Notice2025-22306
Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Annual Testing of the Recovery and Wind-down Plan
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
December 9, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 234 (Tuesday, December 9, 2025)</title>
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[Federal Register Volume 90, Number 234 (Tuesday, December 9, 2025)]
[Notices]
[Pages 57112-57115]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-22306]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104314; File No. SR-NSCC-2025-016]
Self-Regulatory Organizations; National Securities Clearing
Corporation; Notice of Filing and Immediate Effectiveness of a Proposed
Rule Change Relating to Annual Testing of the Recovery and Wind-down
Plan
December 4, 2025.
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 November 25, 2025, National Securities Clearing Corporation
(``NSCC'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II 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)(6) 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)(6).
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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 modifications to the NSCC
Rules & Procedures (``NSCC Rules'').\5\ The proposed changes would
provide that NSCC has established standards to be taken into account
for designating those ``Members,'' ``Limited Members,'' and ``Settling
Banks,'' as such terms are defined in NSCC Rule 42 (``Wind-down of the
Corporation,'' referred to as the ``Wind-down Rule''), who shall be
required to participate in annual testing of NSCC's recovery and wind-
down plan (``RWP Testing'').\6\ The proposed rule change is intended to
provide consistency with the RWP Testing requirements of Rule 17ad-26
\7\ (``SEC Rule 17ad-26'' or ``Rule 17ad-26'') promulgated under the
Act by the Commission.
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\5\ Terms not otherwise defined herein have the meaning set
forth in the NSCC Rules, available at <a href="http://www.dtcc.com/legal/rules-and-procedures">http://www.dtcc.com/legal/rules-and-procedures</a>.
\6\ Id.
\7\ 17 CFR 240.17ad-26. See Covered Clearing Agency Resilience
and Recovery and Orderly Wind-down Plans, Securities Exchange Act
Release No. 101446 (Oct. 25, 2024), 89 FR 91000 (Nov. 18, 2024) (S7-
10-23) (``Adopting Release'').
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[[Page 57113]]
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 proposed rule change would amend NSCC Rule 2B (Ongoing
Membership Requirements and Monitoring) to provide that NSCC has
established standards for designating those ``Members,'' ``Limited
Members,'' and ``Settling Banks,'' as such terms are defined in NSCC
Rule 42, who shall be required to participate in annual RWP Testing.
Currently, NSCC Rule 2B requires certain NSCC participants to fulfill
certain operational testing requirements that may be imposed by NSCC to
test and monitor the continuing operational capability of the
participants and provides that NSCC has established standards for
designating those participants who shall be required to participate in
annual business continuity and disaster recovery testing. Under the
proposed rule change, similar standards would be added with respect to
participation in RWP Testing.
The Commission promulgated Rule 17ad-26, which requires that plans
for the recovery and orderly wind-down of a covered clearing agency,
such as NSCC, identify and include certain specific elements.\8\ One of
the required elements is to include procedures for testing the covered
clearing agency's ability to implement its recovery and orderly wind-
down plan at least every 12 months, including by requiring the covered
clearing agency's participants and when practicable, other
stakeholders, to participate in such testing.\9\ The Commission
recently approved NSCC's proposed rule change to reflect the
requirements of Rule 17ad-26 in the NSCC Recovery & Wind-down Plan (the
``Plan'' or ``RWP'').\10\ In its filing, NSCC described NSCC's
procedures for testing its ability to implement the Plan at least every
12 months, which included describing the requirement that certain
Members participate in the testing based on specified criteria and,
when practicable, other stakeholders participate as well.\11\ NSCC is
now proposing to amend NSCC Rule 2B, as described above, for purposes
of implementing this aspect of the RWP.
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\8\ Id. SEC Rule 17ad-26 identifies the elements that a covered
clearing agency's plan must contain.
\9\ Id. SEC Rule 17ad-26(a)(8) (Testing).
\10\ See Securities Exchange Act Release No.103221 (June 10,
2025), 90 FR 25414 (June 16, 2025) (SR-NSCC-2025-007).
\11\ Id. Specifically, NSCC stated in its proposed rule change
filing that the R&R Team [Recovery & Resolution Team] would identify
the Member(s) required to participate in the simulation and that
considerations for the Member selection may include, but are not
limited to, (i) account structure, (ii) affiliated family structure,
(iii) business model, (iv) operational details, and (v) Member size
in terms of trading and settlement activity.
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A. Proposal To Amend NSCC Rule 2B To Address Standards for Required
Participation in Annual RWP Testing
The proposed amendments to NSCC Rule 2B would ensure that NSCC's
practices with respect to RWP Testing are consistent with Rule 17ad-
26(a)(8) \12\ and the terms of the RWP by setting forth the standards
NSCC would take into account when designating which Members, Limited
Members, and Settling Banks will be required to participate in any
given year. The proposed rule would provide that the terms ``Members,''
``Limited Members,'' and ``Settling Banks'' would be defined as they
are under the Wind-down Rule.\13\ The participant types captured by
these definitions would be the ones most directly impacted in the event
of an NSCC recovery or orderly wind-down, and whose rights and
obligations are governed by the Wind-down Rule in the event that the
Wind-down Plan is initiated.
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\12\ 17 CFR 240.17ad-26(a)(8).
\13\ Supra note 5.
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The proposed rule change would provide for NSCC's rights to: (i)
designate Members, Limited Members and Settling Banks required to
participate in RWP Testing using considerations such as, but not
limited to, account structure, affiliated family structure, business
model, operational details, and Member, Limited Member and Settling
Bank size, trading and settlement activity; (ii) determine the scope
and reporting out of the results of such RWP Testing; and (iii) require
Members, Limited Members and Settling Banks to comply with such RWP
Testing within specified timeframes. Additionally, the proposed rule
would state that information on Member, Limited Member and Settling
Bank selection as well as key elements of the testing that will be
performed would be provided by NSCC to all relevant stakeholders.
B. Implementation of the Proposal
As noted above, the principal purpose of the proposed rule change
is to provide that NSCC has established standards for designating those
``Members,'' ``Limited Members,'' and ``Settling Banks,'' as such terms
are defined in the Wind-down Rule, who shall be required to participate
in annual testing of NSCC's recovery and wind-down plan, consistent
with the requirements of Rule 17ad-26(a)(8).\14\ The proposed rule
change would help to facilitate implementation of this aspect of the
RWP in a manner consistent with SEC Rule 17ad-26 and the RWP recently
approved by the Commission.\15\ Based on the compliance date of SEC
Rule 17ad-26 established by the Commission, the proposed rule change
would become operative on December 15, 2025.\16\
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\14\ 17 CFR 240.17ad-26(a)(8).
\15\ Supra note 10.
\16\ Supra note 7. As set forth in the Adopting Release, ``[. .
.] (2) the proposed rule changes and the Advance Notices must be
effective by December 15, 2025. These compliance dates provide
sufficient time for CCAs to consider changes to their rules,
policies, and procedures necessary to ensure consistency with the
rules amended and adopted in this release [. . .].''
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2. Statutory Basis
NSCC believes that the proposal is consistent with the requirements
of the Act and the rules and regulations thereunder applicable to a
registered clearing agency. In particular, NSCC believes that the
proposed rule change is consistent with Section 17A(b)(3)(F) of the
Act,\17\ Rule 17ad-22(e)(3)(ii) under the Act,\18\ and Rule 17ad-26
under the Act,\19\ for the reasons described below.
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\17\ 15 U.S.C. 78q-1(b)(3)(F).
\18\ 17 CFR 240.17ad-22(e)(3)(ii).
\19\ 17 CFR 240.17ad-26.
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Section 17A(b)(3)(F) of the Act requires, in part, that the NSCC
Rules be designed to promote the prompt and accurate clearance and
settlement of securities transactions.\20\ As described above, the
proposed rule change would provide that NSCC has established standards
regarding a requirement that Members, Limited Members and Settling
Banks participate in annual RWP Testing, thereby facilitating the
inclusion of participants in RWP Testing. This, in turn, would provide
for effective planning by ensuring their familiarity with NSCC's
processes that would be followed in a recovery or wind-down scenario.
It would also allow for preparatory experience among
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NSCC and participants to enable NSCC to consider whether improvements
need to be made to the RWP or RWP Testing going forward. By providing
effective planning for recovery and orderly wind-down scenarios, the
proposed rule change would help ensure the continuity of NSCC's core
services and for the markets served by NSCC and thereby promote the
prompt and accurate clearance and settlement of securities
transactions. As such, NSCC believes the proposed rule change is
consistent with Section 17A(b)(3)(F) of the Act.\21\
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\20\ 15 U.S.C. 78q-1(b)(3)(F).
\21\ Id.
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Rule 17ad-22(e)(3)(ii) under the Act requires NSCC to 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 plans for the
recovery and orderly wind-down of the covered clearing agency
necessitated by credit losses, liquidity shortfalls, losses from
general business risk, or any other losses.\22\ By ensuring that RWP
Testing is consistent with the requirements of Rule 17ad-26 and how
they are described in the RWP, NSCC believes that the proposed rule
change is designed to support the maintenance of the RWP and, as such,
meets the requirements of Rule 17ad-22(e)(3)(ii) under the Act.
Therefore, the proposed changes would help NSCC to maintain the RWP in
a way that continues to be consistent with the requirements of Rule
17ad-22(e)(3)(ii).\23\
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\22\ 17 CFR 240.17ad-22(e)(3)(ii). NSCC is a ``covered clearing
agency'' as defined in Rule 17ad-22(a)(5) under the Act and must
comply with paragraph (e) of Rule 17ad-22. In 2012, NSCC was
designated a systemically important financial market utility by the
Financial Stability Oversight Council.
\23\ Id.
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Rule 17ad-26 requires the plans for recovery and orderly wind-down
of covered clearing agencies, such as NSCC, to identify and address
certain information that is pertinent to the RWP.\24\ This includes
procedures for testing the covered clearing agency's ability to
implement its recovery and orderly wind-down plan at least every 12
months and requiring the covered clearing agency's participants and,
when practicable, other stakeholders, to participate in such testing.
The proposed rule change would provide in the NSCC Rules the details
regarding a requirement for ``Members,'' ``Limited Members,'' and
``Settling Banks,'' as defined under the Wind-down Rule, to take part
in the annual RWP Testing, thereby strengthening NSCC's compliance with
Rule 17ad-26. As such, NSCC believes the proposed rule change is
consistent with Rule 17ad-26.\25\
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\24\ 17 CFR 240.17ad-26.
\25\ Id.
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(B) Clearing Agency's Statement on Burden on Competition
NSCC does not believe that the proposed rule change would impose
any burden on competition because the proposed rule change would apply
to those NSCC participants that are already subject to similar types of
testing requirements as part of their ongoing memberships and provides
additional opportunities for participants to test their readiness under
the Wind-down Rule in the event an NSCC recovery or orderly wind-down
event were to occur.
(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants, or Others
NSCC has 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="http://www.sec.gov/rules-regulations/how-submit-comment">www.sec.gov/rules-regulations/how-submit-comment</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#2d595f4c4944434a4c4349404c5f4648595e6d5e484e034a425b"><span class="__cf_email__" data-cfemail="3f4b4d5e5b5651585e515b525e4d545a4b4c7f4c5a5c11585049">[email protected]</span></a> or 202-551-5777.
NSCC reserves the right to not respond to any comments received.
III. Date of Effectiveness of the Proposed Rule Change, and Timing for
Commission Action
NSCC has filed the proposed rule change pursuant to Section
19(b)(3)(A) of the Act \26\ and Rule 19b-4(f)(6) \27\ thereunder.
Because the foregoing proposed rule change does not: (i) significantly
affect the protection of investors or the public interest; (ii) impose
any significant burden on competition; or (iii) become operative for 30
days from the date on which it was filed, or such shorter time as the
Commission may designate, it has become effective pursuant to Section
19(b)(3)(A) of the Act \28\ and Rule 19b-4(f)(6) \29\ thereunder.
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\26\ 15 U.S.C. 78(b)(3)(A).
\27\ 17 CFR 240.19b-4(f)(6).
\28\ 15 U.S.C. 78s(b)(3)(A).
\29\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Clearing Agency to give the Commission written notice
of its intent to file the proposed rule change, along with a brief
description and text of the proposed rule change, at least five
business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission. The
Clearing Agency has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \30\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\31\ the Commission
may designate a shorter time if such action is consistent with
protection of investors and the public interest. NSCC has asked the
Commission to waive the 30-day operative delay so that the proposed
rule change may become operative immediately upon filing.
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\30\ 17 CFR 240.19b-4(f)(6).
\31\ 17 CFR 240.19b-4(f)(6)(iii).
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Delay of the operation of the proposed rule change, through the 30-
day delayed operative date, could impede NSCC's timely compliance with
Rule 17ad-26 \32\ and thereby defer the intended benefits and
objectives of such regulatory requirements. This, in turn, could
disrupt market expectations that NSCC will implement the proposed rule
change by the December 15, 2025 compliance date, which may adversely
affect NSCC's ability to ensure participant preparedness for recovery
and orderly wind-down scenarios, evaluate and improve its recovery and
wind-down procedures, and maintain continuity of core services in the
event of a disruption. Therefore, waiving the 30-day operative delay
should facilitate NSCC's timely compliance with Rule 17ad-26 and avert
any potential adverse consequences if such compliance were delayed.
Moreover, the Commission believes the proposed rule change would not
impose any significant burden on competition because it would apply to
those NSCC participants that are already subject to similar types of
testing requirements as part of their
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ongoing memberships. Thus, the proposed rule change, and waiving the
30-day operative delay, should not (i) significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; or (iii) affect the safeguarding of
funds or securities in the custody or control of NSCC or for which it
is responsible. Therefore, the Commission waives the 30-day operative
delay, and designates the proposed rule change as operative upon
filing.\33\
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\32\ Supra note 16.
\33\ For purposes only of waiving the the 30-day operative
delay, the Commission has considered the proposed rule change's
impact on efficiency, competition, and capital formation. See 15
U.S.C. 78c(f).
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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.
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#780a0d141d551b1715151d160c0b380b1d1b561f170e"><span class="__cf_email__" data-cfemail="483a3d242d652b2725252d263c3b083b2d2b662f273e">[email protected]</span></a>. Please include
file number SR-NSCC-2025-016 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-2025-016. This file
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 filing will be available for inspection and
copying at the principal office of NSCC and on DTCC's website (<a href="https://dtcc.com/legal/sec-rule-filings.aspx">https://dtcc.com/legal/sec-rule-filings.aspx</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-2025-016 and should be submitted on or
before December 30, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\34\
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\34\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-22306 Filed 12-8-25; 8:45 am]
BILLING CODE 8011-01-P
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