Notice2024-30679
Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Modify the Clearing Agency Operational Risk Management Framework
Primary source
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Published
December 26, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 247 (Thursday, December 26, 2024)</title>
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[Federal Register Volume 89, Number 247 (Thursday, December 26, 2024)]
[Notices]
[Pages 105165-105167]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-30679]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101956; File No. SR-NSCC-2024-012]
Self-Regulatory Organizations; National Securities Clearing
Corporation; Notice of Filing and Immediate Effectiveness of a Proposed
Rule Change To Modify the Clearing Agency Operational Risk Management
Framework
December 18, 2024.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 11, 2024, National Securities Clearing Corporation
(``NSCC'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II
and III below, which Items have been prepared by the clearing agency.
NSCC filed the proposed rule change pursuant to Section 19(b)(3)(A) of
the Act \3\ and Rule 19b-4(f)(4) thereunder.\4\ The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(4).
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I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
The proposed rule change consists of amendments to the Clearing
Agency Operational Risk Management Framework (``ORM Framework'' or
``Framework'') of NSCC and its affiliates The Depository Trust Company
(``DTC'') and Fixed Income Clearing Corporation (``FICC,'' and together
with NSCC and DTC, the ``Clearing Agencies'') in order to reflect
recent changes to group names and make other nonmaterial clarifying
edits.
II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
In its filing with the Commission, the clearing agency included
statements concerning the purpose of and basis for the proposed rule
change and discussed any comments it received on the proposed rule
change. The text of these statements may be examined at the places
specified in Item IV below. The clearing agency has prepared summaries,
set forth in sections A, B, and C below, of the most significant
aspects of such statements.
(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
1. Purpose
The Clearing Agencies adopted the ORM Framework \5\ to provide an
outline for how each of the Clearing Agencies manages its operational
risks. In this way, the Framework supports the Clearing Agencies'
compliance with Rule 17ad-22(e)(17) under the Act,\6\ as described in
the Initial Filing. In addition to setting forth the way each of the
Clearing Agencies addresses these requirements, the ORM Framework also
contains a section titled ``Framework
[[Page 105166]]
Ownership and Change Management'' that, among other matters, describes
the Framework ownership and the required governance process for review
and approval of changes to the Framework.
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\5\ See Securities Exchange Act Release No. 81745 (Sept. 28,
2017), 82 FR 46332 (Oct. 4, 2017) (SR-DTC-2017-014; SR-NSCC-2017-
013; SR-FICC-2017-017) (``Initial Filing'').
\6\ 17 CFR 240.17ad-22(e)(17).
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In connection with the annual review and approval of the Framework
by the Board of Directors of each of the Clearing Agencies, the
Clearing Agencies are proposing to make certain revisions to the
Framework. Such proposed changes would include updating the ORM
Framework to reflect recent changes to group names and making other
nonmaterial clarifying edits. The proposed changes are described in
greater detail below.
i. Proposed Amendments To Update Organizational Name Changes
The Framework is owned and managed by an officer within the
Operational Risk group within the Group Chief Risk Office of DTCC,\7\
who works with the Technology Risk Management group within the Group
Chief Risk Office in administration of the Framework. The Technology
Risk Management group's name has changed to the Cyber Security &
Technology Risk Management group. The proposed changes to the Framework
would reflect the recent organizational name change.
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\7\ The Depository Trust & Clearing Corporation (``DTCC'') is
the parent company of the Clearing Agencies.
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ii. Proposed Changes To Make Nonmaterial Clarifying Edits
The proposed rule change would make additional immaterial edits to
the Framework that include (a) the removal of a defined term not used
in the Framework and therefore unnecessary, and (b) adding additional
context in Section 6 related to data centers. The proposed changes to
Section 6 add context around data centers, specifically the out-of-
region centers, to allow for greater understanding of configurations,
parameters, and limitations. This proposed change also provides
consistency across the Clearing Agencies disclosures. These immaterial
changes do not alter how the Clearing Agencies comply with the
applicable requirements of Rule 17ad-22(e)(17) under the Act.\8\
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\8\ 17 CFR 240.17ad-22(e)(17).
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2. Statutory Basis
The Clearing Agencies believe that the proposed changes are
consistent with Section 17A(b)(3)(F) of the Act \9\ for the reasons
described below.
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\9\ 15 U.S.C. 78q-1(b)(3)(F).
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Section 17A(b)(3)(F) of the Act requires, in part, that the rules
of a registered clearing agency be designed to promote the prompt and
accurate clearance and settlement of securities transactions, and 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.\10\ The proposed changes to update the ORM Framework to
reflect recent changes to group names and making other nonmaterial
clarifying edits would update and clarify the Framework and would make
it more comprehensive in how it describes the methods and tools
currently used by the Clearing Agencies to manage operational risks and
therefore comply with Section 17A(b)(3)(F) of the Act.\11\ By creating
clearer, updated and more comprehensive descriptions, the Clearing
Agencies believe the proposed changes would make the ORM Framework more
effective in providing an overview of the important risk management
activities described therein. Therefore, the Clearing Agencies believe
that the proposed changes are consistent with the requirements of
Section 17A(b)(3)(F) of the Act.\12\
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\10\ Id.
\11\ Id.
\12\ Id.
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(B) Clearing Agency's Statement on Burden on Competition
The Clearing Agencies do not believe that the proposed changes to
the ORM Framework described above would have any impact, or impose any
burden, on competition. The proposed changes would enhance the
Framework by providing additional clarity and accuracy concerning the
Clearing Agencies' operational risk management processes. The proposed
changes to the Framework would not advantage or disadvantage any
participant or user of the Clearing Agencies' services or unfairly
inhibit access to the Clearing Agencies' services. As such, the
Clearing Agencies do not believe that the proposed rule changes would
have any impact on competition.
(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants, or Others
The Clearing Agencies have not received or solicited any written
comments relating to this proposal. If any written comments are
received, they will be publicly filed as an Exhibit 2 to this filing,
as required by Form 19b-4 and the General Instructions thereto.
Persons submitting comments are cautioned that, according to
Section IV (Solicitation of Comments) of the Exhibit 1A in the General
Instructions to Form 19b-4, the Commission does not edit personal
identifying information from comment submissions. Commenters should
submit only information that they wish to make available publicly,
including their name, email address, and any other identifying
information.
All prospective commenters should follow the Commission's
instructions on how to submit comments, available at <a href="https://www.sec.gov/regulatory-actions/how-to-submitcomments">https://www.sec.gov/regulatory-actions/how-to-submitcomments</a>. General questions
regarding the rule filing process or logistical questions regarding
this filing should be directed to the Main Office of the Commission's
Division of Trading and Markets at <a href="/cdn-cgi/l/email-protection#0b7f796a6f62656c6a656f666a79606e7f784b786e68256c647d"><span class="__cf_email__" data-cfemail="3b4f495a5f52555c5a555f565a49505e4f487b485e58155c544d">[email protected]</span></a> or 202-
551-5777.
The Clearing Agencies reserve the right to not respond to any
comments received.
III. Date of Effectiveness of the Proposed Rule Change, and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) \13\ of the Act and paragraph (f) \14\ of Rule 19b-4
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#c9bbbca5ace4aaa6a4a4aca7bdba89baacaae7aea6bf"><span class="__cf_email__" data-cfemail="4133342d246c222e2c2c242f3532013224226f262e37">[email protected]</span></a>. Please include
File Number SR-NSCC-2024-012 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549.
All submissions should refer to File Number SR-NSCC-2024-012. This file
[[Page 105167]]
number should be included on the subject line if email 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 (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change 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
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of NSCC and on
DTCC's website (<a href="http://dtcc.com/legal/sec-rule-filings">dtcc.com/legal/sec-rule-filings</a>). 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 Number SR-NSCC-2024-012 and should be submitted on
or before January 16, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-30679 Filed 12-23-24; 8:45 am]
BILLING CODE 8011-01-P
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