible Clearing Fund Treasury
Securities), supra note 4.
\10\ See GSD Rule 4, Section 3b and MBSD Rule 4, Section 3b,
supra note 4 (referencing the applicability of haircuts and
concentration limits to certain types of Eligible Clearing Fund
Securities).
\11\ Notice of Filing, supra note 3, 88 FR at 68804.
\12\ Id.
---------------------------------------------------------------------------
Currently, collateral haircuts applicable to relevant security
types and remaining maturity terms are specified as fixed percentages
in the Schedule of Haircuts for Eligible Clearing Fund Securities in
the GSD Rules and MBSD Rules.\13\ According to FICC and set forth in
its internal risk management procedures, the sufficiency of collateral
haircuts is evaluated through use of back-tests, stress-tests and
market observations.\14\ Specifically, FICC conducts daily backtesting
analysis by comparing the collateral haircut for each member in
simulated liquidations with the member's actual collateral held on
deposit at FICC.\15\ FICC escalates any exceptions that it observes to
assess the root cause and determine whether further analysis and/or
review would be appropriate, taking into account whether a particular
security may present inherent volatility and/or liquidity risks that
could likely result in an erosion in the value of the security
exceeding the applicable collateral haircut.\16\ On a quarterly basis,
FICC reviews the composition of the Eligible Clearing Fund Securities
that members have pledged to secure their Required
[[Page 78405]]
Fund Deposits in order to assess the sufficiency of the collateral
haircuts applied and whether any haircut changes would be needed,
taking into account backtesting results, any instances where the
simulated losses from available historical stress testing scenario
dates have exceeded the collateral haircut values, and market
conditions.\17\
---------------------------------------------------------------------------
\13\ See Schedule of Haircuts for Eligible Clearing Fund
Securities in the GSD Rules and MBSD Rules, supra note 4. The
Schedule of Haircuts for Eligible Clearing Fund Securities in the
GSD Rules and MBSD Rules was last modified in 2011 in order to
harmonize with the increased haircuts on clearing fund collateral at
the National Securities Clearing Corporation, an affiliate of FICC.
See Securities Exchange Act Release No. 64488 (May 13, 2011), 76 FR
29018 (May 19, 2011) (SR-FICC-2011-03).
\14\ Notice of Filing, supra note 3, 88 FR at 68804. FICC also
filed excerpts from its internal market risk management procedures
as Confidential Exhibit 3b to its filing.
\15\ Id.
\16\ Id.
\17\ Id. at 68804-05.
---------------------------------------------------------------------------
In addition to collateral haircuts, FICC applies concentration
limits to certain Eligible Clearing Fund Securities set forth in the
GSD and MBSD Rules. Under these limits, no more than 20 percent of a
member's Required Fund Deposit may be in the form of Eligible Clearing
Fund Agency Securities that are of a single issuer and no member may
post as eligible collateral Eligible Clearing Fund Agency Securities of
which it is the issuer.\18\ In addition, any deposits of Eligible
Clearing Fund Agency Securities or Eligible Clearing Fund Mortgage-
Backed Securities in excess of 25 percent of a member's Required Fund
Deposit will be subject to a haircut that is twice the amount of the
percentage noted in the haircut schedule, and a member may deposit
Eligible Clearing Fund Mortgage-Backed Securities of which it is the
issuer, however such securities will be subject to a premium haircut,
with the initial haircut being 14 percent, and if a member also exceeds
the 25 percent concentration limit, the haircut shall be 21
percent.\19\
---------------------------------------------------------------------------
\18\ GSD Rule 4, Section 3b(b) and MBSD Rule 4, Section 3c(b),
supra note 4.
\19\ Schedule of Haircuts for Eligible Clearing Fund Securities
in GSD and MBSD Rules, supra note 4.
---------------------------------------------------------------------------
Changes to the collateral haircuts and concentration limits are
subject to FICC's internal governance process.\20\ According to FICC
and based on its internal risk management procedures, if FICC
determines that, based on the analyses that it performs, there is
insufficient/excessive collateral haircut/concentration due to an
identifiable cause that affected multiple members and such cause would
likely persist based on FICC's assessment of market conditions, such
outcome or result could cause FICC to amend the haircuts/concentration
limits in the haircut schedule.\21\ If FICC determines that a change to
the haircut schedule is warranted, it would document the recommendation
and rationale for the change at the time of such determination and
obtain approval from an executive director or above with a notice to
the risk management committee.\22\ Before making adjustments to the
haircut schedule, FICC measures the potential impact of such
adjustments to ensure any impact is both necessary and appropriate.
---------------------------------------------------------------------------
\20\ Notice of Filing, supra note 3, 88 FR at 68805; see also
note 14 supra.
\21\ Id.
\22\ Id.
---------------------------------------------------------------------------
III. Description of the Proposed Rule Change
In the Notice of Filing, FICC states that it has observed that
under volatile market conditions with elevated frequency and magnitude
of securities price movements, the collateral value of Eligible
Clearing Fund Securities may shift in a relatively short period of time
and the current haircuts may not sufficiently account for the change in
value.\23\ When the erosion in the value of the Eligible Clearing Fund
Securities exceeds the relevant haircuts, FICC is exposed to increased
risk of potential losses associated with liquidating a member's
portfolio in the event of a member default when the defaulting member's
own margin is insufficient to satisfy losses to FICC caused by the
liquidation of that member's portfolio.\24\ Similarly, when a member's
portfolio contains large net unsettled positions in a particular group
of securities with a similar risk profile or in a particular asset
type, such securities could present additional risk to FICC.\25\ The
additional risk exposures associated with liquidating a member's
portfolio in the event of a member default could lead to an increase in
the likelihood that FICC would need to mutualize losses among non-
defaulting members during the liquidation process.\26\ However, any
changes to the haircuts and/or concentration limits currently requires
a proposed rule change to be filed with the Commission.
---------------------------------------------------------------------------
\23\ Notice of Filing, supra note 3, 88 FR at 68805.
\24\ Id.
\25\ Id.
\26\ Id.
---------------------------------------------------------------------------
Therefore, to provide FICC with more flexibility in adjusting the
haircuts and concentration limits so FICC can respond to changing
market conditions more promptly in order to mitigate the additional
risk exposure, FICC is proposing to remove the GSD and MBSD Schedules
of Haircuts for Eligible Clearing Fund Securities and concentration
limits from the respective Rules, and to publish the haircuts and
concentration limits in a haircut schedule on FICC's website.\27\
---------------------------------------------------------------------------
\27\ Specifically, FICC is proposing to delete subsections (a),
(b) and (c) of Section 3b (Special Provisions Relating to Deposits
of Eligible Clearing Fund Securities) in GSD Rule 4 and Section 3c
(Special Provisions Relating to Deposits of Eligible Clearing Fund
Securities) in MBSD Rule 4, respectively, to remove all haircuts and
concentration limits from the Rules. FICC is also proposing to
delete a sentence from Section 3b in GSD Rule 4 and Section 3c in
MBSD Rule 4, respectively, that references haircuts set forth in the
Rules, and add a general reference to applicable haircuts.
---------------------------------------------------------------------------
In addition, FICC is proposing to add language in Section 3b in GSD
Rule 4 and Section 3c in MBSD Rule 4, respectively, that makes it clear
that all Eligible Clearing Fund Securities pledged to secure Clearing
Fund deposits shall, for collateral valuation purposes, be subject to a
haircut and may be subject to a concentration limit. The proposed
language would provide that FICC shall determine the applicable
haircuts and any concentration limits from time to time in accordance
with its internal policy and governance process, based on factors
determined to be relevant by FICC, which may include, for example,
backtesting results and FICC's assessment of market conditions, in
order to set appropriately conservative haircuts and/or concentration
limits for the Eligible Clearing Fund Securities and minimize
backtesting deficiency occurrences. The proposed language would also
provide that the haircuts and any concentration limits prescribed by
FICC shall be set forth in a haircut schedule that is published on
FICC's website. The proposed language would also state that it shall be
the member's responsibility to retrieve the haircut schedule, and that
FICC would provide members with at a minimum one Business Day's advance
notice of any change in the haircut schedule.
FICC states that the proposed change to move the haircuts and
concentration limits from the Rules to the website would enable FICC to
adjust the haircuts and concentration limits without undergoing a rule
filing process (although it could still necessitate an advance notice
under Title VIII of the Dodd-Frank Act, if a change materially affects
the nature or level of risks presented by FICC).\28\ FICC states that
by being able to make appropriate and timely adjustments to the
haircuts and concentration limits, it would have the flexibility to
respond to changing market conditions more promptly.\29\ Having the
flexibility to respond to changing market conditions more promptly
would in turn help better ensure that FICC collects sufficient margin
from members as well as risk manages its credit exposures to its
members.\30\
---------------------------------------------------------------------------
\28\ Notice of Filing, supra note 3, 88 FR at 68806 and n. 8
(citing 12 U.S.C. 5465(e)(1) and 17 CFR 240.19b-4(n)(1)(i)).
\29\ Id.
\30\ Id.
---------------------------------------------------------------------------
[[Page 78406]]
In its Notice of Filing, FICC also provides an overview regarding
its changes to the categories relating to Treasury Inflation-Protected
Securities (``TIPS'').\31\ FICC states that, as part of its daily
backtesting regarding the adequacy of collateral haircuts, FICC has
determined that in periods where the inflation rate fluctuates, the
current haircut levels for TIPS have been inadequate to address the
fluctuations from time to time.\32\ This is because TIPS are indexed to
the inflation rate, and prices on TIPS move inversely to their yields,
e.g., when the inflation rate increases, prices on TIPS decrease. When
the decline in market value of TIPS exceeds the haircut for TIPS, FICC
would be exposed to potential liquidation losses.\33\
---------------------------------------------------------------------------
\31\ TIPS are a type of Treasury security issued by the U.S.
government that are indexed to inflation such that the principal
value of the security rises as inflation rises.
\32\ Notice of Filing, supra note 3, 88 FR at 68806.
\33\ Id. Specifically, during the period from September 1, 2021
to August 31, 2022, with TIPS comprising less than 10 percent of the
total collateral value across the GSD and MBSD divisions at FICC,
FICC has observed 29 backtesting deficiencies at FICC, 26 at GSD and
3 at MBSD, where the collateral value that FICC attributed to the
TIPS that were posted by members as margin (inclusive of the
applicable current haircuts) was insufficient to cover the
liquidation of such securities by FICC without incurring a loss. Id.
The 29 backtesting deficiencies represent a sum total of
approximately $9.4 million across four days during the impact study
period, less than 0.1% of the total collateral value at FICC on each
of those days. Id.
---------------------------------------------------------------------------
Accordingly, FICC is planning to address haircuts for TIPS in a
separate category, as opposed to as part of a category also including
Treasury Bills, Notes, and Bonds, and to increase the haircut levels
for TIPS to ensure that the haircut levels would be commensurate with
the particular risk attributes of TIPS.\34\ FICC describes the new TIPS
haircut categories as follows:\35\
---------------------------------------------------------------------------
\34\ Id. FICC also stated that its review of TIPS haircuts at
other registered clearing agencies demonstrate that FICC's current
haircut levels for TIPS are generally lower than the TIPS haircuts
required by other clearing agencies and foreign CCPs, particularly
with respect to maturity ranges of 10 years or longer. Id.
(summarizing and citing various other clearing agency rules).
\35\ Id. FICC also reflected the changes with respect to
haircuts for TIPS on the haircut schedule filed as Exhibit 3c to the
Notice of Filing, which would be posted to its website if the
Proposed Rule Change were approved.
----------------------------------------------------------------------------------------------------------------
Maturity Current (%) Proposed (%)
----------------------------------------------------------------------------------------------------------------
TIPS....................................... Zero to 1 year............... 2.0 2.0
1 year to 2 years............ 2.0 3.0
2 years to 5 years........... 3.0 5.0
5 years to 10 years.......... 4.0 7.0
10 years to 15 years......... 6.0 7.0
15 years or greater.......... 6.0 10.0
----------------------------------------------------------------------------------------------------------------
FICC conducted an impact study for the period from September 1,
2021 through August 31, 2022 (``Impact Study'').\36\ The results of the
Impact Study indicate that, if the haircut changes for TIPS had been in
place, all 29 backtesting deficiencies would have been eliminated.\37\
---------------------------------------------------------------------------
\36\ FICC filed this Impact Study as confidential Exhibit 3a to
the Notice of Filing.
\37\ Notice of Filing, supra note 3, 88 FR at 68807 (also
providing a more detailed summary of the Impact Study).
---------------------------------------------------------------------------
IV. Discussion and Commission Findings
Section 19(b)(2)(C) of the Act \38\ directs the Commission to
approve a proposed rule change of a self-regulatory organization if it
finds that such proposed rule change is consistent with the
requirements of the Act and rules and regulations thereunder applicable
to such organization. After carefully considering the Proposed Rule
Change, the Commission finds that the Proposed Rule Change is
consistent with the requirements of the Act and the rules and
regulations thereunder applicable to FICC. In particular, the
Commission finds that the Proposed Rule Change is consistent with
section 17A(b)(3)(F) \39\ of the Act and Rules 17Ad-22(e)(5) and
(e)(23), each promulgated under the Act.\40\
---------------------------------------------------------------------------
\38\ 15 U.S.C. 78s(b)(2)(C).
\39\ 15 U.S.C. 78q-1(b)(3)(F).
\40\ 17 CFR 240.17Ad-22(e)(5) and (e)(23).
---------------------------------------------------------------------------
A. Consistency With Section 17A(b)(3)(F) of the Act
Section 17A(b)(3)(F) of the Act \41\ requires that the rules of a
clearing agency, such as FICC, be designed to, among other things,
promote the prompt and accurate clearance and settlement of securities
transactions and assure the safeguarding of securities and funds which
are in the custody or control of the clearing agency or for which it is
responsible.\42\ The Commission believes that the Proposed Rule Change
is consistent with section 17A(b)(3)(F) of the Act for the reasons
stated below.
---------------------------------------------------------------------------
\41\ 15 U.S.C. 78q-1(b)(3)(F).
\42\ Id.
---------------------------------------------------------------------------
As stated in Part II supra, a key tool that FICC uses to manage its
credit exposures to its members is the daily collection of margin from
each member described above, and FICC applies haircuts to securities
collected as margin to protect FICC and its members from price
fluctuations, i.e., if FICC is required to liquidate collateral of an
insolvent member and such collateral is worth less at the time of
liquidation than when it is pledged to FICC.
By moving the location where collateral haircuts and concentration
limits are published from FICC's Rules to its website, the Proposed
Rule change would add flexibility for FICC to make timely adjustments
to collateral haircuts and concentration limits during a time of
potentially deteriorating market or other conditions, while preserving
notice requirements to ensure that members are aware of risk management
changes. This added flexibility should allow FICC to continue to ensure
that it can address changing market conditions rapidly and ensure that
it is collecting sufficient margin to cover its credit exposures to
members and minimizing exposures from members with large collateral
positions in a particular group of securities with a similar risk
profile or in a particular asset type.\43\
---------------------------------------------------------------------------
\43\ In addition, the Commission believes that the changes
relating to the haircuts for TIPS would allow FICC to ensure that
the haircut levels would be commensurate with the particular risk
attributes of TIPS, and thereby assure the safeguarding of
securities and funds that are in its custody or control.
---------------------------------------------------------------------------
By helping FICC to collect sufficient margin, the Proposed Rule
Change would better ensure that, in the event of a member default,
FICC's operation of its critical clearance and settlement services
would not be disrupted because of insufficient financial resources.
Accordingly, the Proposed Rule Change should help FICC to continue
providing
[[Page 78407]]
prompt and accurate clearance and settlement of securities
transactions, consistent with section 17A(b)(3)(F) of the Act.\44\
---------------------------------------------------------------------------
\44\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------
Moreover, because the Proposed Rule Change would continue to ensure
that FICC collects sufficient margin from members, it should also help
minimize the likelihood that FICC would have to access the Clearing
Fund, thereby limiting non-defaulting members' exposure to mutualized
losses. By helping to limit the exposure of FICC's non-defaulting
members to mutualized losses, the Proposed Rule Change should help FICC
assure the safeguarding of securities and funds which are in its
custody or control, consistent with section 17A(b)(3)(F) of the
Act.\45\
---------------------------------------------------------------------------
\45\ Id.
---------------------------------------------------------------------------
Finally, the proposed clarifying changes should help to ensure that
FICC's Rules are clear to members. When members better understand their
rights and obligations regarding the Rules, members are more likely to
act in accordance with the Rules, which should promote the prompt and
accurate clearance and settlement of securities transactions. As such,
the proposed clarifying changes are consistent with section
17A(b)(3)(F) of the Act.\46\
---------------------------------------------------------------------------
\46\ Id.
---------------------------------------------------------------------------
B. Consistency With Rule 17Ad-22(e)(5)
Rule 17Ad-22(e)(5) under the Act \47\ requires, in part, a covered
clearing agency to establish, implement, maintain and enforce written
policies and procedures reasonably designed to set and enforce
appropriately conservative haircuts and concentration limits if the
covered clearing agency requires collateral to manage its or its
participants' credit exposure. As described in Part II supra, the
proposed changes to move the collateral haircuts and concentration
limits from FICC's Rules should provide FICC with more flexibility to
respond to changing market conditions because adjustments to the
haircuts and concentration limits would no longer require a rule
change. By being able to make appropriate and timely adjustments to the
haircuts and concentration limits, FICC would have the flexibility to
respond to changing market conditions more promptly. Specifically, FICC
would have the ability to promptly set and enforce conservative
collateral haircuts and concentration limits that are reflective of the
current market conditions. In this way, the proposed changes to move
the collateral haircuts and concentration limits from the Rules to the
website should help FICC set and enforce appropriately conservative
collateral haircuts and concentration limits, consistent with the
requirements of Rule 17Ad-22(e)(5) under the Act.\48\
---------------------------------------------------------------------------
\47\ 17 CFR 240.17Ad-22(e)(5).
\48\ Id.
---------------------------------------------------------------------------
C. Consistency With Rule 17Ad-22(e)(23)
Rule 17Ad-22(e)(23)(i) and (ii) \49\ under the Act requires each
covered clearing agency to establish, implement, maintain, and enforce
written policies and procedures reasonably designed to, among other
things, publicly disclose all relevant rules and material procedures;
and provide sufficient information to enable participants to identify
and evaluate the risks, fees, and other material costs they incur by
participating in the covered clearing agency. Based on its review of
the record, and for the reasons described below, the Commission finds
that the proposed changes, taken together, are consistent with the
requirements of Rule 17Ad-22(e)(23)(i) and (ii).\50\
---------------------------------------------------------------------------
\49\ 17 CFR 240.17Ad-22(e)(23)(i) and (ii).
\50\ Id.
---------------------------------------------------------------------------
By adopting rules that require FICC to provide prior notice through
public disclosures on its website relating to information on collateral
haircuts and concentration limits, FICC's Rules would support the
communication of information that its members may use to identify and
evaluate the haircuts and concentration limits resulting from FICC's
processes. As such, the Proposed Rule Change is consistent with
publicly disclosing all relevant rules and material procedures; and
providing sufficient information to enable participants to identify and
evaluate the risks, fees, and other material costs incurred with
participation in the covered clearing agency. The Commission finds,
therefore, that the Proposed Rule Change is consistent with the
requirements of Rule 17Ad-22(e)(23)(i) and (ii) under the Act.\51\
---------------------------------------------------------------------------
\51\ Id.
---------------------------------------------------------------------------
IV. Conclusion
On the basis of the foregoing, the Commission finds that the
Proposed Rule Change is consistent with the requirements of the Act and
in particular with the requirements of section 17A of the Act \52\ and
the rules and regulations promulgated thereunder.
---------------------------------------------------------------------------
\52\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------
It is therefore ordered, pursuant to section 19(b)(2) of the Act
\53\ that proposed rule change SR-FICC-2023-014, be, and hereby is,
approved.\54\
---------------------------------------------------------------------------
\53\ 15 U.S.C. 78s(b)(2).
\54\ In approving the Proposed Rule Change, the Commission
considered its impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\55\
---------------------------------------------------------------------------
\55\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-25106 Filed 11-14-23; 8:45 am]
BILLING CODE 8011-01-P
</pre></body>
</html>Indexed from Federal Register on November 15, 2023.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.