Notice2026-02800
Self-Regulatory Organizations; CME Securities Clearing Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify the CME Securities Clearing Inc. Rules and Incorporate CME Securities Clearing Inc. Procedures Into the Rules
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
February 12, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 91 Issue 29 (Thursday, February 12, 2026)</title>
</head>
<body><pre>
[Federal Register Volume 91, Number 29 (Thursday, February 12, 2026)]
[Notices]
[Pages 6669-6681]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-02800]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104784; File No. SR-CMESC-2026-001]
Self-Regulatory Organizations; CME Securities Clearing Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Modify the CME Securities Clearing Inc. Rules and Incorporate CME
Securities Clearing Inc. Procedures Into the Rules
February 9, 2026.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on January 29, 2026, CME Securities Clearing Inc. (``CMESC'')
filed with the Securities and Exchange Commission (``SEC'' or
``Commission'') the proposed rule change described in Items I, II, and
III below, which Items have been substantially prepared by CMESC. CMESC
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.
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
I. CMESC's Statement of the Terms and Substance of the Proposed Rule
Change
The proposed rule change consists of non-substantive modifications
to the CMESC Rulebook (the ``Rules'') \5\ to incorporate existing
provisions in the Procedures of CMESC into the Rules; clarify CMESC's
intentions in a small number of Rules; and make wordsmithing
corrections, clarifications, and technical changes to improve clarity
and consistency of the Rules. Almost all of the revisions relate to
relocating CMESC's existing provisions in its Procedures to
corresponding Rules, along with certain non-substantive drafting
changes, including clarification changes, related thereto. The proposed
clarification changes include, notably, revising: (i) the definition of
``Bank'' in Rule 101 to confirm CMESC's intention implicit in the Rules
that CMESC will hold margin collateral, including margin collateral of
Supported Users of Members that are broker-dealers, in a banking
institution that meets the definition of ``Bank'' in Section 3(a)(6) of
the Exchange Act, consistent with the requirements of Note H to Rule
15c3-3a under the Act; (ii) paragraph (b)(ii) of Rule 510, Withdrawal
of Margin, to confirm CMESC's intention that it may only reject a
request pursuant to Rule 510(a) to withdraw excess collateral by a
Member on behalf of a Supported User or by an Independent User for
reasons related to risk considerations with respect to such User, as
reasonably determined by CMESC in its sole judgment and that it will
hold unreturned excess margin subject to the requirements generally for
holding margin, including, as applicable, requirements under Rule 513
applicable to margin deposited for Supported Users authorized by
Members that are broker-dealers, consistent with the requirements of
Note H to Rule 15c3-3a under the Act and for Supported Users authorized
by Members that are not broker-dealers; and (iii) paragraph (c) of Rule
1004, Hearing, to clarify that CMESC will provided at least three (3)
Business Days advance notice of the time and place of a hearing by
changing three (3) calendar days to three (3) Business Days. CMESC
filed Exhibit 5 to this filing showing the text of the proposed
amendments to the CMESC's Rules.
---------------------------------------------------------------------------
\5\ Capitalized terms used herein and not defined shall have the
meanings assigned to such terms in the Rules, as applicable,
available at <a href="https://www.cmegroup.com/rulebook/CMESC/CMESC%20Rulebook.pdf">https://www.cmegroup.com/rulebook/CMESC/CMESC%20Rulebook.pdf</a>.
---------------------------------------------------------------------------
II. CME's Statement of the Purpose of, and Statutory Basis for the
Proposed Rule Change
In its filing with the Commission, CMESC 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. CMESC has prepared summaries, set forth in Sections A,
B, and C below, of the most significant aspects of such statements.
(A) CMESC's Statement of the Purpose of, and Statutory Basis for the
Proposed Rule Change
1. Purpose
CMESC is proposing certain changes to its Rules, which are
reflected in Exhibit 5 to this filing, to incorporate existing
provisions in the Procedures of CMESC into the Rules; clarify CMESC's
intentions in a small number of Rules; and make wordsmithing
corrections, clarifications, and technical changes to improve clarity
and consistency of the Rules. The table below lists each Rule to which
CMESC is proposing changes, describes the proposed changes, and
indicates the types of changes, i.e., whether the changes are in the
nature of clarification, correction or technical, or incorporation of
Procedures into the Rules.
----------------------------------------------------------------------------------------------------------------
Rule Proposed change Change type
----------------------------------------------------------------------------------------------------------------
Rule 101, Definition of ``Bank''........ Revised the definition of ``Bank'' to Clarification.
confirm CMESC's intention implicit in the
Rules that CMESC will hold margin
collateral of Supported Users of Members
that are broker-dealers consistent with
the requirements of Note H to Rule 15c3-
3a under the Act. Specifically, CMESC
proposes expanding the definition to
state that the term ``Bank'' means ``any
U.S. Federal Reserve Bank or any `bank'
within the meaning of that term as
defined in section 3(a)(6) of the Act
that is insured by the Federal Deposit
Insurance Corporation,'' so designated by
the Corporation as a bank where the
Corporation maintains one or more
accounts in which it holds margin assets
and/or makes and receives payments in
satisfaction of Outstanding Exposure
Settlement.
Rule 101, Definitions of ``CME'' and Moved definitions of ``CME'' and ``CME Correction.
``CME Group''. Group'' to be above the definition for
Cooling Off Period to conform with the
alphabetical order.
Rule 101, Definition of ``Cooling Off Changed the format of the cross-reference Technical.
Period''. to combine the subparagraph with the
Rule; relocated this definition after the
definition of ``CME Group'' to be in
alphabetical order.
Rule 101, Definition of ``Controlling Changed the format of the cross-reference Technical.
Management''. to combine the subparagraph with the Rule.
Rule 101, Definition of ``Daily Margin Added ``and/'' before ``or Supported User Clarification.
Report''. Account'' for clarity.
[[Page 6670]]
Rule 101, Definition of ``Default Changed the format of the cross-reference Technical.
Assessment''. to combine the subparagraph with the Rule.
Rule 101, Definition of ``Eligible Changed the format of the cross-reference Technical.
Secondary Market Transaction''. to combine the subparagraph with the Rule.
Rule 101, Definition of ``Haircut Removed the first reference to ``excess of Correction.
Collateral''. the'' value to correct an inadvertent
error.
Rule 101, Definition of ``Head of Added ``the'' between ``head of'' and Technical.
Corporation''. ``Corporation''.
Rule 101, Definition of ``Interest Rate Changed ``clearing and settlement'' to Clarification.
Securities Clearing Service''. ``clearance and settlement'' to be
consistent with the statutory language in
Section 17A of the Act.
Rule 101, Definition of ``Procedures''.. Changed ``the Procedures of the Clarification
Corporation adopted'' to ``any Procedures
the Corporation may adopt'' to reflect
that the Procedures have been removed,
but may be adopted later.
Rule 101, Definition of ``Required Changed the format of the cross-reference Technical.
Guaranty Fund Contribution''. to combine the subparagraph with the Rule.
Rule 101, Definition of ``Securities Added definition for ``Securities Clearing Clarification.
Clearing System''. System'' as a result of incorporation of
Procedures into the Rules: ``The term
`Securities Clearing System' means the
clearing system utilized by the
Corporation''.
Rule 201(b)............................. Added language from Procedure 2-1(b): Incorporation of Procedure
``via an Advisory'' and ``, and the 2-1(b) to Rule 201(b).
Corporation shall state the reasons for
such discontinuance''.
Rule 201(c)............................. Revised existing Rule 201(c) to reflect Incorporation of Procedure
language from Procedure 2-1(a) regarding 2-1(a) to Rule 201(c).
maintenance of the master file listing of
Eligible Securities Transactions.
Rule 202(b)............................. Changed ``clearing and settlement'' to Clarification.
``clearance and settlement'' to be
consistent with the statutory language in
Section 17A of the Act.
Rule 202(c)............................. Deleted reference to ``Procedures'' to Clarification and
reflect removal of the Procedures and Technical.
collapsing the same into the Rulebook.
Changed the format of the cross-references
to combine the subparagraphs with the
Rules.
Rule 202(d)............................. Revised existing Rule 202(d) to be split Incorporation of
into four subparts, (i)-(iv). Subpart (i) Procedures 2-2(a)-(e) as
retains language from the existing Rule Rules 202(d)(i)-(iv).
202(d) and adds language from Procedure 2-
2(a).
New subparts (ii)-(v) are derived from
Procedures 2-2(b)-(e) regarding periodic
review of Members to monitor compliance
with obligations under proposed Rule
202(b).
The provision regarding Members' full
cooperation with any inquiry,
investigation or review conducted by the
Corporation in existing Rule 202(d) was
combined with Procedure 2-2(d) regarding
Member's obligation to cooperate and the
Corporation's authority to take
disciplinary action against a Member for
its failure to cooperate, as new Rule
202(d)(iv).
Rule 302(a)(iv)......................... Corrected cross-reference regarding Correction and Technical.
satisfaction of minimum net asset
requirements from Rule 306(b)(v) to
(b)(iv) and changed the format of the
cross-reference to combine the
subparagraph with the Rule.
Rule 302(b)(iii)........................ Replaced a comma with a semicolon as a Technical.
technical grammatical change.
Rule 302(c)............................. Revised existing Rule 302(c) to Incorporation of Procedure
incorporate language from Procedure 3-3 3-3 to Rule 302(c).
regarding the requirement of Risk
Management Committee's approval with
respect to new categories of Members and
Users at Committee's discretion.
Rule 303(a)(i).......................... Added language to existing Rule 303(a)(i) Incorporation of Procedure
from Procedure 3-1(a) to clarify that the 3-1(a) to Rule 303(a)(i).
Corporation offers the Interest Rate
Securities Clearing Service and persons
must be approved as Members/Users to use
that service.
Rule 303(a)(ii)......................... Changed reference to ``Applications'' to Incorporation of Procedure
be ``An application'' in the first 3-1(a)(i) to Rule
sentence for clarity. 303(a)(ii).
Added language to Rule 303(a)(ii) from
Procedure 3-1(a)(i) to clarify that
Member Applications shall be filed
electronically or via email and the
Corporation may amend the Member
Application and require additional
information from applicants ``from time
to time''.
Rule 303(a)(iii)........................ Changed references to ``Applications'' to Clarification.
be ``An application'' in two places for
clarity.
Added language to Rule 303(a)(iii) from Incorporation of Procedure
Procedure 3-1(a)(i) to clarify that a 3-1(a)(ii) to Rule
User Application shall be filed with the 303(a)(iii).
Corporation electronically or via email
and the Corporation may amend User
Application and require additional
information from applicants ``from time
to time''.
Corrected the cross-reference to Rule Correction and Technical.
303(b) to Rule ``303(c)'' regarding a
Member's verification of due diligence on
authorized User applicant and changed the
format of the cross-reference to combine
the subparagraph with the Rule.
Rule 303(a)(iv)......................... Incorporated Procedure 3-1(a)(iii) into Incorporation of Procedure
Rule 303(a) as new Rule 303(a)(iv) 3-1(a)(iii) as Rule
regarding information and materials 303(a)(iv).
Members are required to provide to
Corporation if the Member is seeking to
nominate and authorize persons as Users
and added a heading ``Member
Authorization of User''.
Rule 303(e)............................. Revised Rule 303(e) to conform with Incorporation of
Procedures 3-1(a)(i)-(ii) regarding Procedures 3-1(a)(i)-(ii)
recommendation for approval or and 3-1(b) to Rule
disapproval to Risk Management Committee, 303(e).
which shall approve or disapprove
applications, and also with Procedure 3-
1(b) which provides that the Corporation
is not subject to any timeframe for
approving or disapproving applications.
Rule 303(f)............................. Revised Rule 303(f) to conform with Incorporation of
Procedures 3-1(a)(i)-(ii) to clarify that Procedures 3-1(a)(i)-(ii)
application denial determinations are to Rule 303(f).
ultimately made by the Risk Management
Committee.
Changed the format of the cross-reference Technical.
to combine the subparagraph with the Rule.
Rule 303(g)............................. Added Rule 303(g) from Procedure 3-1(c) Incorporation of Procedure
regarding the ``Conditions for Approval'' 3-1(c) as Rule 303(g).
by the Corporation of a Member's or
User's application.
Rule 303(h)............................. Added Rule 303(h) from Procedure 3-1(d) Incorporation of Procedure
providing that Approved Applicants must 3-1(d) as Rule 303(h).
fulfill all conditions associated with
their approval within the timeframe
established by the Corporation.
Rule 303(i)............................. Added Rule 303(i) from Procedure 3-1(e) Incorporation of Procedure
providing that Member or User status does 3-1(e) as Rule 303(i).
not confer any ``participant'' or
``member'' or comparable status with any
Affiliate of the Corporation.
Rule 303(j)............................. Added Rule 303(j) from Procedure 3-2(d) Incorporation of Procedure
regarding an Approved Applicant's 3-2(d) as Rule 303(j).
completion of satisfactory operational
testing and other requirements or
conditions imposed by the Corporation.
Rule 305(a)(i).......................... Deleted reference to ``Procedures'' to Clarification and
reflect the removal of the Procedures and Technical.
collapsing the same into the Rulebook.
Also removed a comma after ``By-Laws'' as
a grammatical correction.
Rules 305(a)(ii)-(v).................... Deleted reference to ``Procedures'' to Clarification and
reflect the removal of the Procedures and Technical.
collapsing the same into the Rulebook.
Also removed a comma after ``By-Laws''
and added ``and'' before ``Rules'' as
grammatical corrections.
[[Page 6671]]
Rule 305(a)(xi)......................... Deleted reference to ``Procedures'' to Clarification and
reflect the removal of the Procedures and Technical.
collapsing the same into the Rulebook.
Also removed a comma after ``By-Laws''
and added ``or'' before ``Rules'' as
grammatical corrections. Also added
``to'' between ``right'' and
``withdraw.'' Finally, deleted a comma
after ``withdraw as a Member''.
Rules 305(a)(xiii)-(xiv)................ Deleted reference to ``Procedures'' to Clarification.
reflect the removal of the Procedures and
collapsing the same into the Rulebook.
Rules 305(b)(i)-(v)..................... Deleted reference to ``Procedures'' to Clarification and
reflect the removal of the Procedures and Technical.
collapsing the same into the Rulebook.
Also removed a comma after ``By-Laws''
and added ``and'' before ``Rules as
grammatical corrections.
Rule 305(b)(ix)......................... Deleted reference to ``Procedures'' to Clarification and
reflect the removal of the Procedures and Technical.
collapsing the same into the Rulebook.
Also removed a comma after ``By-Laws''
and added ``or'' before ``Rules'' as
grammatical corrections.
Rule 305(c)............................. Deleted references to ``Procedures'' to Clarification.
reflect the removal of the Procedures and
collapsing the same into the Rulebook.
Rule 305(d)............................. Added Rule 305(d) from Procedure 3-2(a) Incorporation of Procedure
regarding the terms and conditions 3-2(a) as Rule 305(d).
binding on each Member and User, and the
requirement for applicants to sign the
same during the application process.
Rule 305(e)............................. Added Rule 305(e) from Procedure 3-2(b) Incorporation of Procedure
regarding an Approved Applicant's receipt 3-2(b) as Rule 305(e).
of the executed copy of the Agreement and
notification of acceptance, among other
things, upon granting of Member or User
status.
Rule 306(a)............................. Deleted reference to ``Procedures'' to Clarification.
reflect the removal of the Procedures and
collapsing the same into the Rulebook.
Rule 306(a)(i).......................... Changed the format of the cross-reference Technical.
to combine the subparagraph with the Rule.
Capitalized ``Default Assessment'' to Clarification.
reflect that it is a defined term.
Rule 306(b)(iv)......................... Deleted ``(y),'' which was an inadvertent Correction.
remnant of a prior revision.
Rule 306(b)(v).......................... Corrected cross-reference to ``(b)(i) Correction.
through (b)(v)'' (of Rule 306) to
``(b)(i) through (b)(iv)''.
Changed the format of the cross-reference Technical.
to combine the subparagraphs with the
Rule.
Rule 306(b)(vi)......................... Removed an ``s'' from ``Members''......... Technical.
Rule 306(c)(i)(C)....................... Corrected the cross-reference to Rule 311 Correction.
to be Rule 313.
Rule 306(c)(iii)........................ Moved introductory paragraph to Rule Incorporation of Procedure
306(c)(iii)(A) and added language 3-6(a) to Rule
regarding a Member's User Due Diligence 306(c)(iii).
Policies to reflect Procedure 3-6(a).
Rules 306(c)(iii)(A)(a)-(g)............. Changed lettering of Rules 306(c)(iii)(A)- Technical.
(G) to be Rules 306(c)(iii)(a)-(g).
Rule 306(c)(iii)(B)..................... Added Rule 306(c)(iii)(B) from Procedure 3- Incorporation of Procedure
6(b) regarding the requirement that a 3-6(b) as Rule
Member conduct due diligence of each 306(c)(iii)(B).
applicant for User status the Member
nominates.
Changed the format of the cross-reference Technical
to combine the subparagraph with the Rule.
Rule 306(c)(iii)(C)..................... Added Rule 306(c)(iii)(C) from Procedure 3- Incorporation of Procedure
6(c) regarding the requirement that a 3-6(c) as Rule
Member conduct routine periodic due 306(c)(iii)(C).
diligence of its authorized Users.
Rule 306(d)............................. Deleted reference to ``Procedures'' to Clarification.
reflect the removal of the Procedures and
collapsing the same into the Rulebook.
Removed ``Chapter,'' which was a typo..... Correction.
Rule 307(a)............................. Deleted reference to ``Procedures'' to Clarification.
reflect the removal of the Procedures and
collapsing the same into the Rulebook.
Rule 307(d)............................. Deleted reference to ``Procedures'' to Clarification.
reflect the removal of the Procedures and
collapsing the same into the Rulebook.
Removed ``Chapter,'' which was a typo..... Technical.
Rule 308(a)(iii)........................ Changed the format of the cross-reference Technical.
to combine the subparagraph with the Rule.
Rule 308(c)............................. Added ``and/'' before ``or operational Clarification.
capability'' to clarify that the
Corporation maintains the discretion to
obtain both adequate assurances of the
applicant's financial responsibility and
operational capability from the applicant.
Changed the format of the cross-reference Technical.
to combine the subparagraph with the Rule.
Rules 309(a)-(b), (b)(v)-(vi), (c)...... Changed the format of the cross-references Technical.
to combine the subparagraphs with the
Rules.
Rule 309(b)............................. Corrected cross-references to Rule Correction.
309(b)(i)--(b)(v) to be ``(b)(i) through
(b)(viii)'' to reflect additions of Rules
309(b)(vi)-(viii) as a result of the
incorporation of Procedures 3-7(b)-(d) as
new Rule 309(b)(vi)-(b)(viii).
Rule 309(b)(v).......................... Added language to Rule 309(b)(v) from Incorporation of
Procedures 3-7(a)(i)-(iii) regarding the Procedures 3-7(a)(i)-
supplemental information required in (iii) to Rule 309(b)(v).
monthly submissions submitted by Members
to the Corporation.
Rule 309(b)(vi)......................... Added Rule 309(b)(vi) from Procedure 3- Incorporation of Procedure
7(b) regarding the requirement that a 3-7(b) as Rule
Member submit annual audited financial 309(b)(vi).
statements to the Corporation.
Rule 309(b)(vii)........................ Added Rule 309(b)(vii) from Procedure 3- Incorporation of Procedure
7(c) regarding the requirement that a 3-7(c) as Rule
Member who is not required to prepare 309(b)(vii).
annual audited financial statements by
any regulatory agency must submit
equivalent financial information to the
Corporation.
Rule 309(b)(viii)....................... Added Rule 309(b)(viii) from Procedure 3- Incorporation of Procedure
7(d) regarding the Corporation's 3-7(d) as Rule
discretion to require a Member at any 309(b)(viii).
time to make more frequent capital
computations or submit more frequent
reports or financial statements.
Rule 309(e)(iv)......................... Deleted reference to ``Procedures'' to Clarification.
reflect the removal of the Procedures and
collapsing the same into the Rulebook.
Rule 311 Heading........................ Added ``Member Status, or User Status'' to Clarification.
the heading for Rule 311 to reflect the
addition of Rule 311(d) regarding
voluntary withdrawal of Member and User
status as a result of incorporation of
Procedure 3-8(c).
Rule 311(a)............................. Added language to Rule 311(a) from Incorporation of Procedure
Procedure 3-4(a)(ii)--placed after Rule 3-4(a)(ii) to Rule
311(a)(x)--regarding the Corporation's 311(a).
periodic review of Members.
Rule 311(a)(ix)......................... Uncapitalized ``If'' to conform with the Technical.
other items in Rule 311(a)(i)-(x).
Rule 311(c)............................. Added language to Rule 311(c) from Incorporation of Procedure
Procedure 3-4(a)(iii)--placed after Rule 3-4(a)(iii) to Rule
311(c)(v)(D)--regarding the Corporation's 311(c).
periodic review of Members.
Rule 311(c)(i).......................... Changed the format of the cross-reference Technical.
to combine the subparagraph with the Rule.
Rules 311(c)(ii)(A), (iii).............. Uncapitalized references to ``Net Correction.
Capital'' because it is not a defined
term.
Rule 311(c)(iv)......................... Added reference to ``CET1'' before Clarification.
``capital declines'' for clarification.
Rules 311(c)(v)(A)-(D).................. Changed Rule 311(c)(v)(A) to be a separate Clarification and
subparagraph under Rule 311(c)(vi), and Correction.
changed lettering of Rule 311(c)(v)(B)-
(D) to be (c)(vi)(A)-(C), accordingly.
Rule 311(d)............................. Added language to Rule 311(d) from Incorporation of Procedure
Procedure 3-8(c) regarding defined term 3-8(c) to Rule 311(d).
``Authorization Termination Notice'' and
the requirement that the Corporation
confirm termination of the Authorization
Agreement in writing.
Rule 311(d)(i).......................... Added language to Rule 311(d)(i) from Incorporation of Procedure
Procedure 3-8(c) regarding a Member's 3-8(c) to Rule 311(d)(i).
responsibility to meet a defaulting
User's obligations prior to termination
of the Authorization Agreement.
[[Page 6672]]
Revised language to clarify that the Clarification.
Member's guarantee of financial
performance for each User remains in
effect ``as to any and all Eligible
Securities Transactions submitted for the
User's User Account associated with the
Authorizing Member prior to the effective
date of'' termination of the
Authorization Agreement, instead of
``until'' that termination.
Rule 311(d)(ii)......................... Added language to Rule 311(d)(ii) from Incorporation of Procedure
Procedure 3-8(c) regarding withdrawal of 3-8(c) to Rule
an unauthorized User's status. 311(d)(ii).
Rule 311(e)............................. Added Rule 311(e) from Procedures 3-8(a)- Incorporation of
(b) regarding voluntary withdrawal of Procedures 3-8(a)-(b) as
Member or User status. Rule 311(e).
Changed the format of the cross-reference Technical.
to combine the subparagraphs with the
Rule.
Rule 314................................ Deleted reference to ``Procedures'' to Clarification and
reflect the removal of the Procedures and Technical.
collapsing the same into the Rulebook.
Also removed a comma after ``By-Laws''
and added ``and'' before ``Rules'' as
grammatical corrections.
Rule 402(a)............................. Replaced ``Corporation's Procedures'' with Clarification.
``Rules'' to reflect the removal of the
Procedures and collapsing the same into
the Rulebook. Also capitalized
``Default'' to reflect that it is a
defined term.
Added language to Rule 402(a) from Incorporation of
Procedures 4-1(a)-(b) regarding the Procedures 4-1(a)-(b) to
calculation of the amount of the Guaranty Rule 402(a).
Fund.
Rule 402(b)............................. Added language to Rule 402(b) from Incorporation of Procedure
Procedure 4-2(a) regarding the 4-2(a) to Rule 402(b).
requirement that the Corporation must
receive a new Member's Required Guaranty
Fund Contribution before the Member is
eligible to commence clearing.
Added language to Rule 402(b) from Incorporation of Procedure
Procedure 4-1(c) regarding the 4-1(c) to Rule 402(b).
determination of each Member's Required
Guaranty Fund Contribution using fair and
risk-based measures, and reflecting that
the Fund may be adjusted from time to
time.
Added language to Rule 402(b) from Incorporation of Procedure
Procedure 4-1(d)--placed after Rule 4-1(d) to Rule 402(b).
402(b)(ii)--regarding the formula for
calculating amounts pursuant to Rule
402(b)(ii).
Rule 402(b)(i).......................... Added language to Rule 402(b)(i) from Incorporation of Procedure
Procedure 4-1(c)(i) reflecting that one 4-1(c)(i) to Rule
of the potential values of the Required 402(b)(i).
Guaranty Fund Contribution is $10
million, which is the minimum amount of
cash or securities that a Member is
required to contribute to the Guaranty
Fund.
Removed ``as determined by the Technical.
Corporation'' and the phrase ``set forth
in subparagraph (c)(i) of Procedure 4-1''
because the $10 million figure in
Procedure 4-1(c)(i) has been incorporated
into Rule 402(b)(i).
Rule 402(b)(ii)......................... Added language to Rule 402(b)(ii) from Incorporation of Procedure
Procedure 4-1(c)(ii) to provide that 4-1(c)(ii) to Rule
prior to a Member using a Clearing 402(b)(ii).
Service, the Member's proportionate share
of the aggregate Required Guaranty Fund
Contribution for such Clearing Service is
zero.
Rule 402(c)............................. Broke Rule 402(c) regarding Default Clarification.
Assessment into Rule 402(c)(i) and (ii)
for better clarity.
Rule 402(c)(i).......................... Added language to new Rule 402(c)(i) from Incorporation of Procedure
Procedure 4-5(a) to reflect the specific 4-5(a) to Rule 402(c)(i).
losses or liabilities that triggers a
Default Assessment is in excess of ``50%
of'' the amount of funds available to the
Corporation ``for discharging such losses
and liabilities''.
Added language to Rule 402(c)(i) from Incorporation of Procedure
Procedure 4-5(a) reflecting that the 4-5(a) to Rule 402(c)(i).
Corporation may impose a Default
Assessment ``in its sole discretion'' if
the losses or liabilities arising from a
Member Default exceed a certain amount.
Added language to the end of Rule Incorporation of Procedure
402(c)(i) from Procedure 4-5(a) providing 4-5(a) to Rule 402(c)(i).
clarification on the meaning of a Default
Assessment.
Made necessary non-substantive adjustments Technical.
to the original Rule 402(c) to
accommodate the additional language form
Procedure 4-5(a), including changing the
reference to ``loss or liability'' to
``losses or liabilities arising from a
Member Default'' and removing parentheses
and quotes around ``Default Assessment,''
because it is a previously defined term
in Chapter 1. Also changed the format of
the cross-references to combine the
subparagraphs with the Rules.
Rule 402(c)(ii)......................... Capitalized ``Defaulting'' in ``non- Clarification.
Defaulting'' to reflect that it is a
defined term.
Rule 402(c)(iii)........................ Added Rule 402(c)(iii) from Procedure 4- Incorporation of Procedure
5(d) reflecting that a Member who does 4-5(d) as Rule
not satisfy a Default Assessment may be 402(c)(iii).
declared to be in Default.
Rule 402(c)(iv)......................... Added Rule 402(c)(iv) from Procedure 4- Incorporation of Procedure
5(b) regarding calculation of each 4-5(b) as Rule
Member's Default Assessment. 402(c)(iv).
Rule 402(d)............................. Added language to Rule 402(d) from Incorporation of Procedure
Procedure 4-1(h) reflecting that 4-1(h) to Rule 402(d).
recalculations of the Required Guaranty
Fund Contribution and maximum Default
Assessment may be ``based on the results
of the Corporation's daily stress
testing'' ``for risk management purposes
including but not limited to adherence to
the cover two standard''.
Changed the format of the cross-references Technical.
to combine the subparagraphs with the
Rules.
Added a comma and ``if'' in the second Clarification.
sentence for better clarity.
Rule 402(d)(i).......................... Replaced language in Rule 402(d)(i) Incorporation of
regarding withdrawal of reported excess Procedures 4-2(c)-(d) to
with more detailed language from Rule 402(d)(i).
Procedures 4-2(c)-(d) defining the
``Required Guaranty Fund Contribution
Deadline,'' reflecting possible
shortening or extension of that deadline,
and repayment of Guaranty Fund
contribution amounts in excess of a
Member's Required Guaranty Fund
Contribution (unless withheld by the
Corporation for unmet obligations).
Rule 402(e)............................. Added Rule 402(e) from Procedure 4-1(e) Incorporation of Procedure
regarding stress testing. 4-1(e) as Rule 402(e).
Rule 402(f)............................. Added Rule 402(f) from Procedure 4-1(f) Incorporation of Procedure
regarding periodic comprehensive analyses 4-1(f) as Rule 402(f).
performed by the Corporation to determine
the adequacy of and adopting adjustments
to the Corporation's margin methodology,
model parameters, models used to generate
clearing or Guaranty Fund requirements,
and other relevant aspects of the
Corporation's risk management policies
and procedures.
Rule 404(a)............................. Replaced the reference to ``Procedures'' Clarification.
with ``these Rules'' to reflect the
removal of the Procedures and collapsing
the same into the Rulebook.
Rule 405(a)............................. Deleted the reference to ``Procedures'' to Clarification.
reflect the removal of the Procedures and
collapsing the same into the Rulebook.
Also moved Rule 405 under newly added
Rule 405(a) as a ``General'' introductory
provision regarding the Default
Management Process to account for
additions of Procedure 4-4(a)-(d)
pursuant to collapsing the Procedures
into the Rulebook. Also deleted reference
to ``Procedures'' to reflect the removal
of the Procedures and collapsing the same
into the Rulebook.
Rules 405(b) and (b)(i)-(iii)........... Added Rule 405(b), ``Member Default,'' and Incorporation of
subparagraphs (b)(i)-(iii) from Procedures 4-4(a)(i)-
Procedures 4-4(a)(i)-(iii) regarding the (iii) as Rules 405(b)(i)-
specific Member Default management (iii).
process.
[[Page 6673]]
Rules 405(c) and (c)(i)-(iii)........... Added Rule 405(c), ``User Default,'' and Incorporation of
subparagraphs (c)(i)-(iii) from Procedures 4-4(b)(i)-
Procedures 4-4(b)(i)-(iii) regarding the (iii) as Rules 405(c)(i)-
specific User Default management process. (iii).
Rules 405(d), (d)(i)-(ii), and Added Rule 405(d), ``Close-out process for Incorporation of
(d)(ii)(A)-(B). the positions of a Defaulting Member or Procedures 4-4(c)(i)-(ii)
Defaulting User,'' and subparagraphs and (c)(ii)-(A)-(B) as
(d)(i)-(ii) and (ii)(A)-(B) from Rules 405(d)(i)-(ii), and
Procedures 4-4(c)(i)-(ii) and (c)(ii)(A)- (d)(ii)(A)-(B).
(B) regarding the specific process for
such close-outs.
Rules 405(e) and (e)(i)-(iii)........... Added Rule 405(e), ``Managing a Default Incorporation of
with Respect to a Specific Clearing Procedures 4-4(d)(i)-
Service and Across Clearing Services,'' (iii) as Rules 405(e)(i)-
and subparagraphs (e)(i)-(iii) from (iii).
Procedures 4-4(d)(i)-(iii) regarding the
Corporation's discretion to take certain
actions in the event of a Member or User
Default.
Rule 405(f)............................. Added Rule 405(f) from Procedure 4-7(a) Incorporation of Procedure
regarding the Corporation's notice to 4-7(a) as Rule 405(f).
Members and Users of a Member or User
Default.
Rule 405(g)............................. Added Rule 405(g) from Procedure 4-7(b) Incorporation of Procedure
regarding the Corporation's provision of 4-7(b) as Rule 405(g).
updated Guaranty Fund Statements to
Members following any charges against the
Guaranty Fund due to Default by a Member.
Rules 406(a)(ii)-(v).................... Changed the format of the cross-references Technical.
to combine the subparagraphs with the
Rules.
Rule 406(a)(iv)......................... Added ``Required'' to ``Guaranty Fund Clarification.
Contributions'' and capitalized the ``C''
in ``Contributions'' to reflect that
``Required Guaranty Fund Contributions''
is a defined term.
Rule 406(b)(ii)(B)...................... Changed ``obligations'' to ``losses and Clarification.
liabilities'' to conform with the
language in Rule 406(b)(ii)(A).
Rules 406(b)(iii)-(iv), (c)............. Changed the format of the cross-references Technical.
to combine the subparagraphs with the
Rules.
Rules 407(c)(i)-(ii).................... Capitalized references to ``Repo Clarification.
Transaction'' to reflect that it is a
defined term.
Rule 407(c)(iii)........................ Changed the format of the cross-reference Technical.
to combine the subparagraphs with the
Rule.
Rule 408(a)............................. Added language to Rule 408(a) from Incorporation of
Procedures 4-11(a)-(d) regarding the Procedures 4-11(a)-(d) as
requirement that Members must execute a Rule 408(a).
master repurchase agreement with the
Corporation to govern all non-committed
repo transactions, and regarding
negotiation of terms for such
transactions and periodic testing by
Members of repo transactions with the
Clearing House when requested.
Capitalized the references to ``Repo Technical.
Transaction'' to reflect that it is a
defined term.
Rule 408(b)............................. Changed the format of the cross-references Technical.
to combine the subparagraphs with the
Rules.
Capitalized references to ``Repo Clarification.
Transaction'' to reflect that it is a
defined term.
Rule 409................................ Removed an inadvertent comma between Technical.
``creation of'' and ``security
interests''.
Added language to Rule 409 from Procedures Incorporation of
4-12(a)-(c) regarding the terms of Procedures 4-12(a)-(c) to
committed repo transactions and testing Rule 409.
committed repo counterparties to affirm
operational readiness.
Rules 410(a) and (a)(i)................. Moved Rule 410(a) to Rule 410(a)(i) under Incorporation of Procedure
a new heading to Rule 410(a): ``CLF 4-9(a) to Rule 410(a).
MRA,'' to incorporate Procedure 4-9(a).
Added language to Rule 410(a)(i) from Incorporation of Procedure
Procedure 4-9(a)(i) regarding CLF Event 4-9(a)(i) to Rule
Transactions. 410(a)(i).
Rules 410(a)(ii) and (a)(ii)(A)-(F)..... Added Rules 410(a)(ii) and (a)(ii)(A)-(F) Incorporation of
from Procedures 4-9(a)(ii) and (a)(ii)(A)- Procedures 4-9(a)(ii) and
(F) regarding the terms of the CLF MRA. (a)(ii)(A)-(F) as Rules
410(a)(ii) and (a)(ii)(A)-
(F).
Rules 410(b), (b)(i), and (b)(i)(A)..... Added new heading to Rule 410(b): Incorporation of
``Declaration of a CLF Event,'' and moved Procedures 4-9(b),
existing Rule 410(b) to subparagraph (b)(i), and (b)(i)(A) to
(b)(i)(A) to incorporate Procedure 4- Rules 410(b), (b)(i), and
9(b). New Rule 410(b), (b)(i) and (b)(i)(A).
(b)(i)(A) reflects Procedure 4-9(b),
(b)(i) and (b)(i)(A).
Rule 410(b)(i)(A)....................... Revised existing Rule 410(b) that has been Incorporation of Procedure
moved to Rule 410(b)(i)(A) to reflect 4-9(b)(i)(A) to Rule
language of Procedure 4-9(b)(i)(A) 410(b)(i)(A).
regarding notification to Members of the
declaration of the CLF Event.
Rules 410(b)(i)(B)-(E).................. Added Rules 410(b)(i)(B)-(E) from Incorporation of
Procedures 4-9(b)(i)(C)-(F) regarding Procedures 4-9(b)(i)(C)-
events resulting from the declaration of (F) as Rules 410(b)(i)(B)-
a CLF Event. (E).
Rule 410(c)............................. Revised existing Rule 410(c) to Incorporation of Procedure
incorporate language from Procedure. 4- 4-9(b)(i)(B) to Rule
9(b)(i)(B) regarding the terms of CLF 410(c).
Event Transactions, and specifying that
Members who enter into CLF Event
Transactions are non-Defaulting Members.
Rule 410(d)............................. Changed the format of the cross-reference Technical.
to combine the subparagraph with the Rule.
Rule 410(h)............................. Revised Rule 410(h) to incorporate Incorporation of Procedure
language from Procedure 4-9(b)(ii) 4-9(b)(ii) to Rule
regarding the exchange of securities for 410(h).
cash after termination of a CLF Event
Transaction.
Rules 410(i) and (i)(i)-(ii)............ Added Rule 410(i) and subparagraphs (i)(i)- Incorporation of
(ii) from Procedures 4-9(c) and (c)(i)- Procedures 4-9(c) and
(ii) regarding ``Calculation of Required (c)(i)-(ii) as Rules
CLF Size and Allocated Capped CLF 410(i) and (i)(i)-(ii).
Amounts''.
Rules 410(j) and (j)(i)-(ii)............ Added Rules 410(j) and (j)(i)-(ii) from Incorporation of
Procedures 4-9(d) and (d)(i)-(ii) Procedures 4-9(d) and
regarding a Member's ``Required (d)(i)-(ii) as Rules
Attestation and Acknowledgment'' that the 410(j) and (j)(i)-(ii).
Member understands and is bound by the
Rules related to CLF.
Rule 410(k)............................. Added Rule 410(k) from Procedure 4-9(e) Incorporation of Procedure
regarding ``Report of Actions'' to the 4-9(e) as Rule 410(k).
SEC and other relevant regulatory
agencies.
Capitalized reference to ``Repo Clarification.
Transaction'' to reflect that it is a
defined term.
Rule 410(l)............................. Added Rule 410(l) from Procedure 4-9(f) Incorporation of Procedure
regarding ``Operational Testing'' with 4-9(f) as Rule 410(l).
respect to annual CLF MRA tests for
Member.
Rule 411................................ Added subparagraph letters (a)-(g) to Rule Incorporation of
411 regarding ``Substitution of Guaranty Procedures 4-10(a)-(g) to
Fund Cash'' to reflect Procedure 4-10(a)- Rule 411.
(g).
Rule 411(a)............................. Revised Rule 411(a) to reflect language Incorporation of Procedure
from Procedure 4-10(a) regarding 4-10(a) to Rule 411(a).
procedures for substitution of Guaranty
Fund cash.
Rule 411(b)............................. Added Rule 411(b) from Procedure 4-10(b) Incorporation of Procedure
regarding notice to impacted non- 4-10(b) as Rule 411(b).
Defaulting Members of a substitution of
Guaranty Fund cash for U.S. Treasury
securities.
Rule 411(c)............................. Revised Rule 411(c) to reflect language Incorporation of Procedure
from Procedure 4-10(c) regarding 4-10(c) to Rule 411(c).
determining the market value of the
securities used in a cash substitution
under Rule 411, subject to the
Corporation's discretion to impose
appropriate haircut.
Rule 411(e)............................. Added Rule 411(e) from Procedure 4-10(d) Incorporation of Procedure
regarding timing of completion of 4-10(d) as Rule 411(e).
substitution of U.S. Treasury securities
for cash Guaranty Fund contributions as
determined by the Corporation.
Rule 411(f)............................. Revised Rule 411(f) to incorporate Incorporation of
language from Procedures 4-10(e)-(f) Procedures 4-10(e)-(f) to
regarding replacement of substituted U.S. Rule 411(f).
Treasury securities for cash.
[[Page 6674]]
Rule 411(g)............................. Added Rule 411(g) from Procedure 4-10(g) Incorporation of Procedure
regarding procedures for substitution of 4-10(g) as Rule 411(g).
Guaranty Fund cash.
Rule 412................................ Revised Rule 412 to incorporate language Incorporation of Procedure
from Procedure 4-8 regarding the transfer 4-8 to Rule 412.
of User Accounts where a Member with
authorized Users is in Default.
Rules 413(a)-(d)........................ Changed the format of the cross-references Technical.
to combine the subparagraphs with the
Rules.
Rule 413(e)............................. Added Rule 413(e) from Procedure 4-7(b) Incorporation of Procedure
regarding the Corporation's obligation to 4-7(b) as Rule 413(e).
provide updated Guaranty Fund Statements
to Members following charges against the
Guaranty Fund due to Default by a Member.
Rules 416(a)-(b)........................ Deleted the references to ``Procedures'' Clarification.
from Rule 416(a)-(b) to reflect the
removal of the Procedures and collapsing
the same into the Rulebook.
Rule 417................................ Changed the format of the reference to the Technical.
Securities Exchange Act to combine the
subparagraph with the rule.
Rule 501................................ Deleted the reference to ``Procedures'' Clarification.
from Rule 501 to reflect the removal of
the Procedures and collapsing the same
into the Rulebook.
Rule 502(a)............................. Revised Rule 502(a) to incorporate Incorporation of
language from Procedures 5-2(a)-(b) Procedures 5-2(a)-(b) to
regarding calculation of initial margin Rule 502(a).
and providing information about the
Corporation's margin model and
calculations to Members and Users. Also
removed the reference to Procedure 5-2 to
reflect the removal of Procedures and
collapsing the same into the Rulebook.
Rule 502(b)............................. Changed heading of Rule 502(b) from Incorporation of Procedure
``Form'' to ``Form and Limitations on 5-3(a) to Rule 502(b).
Types of Collateral'' to reflect
incorporation of Procedure 5-3(a)
regarding limitations on types of
collateral.
Removed comma after ``in the manner'' to Technical.
correct a grammatical error.
Deleted the reference to ``Procedures'' to Clarification.
reflect the removal of the Procedures and
collapsing the same into the Rulebook.
Revised Rule 502(b) to add language from Incorporation of Procedure
Procedure 5-3(a) regarding the 5-3(a) to Rule 502(b).
limitations on the types of collateral
acceptable as satisfying initial margin
requirements.
Rule 502(c)............................. Added ``(s)'' to the end of Clarification.
``Corporation's Bank'' to clarify that
the Corporation might have multiple
Banks. Also deleted reference to
``Procedure 5-4'' to reflect the removal
of the Procedures and collapsing the same
into the Rulebook.
Added language to Rule 502(c) from Incorporation of Procedure
Procedure 5-4(c)(ii) regarding the 5-4(c)(ii) to Rule
receipt of substitution funds and 502(c).
transfer of excess initial margin.
Rules 502(f) and (f)(i)-(iii)........... Added Rule 502(f) and subparagraphs (f)(i)- Incorporation of
(iii) from Procedure 5-3(d) and Procedures 5-3(d) and
subparagraphs (d)(i)-(iii) regarding (d)(i)-(iii) as Rule
accepting U.S. Treasury securities in 502(f) and (f)(i)-(iii).
satisfaction of initial margin
requirements, as well as limitations,
valuation, and maturity of the same.
Rules 502(g) and (g)(i)-(iii)........... Added Rules 502(g) and subparagraphs Incorporation of
(g)(i)-(iii) from Procedures 5-4(b) and Procedures 5-4(b) and
subparagraphs (b)(i) and (iv) regarding (b)(i), (iv) as Rules
requirements for Members and Users 502(g) and (g)(i)-(iii).
posting margin into the Corporation's
system.
Rules 503(a)(ii), (b)(i)................ Deleted the references to ``Procedures'' Clarification.
to reflect the removal of the Procedures
and collapsing the same into the Rulebook.
Rule 505(a)(ii)......................... Replaced the reference to ``Procedures'' Clarification.
with ``these Rules'' to reflect the
removal of the Procedures and collapsing
the same into the Rulebook.
Rule 506(a)............................. Replaced reference to ``Procedure 5-1'' Clarification.
with ``Rule 508,'' and deleted the
reference to ``Procedures'' to reflect
the removal of the Procedures and
collapsing the same into the Rulebook.
Changed the format of the cross-reference Technical.
to combine the subparagraph with the Rule.
Added ``the'' before ``market value''..... Technical.
Added ``and paying out'' after ``The Clarification.
Corporation may forego collecting'' and
before ``de minimis amounts of
Outstanding Exposure Settlement, as a
clarification, to reflect that the
Corporation may forego de minimis amounts
of Outstanding Exposure Settlement in
both collecting and paying out
circumstances.
Rule 507(a)............................. Corrected ``if'' to ``of'' in the second Technical.
sentence.
Deleted the reference to ``Procedures'' to Clarification.
reflect the removal of the Procedures and
collapsing the same into the Rulebook.
Added the words ``at least'' before the Clarification.
list of applicable accounts to clarify
that the list is not exhaustive.
Rule 507(d)............................. Deleted the reference to ``Procedures'' to Clarification.
reflect the removal of the Procedures and
collapsing the same into the Rulebook.
Rules 508(a) and (a)(i) and (iii)....... Added Rules 508(a)(i) and (a)(iii) from Incorporation of
Procedures 5-1(a)(i)-(ii) regarding the Procedures 5-1(a)(i)-(ii)
contents of the Daily Margin Report. as Rules 508(a)(i),
(iii).
Rule 508(a)(ii)......................... Added the word ``and'' before ``any Technical.
surplus'' and ``removed the word ``and''
at the end of (a)(ii) as technical
grammar corrections.
Rule 508(a)(iv)......................... Deleted the words ``The Daily Margin Clarification.
Report will also provide'' to clarify
that the next subparagraph is part of a
continuing list of items the Daily Margin
Report contains.
Rule 508(a)(v).......................... Changed the format of the cross-reference Technical.
to combine the subparagraph with the Rule.
Rule 508(a)............................. Added language to the end of Rule 508(a) Incorporation of Procedure
from Procedure 5-1(b) regarding making 5-1(b) to Rule 508(a).
the Daily Margin Report available to
Members and Users via various means
following each clearing cycle on each
Business Day at a time determined by the
Corporation.
Rules 508(c) and (c)(i)-(ii)............ Added Rules 508(c) and subparagraphs Incorporation of
(c)(i)-(ii) from Procedures 5-1(c) and Procedures 5-1(c) and
(c)(i)-(ii) regarding end-of-day clearing (c)(i)-(ii) as Rules
cycles and intraday clearing cycles. 508(c) and (c)(i)-(ii).
Rules 509(a)-(c)........................ Revised Rules 509(a)-(c) to reflect Incorporation of Procedure
Procedure 5-1(d) regarding requiring 5-1(d) to Rules 509(a)-
additional initial margin posting at the (c).
sole Corporation's discretion, the time
frame for Members and Users to meet the
additional margin requirement and the
Corporation's sole discretion to run
additional clearing cycles to facilitate
the exchange of Outstanding Exposure
Settlement.
Rule 510(a)............................. Revised Rule 510(a) to reflect Procedures Incorporation of
5-4(c) and (c)(i) regarding withdrawals Procedures 5-4(c) and
of excess collateral and the process for (c)(i) to Rule 510(a).
effecting the same.
Add ``of'' before ``initial margin'' in Technical.
the first sentence as a grammatical
change.
Rule 510(b)............................. Changed the format of the cross-reference Technical.
to combine the subparagraph with the Rule.
[[Page 6675]]
Rule 510(b)(ii)......................... Revised Rule 510(b)(ii) to confirm CMESC's Clarification.
intention that it may only reject a
request pursuant to Rule 510(a) to
withdraw excess collateral by a Member on
behalf of a Supported User or by an
Independent User for reasons related to
risk considerations with respect to such
User, as reasonably determined by CMESC
in its sole judgment. Specifically, CMESC
proposes to make this clarification by
adding, at the end of the first sentence,
``that the Corporation may only reject a
request pursuant to Rule 510(a) to
withdraw excess collateral by a Member on
behalf of a Supported User or by an
Independent User for reasons related to
risk considerations with respect to such
User, as reasonably determined by the
Corporation in its sole judgement''.
Further revised Rule 510(b)(ii) to confirm ..........................
CMESC's intention that it will hold
unreturned excess margin subject to the
requirements generally for holding
margin, including, as applicable,
requirements under Rule 513 applicable to
margin deposited for Supported Users.
Specifically, CMESC proposes to clarify
how it will hold unreturned excess margin
by adding that in the event the
Corporation rejects a withdrawal request,
the Corporation will ``hold the margin
posted subject to and in accordance with
the Rules including Rule 513 as may be
applicable''.
Rule 511(b)............................. Changed reference to ``Board of Clarification.
Directors'' to be ``Board,'' to reflect
that ``Board'' is a defined term. Also
added ``sole'' before ``discretion'' and
``elect to'' before ``consult'' as
clarification edits.
Rule 513(a)............................. Replaced reference to ``Procedures'' with Clarification.
``these Rules'' to reflect the removal of
the Procedures and collapsing the same
into the Rulebook.
Rule 513(c)............................. Changed the format of the cross-reference Technical.
to combine the subparagraph with the Rule.
Rule 514................................ Added Rule 514 from Procedure 5-4(a) Incorporation of Procedure
regarding the Corporation's system to 5-4(a) as Rule 514.
enter and receive information regarding
initial margin and Outstanding Exposure
Settlement.
Rule 601................................ Changed ``maintain'' to ``have'' as Clarification.
clarification edits.
Rule 602(a)............................. Replaced the words ``the Procedures'' with Clarification.
``these Rules'' to reflect the removal of
the Procedures and collapsing the same
into the Rulebook.
Rule 602(d)(i).......................... Change the cross-reference to Procedure 15- Clarification.
4(c)(iii) to Rule 1502(b)(iii) to reflect
collapsing the Procedures into the
Rulebook.
Rules 602(d)(i)-(ii).................... Changed the format of the cross-references Technical.
to combine the subparagraphs with the
Rules.
Rule 602(d)(iii)........................ Added Rule 602(d)(iii) from Procedure 6- Incorporation of Procedure
1(c) regarding the Corporation's right to 6-1(c) as Rule
adopt a schedule of fines to be imposed 602(d)(iii).
summarily on Members or Users who have a
pattern of making initial submissions of
transaction data that are rejected.
Rule 603................................ Replaced references to ``Procedures'' with Clarification.
``Rules'' to reflect the removal of the
Procedures and collapsing the same into
the Rulebook.
Rule 604(b)............................. Added ``prior to or'' with respect to when Clarification.
Members and Users must notify the
Corporation of the Securities Settlement
Bank(s) or Bank(s) that will act on their
behalf with respect to handling
settlement of Eligible Securities
Transactions.
Rule 605................................ Added ``unless and'' before ``until'' in Clarification.
the last sentence as clarification edits.
Rule 701(b)(ii)......................... Changed the format of the cross-reference Technical.
to 17 CFR 210.2-02 to combine the
subparagraphs with the regulation section.
Rule 705................................ Revised the language of Rule 705 to Clarification.
clarify that the Board ``may'' prescribe
Procedures in the future pursuant to this
Rule 705 and will post any Procedures so
adopted on the Corporation's website.
Rule 706(b)............................. Changed the format of the cross-reference Technical.
to combine the subparagraph with the Rule.
Rule 707(a)............................. Deleted the references to the Clarification.
``Procedures'' to reflect the removal of
the Procedures and collapsing the same
into the Rulebook.
Rule 708(b)(iv)......................... Changed the incorrect paragraph numbering Technical.
(b)(iv)(E) and (b)(iv)(F) to (b)(iv)(B)
and (b)(iv)(C).
Rule 708(b)(vi)......................... Changed ``him'' to ``them'' with respect Clarification.
to reference to a Member.
Rule 709(b)............................. Added language to Rule 709(b) from Incorporation of Procedure
Procedure 7-3(a) to reflect that the 7-3(a) as Rule 709(b).
Corporation will release Clearing Data
related to a particular User to a Member
that authorizes that User upon written
request.
Rule 709(d)............................. Added language to Rule 709(d) from Incorporation of Procedure
Procedure 7-3(b) to reflect that the 7-3(b) as Rule 709(d).
Corporation will post to its website
basic data related to the volume and
values of Eligible Securities
Transactions cleared through the
Corporation.
Rule 709(e)............................. Added ``to'' between ``construed'' and Technical.
``limit'' to correct grammatical error.
Rule 710(b)............................. Added a comma after ``positions of Members Technical.
and Users'' in the last sentence to
improve clarity and enhance readability.
Rule 710(e)............................. Added a comma after ``CMESC Emergency Technical.
Financial Committee'' in the second
sentence, to improve clarity and enhance
readability.
Rule 710(f)............................. Deleted the reference to ``Procedures'' to Clarification.
reflect the removal of the Procedures and
collapsing the same into the Rulebook.
Rule 710(g)............................. Changed reference to ``Board of Clarification.
Directors'' to be ``Board,'' to reflect
that ``Board'' is a defined term.
Rule 711................................ Changed reference to ``Board of Clarification.
Directors'' to be ``Board,'' to reflect
that ``Board'' is a defined term.
Rule 713................................ Revised heading of Rule 713 to capitalize Technical and
``Regarding.'' Deleted the reference to Clarification.
``Procedures'' in the heading and body of
Rule 713 to reflect the removal of the
Procedures and collapsing the same into
the Rulebook.
Rule 714(a)............................. Removed quotation marks around Clarification.
``Corporation Default'' to reflect that
it is a previously defined term in
Chapter 1.
Changed the format of the cross-reference Technical.
to combine the subparagraph with the Rule.
Rules 714(a)(i), (b), (c), (c)(i), (d).. Deleted the references to ``Procedures'' Clarification.
to reflect the removal of the Procedures
and collapsing the same into the Rulebook.
Rule 714(d)(iii)........................ Added ``acting'' at the beginning of the Clarification.
parentheses before ``for itself,''
referring to a Member to improve clarity
and readability.
Rule 714(d)(vii)........................ Clarified that the close-out process Clarification.
referred to in Rule 714(d)(vii) is also
laid out in Rule 405, in addition to
Rules 714, 1501, and 1507. Also deleted
the references to ``Procedures'' to
reflect the removal of the Procedures and
collapsing the same into the Rulebook.
Rule 717................................ Added Rule 717 from Procedure 7-4 Incorporation of Procedure
regarding ``Forms, Media and Technical 7-4 as Rule 717.
Specifications'' with respect to the
forms and format Members and Users must
use to submit instructions and data to
the Corporation.
[[Page 6676]]
Rule 801(a)............................. Deleted the word ``such'' before ``fees Clarification.
and charges'' to improve clarity and
readability. Also changed ``the Rules''
to ``these Rules'' to clarify the Rule is
discussing this Rulebook. Also deleted
the reference to ``Procedures'' to
reflect the removal of the Procedures and
collapsing the same into the Rulebook.
Rule 801(d)............................. Added Rule 801(d) from Procedure 8-1 Incorporation of Procedure
regarding the Schedule of Fees setting 8-1 as Rule 801(d).
out the fees and charges arising from the
provision of the Corporation's services.
Rule 901(a)............................. Added language to Rule 901(a) from Incorporation of Procedure
Procedure 9-1(a) reflecting that a 9-1(a) as Rule 901(a).
Member's or User's notification of its
failure to perform material contracts or
obligations, its determination of
inability to perform material contracts
or obligations, or its insolvency can be
in the form of e-mail or another system
designated by the Corporation, and the
timing of such required notice by the
Member or User.
Replaced ``to do so'' with ``to perform Clarification.
its material contracts or obligations''
to improve clarity.
Rule 901(b)(i).......................... Changed the format of the cross-reference Technical.
to combine the subparagraph with the Rule.
Added language to Rule 901(b)(i) from Incorporation of Procedure
Procedure 9-3 reflecting that the 9-3 as Rule 901(b)(i).
Corporation has sole discretion to
determine the timeframe within which a
Member or User that has provided an
insolvency notice to the Corporation
pursuant to Rule 901(a) must post a bond,
indemnity, or guaranty from a third party
satisfactory to the Corporation to avoid
being treated as insolvent by the
Corporation.
Rule 901(b)(v).......................... Revised the lead-in language to conform Clarification.
with other items in Rule 901(b)(i)-(vi).
Rule 901(b)(vi)......................... Add the word ``the'' before ``Member or Technical.
User'' as a technical grammatical change.
Rule 901(c)............................. Removed comma after ``act for the Member Technical.
or User'' as a technical, grammatical
change. Also changed the format of the
cross-reference to combine the
subparagraph with the Rule.
Capitalized ``Default'' to reflect that it Clarification.
is a defined term.
Rule 902(a)............................. Capitalized ``Default'' to reflect that it Clarification.
is a defined term.
Rule 902(a)(i).......................... Deleted the reference to ``Procedures'' to Clarification.
reflect the removal of the Procedures and
collapsing the same into the Rulebook..
Changed the format of the cross-reference Technical.
to combine the subparagraph with the Rule.
Rule 902(a)(ii)......................... Deleted the reference to ``Procedures'' to Clarification.
reflect the removal of the Procedures and
collapsing the same into the Rulebook.
Rule 902(b)............................. Changed the format of the cross-references Technical.
to combine the subparagraphs with the
Rules.
Rule 902(c)............................. Added language to Rule 902(c) from Incorporation of Procedure
Procedure 9-4(d) regarding the Head of 9-4(d) to Rule 902(c).
the Corporation's latitude to consider
all information available in determining
whether to prohibit or limit the access
of a Member or User to services offered
by the Corporation.
Capitalized ``Default'' to reflect that it Clarification.
is a defined term.
Rule 903(a)............................. Revised Rule 903(a) to become Rule Clarification.
903(a)(i), and added a heading for
903(a), titled ``Voluntary Withdrawal of
Member or User Status,'' to reflect that
Rules 903(a)(i) and (a)(ii) cover
Voluntary Withdrawal of Member Status and
Voluntary Withdrawal of User Status,
respectively.
Rule 903(a)(i).......................... Revised Rule 903(a)(i) to reflect Incorporation of Procedure
Procedure 3-8(a) regarding the process 3-8(a) to Rule 903(a)(i).
related to a Member's voluntary
withdrawal of its Member status,
including the requirement of providing an
at least ten-Business-Day Member
Withdrawal Notice to the Corporation and
the withdrawal not being effective until
the Corporation's confirmation via an
Advisory announcing the withdrawal of the
Member and the effective date of the
withdrawal.
Rule 903(a)(ii)......................... Added Rule 903(a)(ii) from Procedure 3- Incorporation of Procedure
8(b) regarding the process related to a 3-8(b) to Rule
User's voluntary withdrawal of its User 902(a)(ii).
status, including providing an at least
ten-Business-Day User Withdrawal Notice
to the Corporation and the withdrawal not
being effective until Corporation's
confirmation via an Advisory announcing
the withdrawal of the User and the
effective date of the withdrawal.
Rule 903(c)............................. Changed the format of the cross-reference Technical.
to combine the subparagraph with the Rule.
Rule 904................................ Added language to Rule 904 from Procedures Incorporation of
9-4(b)(i)-(ii) regarding the effect of Procedures 9-4(b)(i)-(ii)
the Corporation ceasing to act for a to Rule 904.
Member or User, specifically relating to
completing or closing transactions and
open positions, and returning
contributions to the Guaranty Fund of the
Member pursuant to Rule 415 and margin
owed to the Member or User.
Rule 906................................ Added language to Rule 906 from Procedure Incorporation of Procedure
9-4(c) regarding a terminated Member's or 9-4(c) to Rule 906.
User's continuing responsibility to
discharge any obligations it incurred
prior to the Corporation's ceasing to act
on the Member's or User's behalf.
Rule 907(a)............................. Changed the cross-reference to Rule 902 to Clarification.
refer to both ``Rules 901 and 902'' to
reflect that cessation-to-act by the
Corporation under either rule can result
in the Corporation prohibiting or
limiting a Member's or User's access to
Clearing Services. Also changed
``object'' to ``objective'' for clarity.
Added language to Rule 907(a) from Incorporation of
Procedures 9-4(a)(i)-(iii) regarding the Procedures 9-4(a)(i)-
ways the Corporation may prohibit or (iii) to Rule 907(a).
limit a Member's or User's access to
Clearing Services, including limiting or
suspending a Member or User from
submitting additional transactions for
clearing and, if a Member is suspended
from submitting additional transactions
for clearing, requiring such Member to
transfer its authorization of any User,
along with such User Account, to another
Member.
Added language to Rule 907(a) from Incorporation of Procedure
Procedure 9-2 regarding the Corporation's 9-2 to Rule 907(a).
discretion to subject a Member or User to
fines, additional requirements, or
restrictions upon failure of the Member
or User to perform certain required
obligations for Member status or User
status.
Added language to Rule 907(a) clarifying Clarification.
that, in addition to fines, requirements,
and other restrictions as a result of a
Member's or User's failure to perform
obligations, the Corporation may also
terminate the Member's or User's status
as a Member or User with the Corporation.
Rule 907(b)............................. Changed the format of the cross-references Technical.
to combine the subparagraphs with the
Rules.
Rule 907(c)............................. Added Rule 907(c) from Procedures 9-1(c)- Incorporation of
(e) regarding the Corporation's Procedures 9-1(c)-(e) as
discretion to impose a Noncompliance Time Rule 907(c).
Period in lieu of ceasing to act for the
Member or User, during which the Member
or User subject to the Noncompliance Time
Period must use every effort to come back
into compliance with the applicable
requirements for Member or User status,
while the Corporation preserves its
authority to cease to act at the end of
the Noncompliance Time Period, or, if the
Corporation determines, in its sole
discretion, that a Member's financial or
operational condition or User's
operational condition has significantly
deteriorated during the Noncompliance
Time Period, the Corporation may cease to
act for the Member or User pursuant to
Rules 901 and 902.
Rule 1001(b)............................ Deleted the reference to ``Procedures'' to Clarification.
reflect the removal of the Procedures and
collapsing the same into the Rulebook.
[[Page 6677]]
Rules 1003(a)-(b)....................... Changed the format of the cross-references Technical.
to combine the subparagraphs with the
Rules.
Rule 1004(b)............................ Changed references to ``Board of Clarification.
Directors'' to be ``Board,'' to reflect
that ``Board'' is a defined term.
Rule 1004(c)............................ Changed ``three (3) days'' to ``three (3) Clarification.
Business Days,'' with respect to the
minimum advance notice given to the
Respondent or Interested Person of the
place and time of a hearing.
Rule 1005(b)(i)......................... Removed the comma after ``engaged'' to Technical.
improve readability.
Rule 1005(b)(ii)........................ Deleted the reference to ``Procedures'' to Clarification.
reflect the removal of the Procedures and
collapsing the same into the Rulebook.
Rule 1005(c)............................ Changed the format of the cross-reference Technical.
to combine the subparagraph with the Rule.
Rule 1008............................... Clarified that the reference to ``this Clarification.
Chapter'' refers to ``Chapter 10''.
Rules 1011(b)(ii)-(iv).................. Corrected paragraph numbering by changing Correction.
the paragraph number of existing Rule
1011(b)(iv), (v) and (vi) to Rule
1011(b)(ii), (iii) and (iv).
Rule 1011(b)(iv)........................ Changed the format of the cross-reference Technical.
to combine the subparagraph with the Rule.
Rule 1011(d)............................ Added a comma after ``filing with the Technical.
Corporation'' in the first sentence to
improve clarity and readability.
Rules 1012(b)-(d)....................... Changed the format of the cross-references Technical.
to combine the subparagraphs with the
Rules.
Rule 1012(b)............................ Deleted the reference to ``Procedures'' to Clarification.
reflect the removal of the Procedures and
collapsing the same into the Rulebook.
Rule 1012(e)............................ Removed the comma after ``Securities Technical.
Exchange Act'' in the first sentence to
improve readability.
Rule 1013(b)............................ Changed the format of the cross-reference Technical.
to combine the subparagraph with the Rule.
Rule 1101............................... Changed reference to ``Board of Clarification.
Directors'' to be ``Board,'' to reflect
that ``Board'' is a defined term.
Rules 1101(d)-(e)....................... Removed the subparagraph number to make Clarification.
(e) a separate paragraph under Rule 1101.
Rules 1102(b), (d)...................... Changed the format of the cross-references Technical.
to combine the subparagraphs with the
Rules.
Rule 1301............................... Replaced the reference to ``Procedures'' Clarification.
with ``these Rules'' to reflect the
removal of the Procedures and collapsing
the same into the Rulebook.
Rules 1303-1304......................... Deleted the references to ``Procedures'' Clarification.
to reflect the removal of the Procedures
and collapsing the same into the Rulebook.
Rules 1305(a)(i), (b)................... Deleted the references to ``Procedures'' Clarification.
to reflect the removal of the Procedures
and collapsing the same into the Rulebook.
Rule 1307(b)............................ Changed the format of the cross-reference Technical.
to combine the subparagraph with the Rule.
Rule 1501(b)............................ Deleted the reference to ``Procedures'' to Clarification.
reflect the removal of the Procedures and
collapsing the same into the Rulebook.
Rule 1501(c)............................ Revised and added language to Rule 1501(c) Incorporation of Procedure
to reflect Procedure 15-1(a) to identify 15-1(a) to Rule 1501(c).
that only Repo Transactions and Cash
Transactions involving Eligible
Securities that are U.S. Treasury
securities may be cleared through the
Corporation's Interest Rate Securities
Clearing Service, and providing that the
Corporation may make information
regarding the terms of Repo Transactions
and a list of U.S. Treasury securities
that are Eligible Securities for purposes
of Cash Treasury Transactions available
to Members and Users via an Advisory.
Deleted the reference to ``Procedures'' to Clarification.
reflect the removal of the Procedures and
collapsing the same into the Rulebook.
Rule 1501(d)............................ Deleted the reference to ``Procedures'' to Clarification.
reflect the removal of the Procedures and
collapsing the same into the Rulebook.
Rule 1501(e)............................ Added Rule 1501(e) from Procedure 15-1(b) Incorporation of Procedure
regarding the requirement that original 15-1(b) as Rule 1501(e).
parties to a Clear to Hold Transaction
may only deliver collateral to settle
Repo Transactions that meets the
requirements of a General Collateral
Bucket.
Rule 1501(f)............................ Added Rule 1501(f) from Procedure 15-1(c) Incorporation of Procedure
regarding the Corporation providing a 15-1(c) as Rule 1501(f).
description to Members and Users of the
General Collateral Bucket and Eligible
Securities that the Corporation will
accept as collateral.
Rule 1501(g)(iii)....................... Deleted the reference to ``Procedures'' to Clarification.
reflect the removal of the Procedures and
collapsing the same into the Rulebook.
Rule 1501(h)............................ Capitalized ``Repo Transactions'' to Clarification.
reflect that it is a defined term.
Rules 1501(g)-(h)....................... Changed letter numbering of Rules 1501(e) Correction.
and (f) to Rules 1501(g) and 1501(h),
respectively, to reflect the addition of
new Rules 1501(e) and (f).
Rule 1502............................... Changed the heading of Rule 1502 from Incorporation of
``Members and Users'' to ``Submission of Procedures 15-3 and 15-4
Eligible Securities Transactions for to Rule 1502.
Clearing; Functions of the Clearing
System,'' to reflect addition of Rules
from Procedures relating to processes for
submitting Clear to Deliver Transactions,
Cash Treasury Transactions, Clear to Hold
Transactions, and Repo Transactions, as
well as the functions of the securities
clearing system.
Rules 1502(a) and (a)(i)................ Moved existing Rule 1502 to Rule Clarification.
1502(a)(i) and added heading to Rule
1502(a) titled ``Submission Process.''
Also removed reference to ``Procedures''
from Rule 1502(a)(i) to reflect the
removal of the Procedures and collapsing
the same into the Rulebook.
Rule 1502(a)(i)......................... Added language to the end of Rule Incorporation of Procedure
1502(a)(i) from Procedure 15-3(a) 15-3(a) to Rule
regarding Members and Users' submission 1502(a)(i).
of Cash Treasury Transactions and Repo
Transactions for clearing to the
Securities Clearing System, and access to
the same.
Rules 1502(a)(i)(A)-(B) and (a)(ii)- Added Rules 1502(a)(i)(A)-(B) and (a)(ii)- Incorporation of
(iii). (iii) from Procedures 15-3(a)(i)-(ii) and Procedures 15-3(a)(i)-
(b)-(c) regarding the specific submission (ii) and (b)-(c) as Rules
processes for Clear to Deliver 1502(a)(i)(A)-(B) and
Transactions, Cash Treasury Transactions, (a)(ii)-(iii).
and Repo Transactions.
Rules 1502(b) and (b)(i)-(iv)........... Added Rules 1502(b) and (b)(i)-(iv) from Incorporation of
Procedures 15-4(a)-(d) regarding the Procedures 15-4(a)-(d) as
functions of the Corporation's Securities Rules 1502(b) and (b)(i)-
Clearing System. (iv).
Rule 1503(a)............................ Revised Rule 1502(a) to replace cross- Clarification.
references to Procedures 15-1 and 15-3
with Rules 1501 and 1502 to reflect
removal of the Procedures and collapsing
the same into the Rulebook. Also removed
the reference to ``Procedures'' for the
same reason.
Added language to Rule 1503(a) from Incorporation of Procedure
Procedure 15-5(a) to reflect that 15-5(a) to Rule 1503(a).
novation may occur ``[u]pon completion of
the confirmations set forth in Rule
1502(b)''.
Rule 1503(c)............................ Changed the format of the cross-references Technical.
to combine the subparagraphs with the
Rules.
Rules 1503(d) and (d)(i)-(vi)........... Added new heading, ``Settlement Incorporation of
Modification,'' to Rule 1503(d) to Procedures 15-8(a)-(f) as
reflect addition of Rules 1503(d)(i)-(vi) Rules 1503(d) and (d)(i)-
from Procedures 15-8(a)-(f) regarding (vi).
processes related to settlement
modification of different transactions,
notification to the Corporation of the
same, and cancellation of the original
transaction upon such modification.
[[Page 6678]]
Rules 1503(e) and (e)(i)-(iv)........... Added Rules 1503(e) and (e)(i)-(iv) from Incorporation of
Procedures 15-5(b) and (b)(i)-(iv) Procedures 15-5(b) and
regarding the Clearing Confirmation (b)(i)-(iv) as Rules
provided to Members and Users that were 1503(e) and (e)(i)-(iv).
parties to original Repo Transactions or
Cash Treasury Transactions.
Rule 1504(a)............................ Added ``and'' before item (B) as a Technical.
technical edit.
Rule 1504(d)............................ Added language to Rule 1504(d) to clarify Clarification.
that the procedures for settlement and
netting are detailed in paragraphs (f)
and (g) of Rule 1504. Also capitalized
``Transactions'' in ``Clear to Hold
Transactions'' to reflect that it is part
of the defined term.
Rule 1504(e)............................ Revised language to clarify that the Rule Clarification.
applies to ``any'' Repo Transactions
``and/or'' Cash Treasury Transactions.
Also removed the ``s'' from ``Daily
Settlement Report.'' Also added ``and/''
before ``or General Collateral
Bucket(s)''.
Rules 1504(f) and (f)(i)-(ix)........... Added Rules 1504(f) and (f)(i)-(ix) from Incorporation of
Procedures 15-6(a)-(i) regarding the Procedures 15-6(a)-(i) as
Corporation's settlement procedure and Rules 1504(f) and (f)(i)-
obligations of Members and Users pursuant (ix).
to the same.
Rules 1504(g) and (g)(i)-(v)............ Added Rules 1504(g) and (g)(i)-(v) from Incorporation of Rules
Procedures 1507(a)-(e) regarding the Procedures 15-7(a)-(e) as
Corporation's netting procedures. Rules 1504(g) and (g)(i)-
(v).
Rule 1505(a)............................ Revised Rule 1505(a) to be a ``General'' Incorporation of Procedure
provision related to the Corporation's 15-9(a) to Rule 1505(a).
collection of net deficit and payment of
net gain, which language was taken from
Procedure 15-9(a).
Rule 1505(b)............................ Added a lead-in provision, Rule 1505(b), Clarification.
which applies to 1505(b)(i)-(vii)
regarding components of Outstanding
Exposure Settlement for Clear to Deliver
Transactions.
Rule 1505(b)(i)......................... Added language to Rule 1505(b)(i) from Incorporation of
Procedures 15-9(b)(i)(A)-(C) regarding Procedures 15-9(b)(i)(A)-
the calculation of settlement variation (C) to Rule 1505(b)(i).
payment amount for Clear to Deliver
Transactions. Also changed ``Repo''
Transaction to ``Clear to Deliver''
Transaction to reflect the terminology
used in Procedures 15-9(b)(i)(A)-(C).
Revised the language regarding the Clarification.
``difference between the settlement
prices for the current and preceding
clearly cycles'' and added ``multiplied
by the par amount of the securities'' for
clarity.
Rule 1505(b)(ii)........................ Revised Rule 1505(b)(ii) to reflect Incorporation of
Procedures 15-9(b)(iii) and (b)(iii)(A) Procedures 15-9(b)(iii)
regarding the Repo Rate Accrual and and (b)(iii)(A) to Rule
calculation of the same. 1505(b)(ii).
Rule 1505(b)(iii)....................... Revised Rule 1505(b)(iii) to reflect Incorporation of
Procedures 15-9(b)(v) and (b)(v)(A)-(B) Procedures 15-9(b)(v) and
regarding collateral coupon payments for (v)(A)-(B) to Rule
Clear to Deliver Transactions. 1505(b)(iii).
Rule 1505(b)(iv)........................ Revised Rule 1505(b)(iv) to remove the Clarification.
reference to Procedure 15-9(b)(iv) and to
make it a lead-in paragraph to new Rules
1505(b)(iv)(A)-(C).
Rules 1505(b)(iv)(A)-(C)................ Added proposed Rules 1505(b)(iv)(A)-(C) Incorporation of
from Procedures 15-9(b)(iv)(A)-(C) Procedures 15-9(b)(iv)(A)-
regarding determining the Price Alignment (C) as Rules
Amount component of Clear to Deliver 1505(b)(iv)(A)-(C).
Transactions.
Rule 1505(b)(v)......................... Relocated existing Rule 1505(b)(v) Clarification.
regarding ``Additional Information
Included in Daily Margin Report'' to
become new Rule 1505(e) with minor
adjustments described below, which will
apply to all of Clear to Deliver
Transactions, Cash Treasury Transactions,
and Clear to Hold Transactions.
Incorporated Procedure 15-9(b)(vi) Incorporation of Procedure
regarding maturity adjustments for Clear 15-9(b)(vi) as new Rule
to Deliver Transactions as new Rule 1505(b)(v).
1505(b)(v).
Rule 1505(b)(vi)........................ Added Rule 1505(b)(vi) from Procedure 15- Incorporation of Procedure
9(b)(viii) regarding a potential transfer 15-9(b)(viii) as Rule
cash component to Outstanding Exposure 1505(b)(vi).
Settlement for Clear to Deliver
Transactions.
Rules 1505(b)(vii) and (b)(vii)(A)-(B).. Added Rules 1505(vii) and (vii)(A)-(B) Incorporation of
from Procedures 15-9(b)(vii) and (vii)(A)- Procedures 15-9(b)(vii)
(B) regarding the possible collection or and (vii)(A)-(B) as Rules
return of Haircut Collateral relating to 1505(vii) and (vii)(A)-
Outstanding Exposure Settlement for Clear (B).
to Deliver Transactions.
Rule 1505(c)............................ Added clarifying lead-in language to Rule Clarification.
1505(c) to reflect that Rules 1505(c)(i)-
(v) are components of Outstanding
Exposure Settlement for Cash Treasury
Transactions.
Rule 1505(c)(i)......................... Added language to Rule 1505(c)(i) from Incorporation of Procedure
Procedures 15-9(b)(ii)(A)-(B) regarding 15-9(b)(ii)(A)-(B) to
the calculation settlement variation Rule 1505(c)(i).
payment amount for Cash Treasury
Transactions.
Rule 1505(c)(ii)........................ Revised Rule 1505(c)(ii) to reflect Incorporation of
Procedures 15-9(b)(v) and (b)(v)(B) Procedures 15-9(b)(v) and
regarding collateral coupon payments for (b)(v)(B) to Rule
Cash Treasury Transactions. 1505(c)(ii).
Uncapitalized ``coupon payment date'' to Clarification.
reflect that it is not a defined term.
Rule 1505(c)(iii)....................... Revised Rule 1505(c)(iii) to remove the Clarification.
reference to Procedure 15-9(b)(iv) to
reflect the removal of the Procedures and
collapsing the same into the Rulebook.
Also revised Rule 1505(c)(iii) to reflect
that the Price Alignment Amount component
for a Cash Treasury Transaction is
calculated in the same manner as
explained in Rules 1505(b)(iv) with
respect to Clear to Deliver Transactions.
Rule 1505(c)(iv)........................ Added Rule 1505(c)(iv) from Procedure 15- Incorporation of Procedure
9(b)(vi) regarding maturity adjustments 15-9(b)(vi) as Rule
for Cash Treasury Transactions. 1505(c)(iv).
Rule 1505(c)(v)......................... Added Rule 1505(c)(v) from Procedure 15- Incorporation of Procedure
9(b)(viii) regarding a potential transfer 15-9(b)(viii) as new Rule
cash component to Outstanding Exposure 1505(c)(v).
Settlement for Cash Treasury Transactions.
Rule 1505(d)............................ Added Rule 1505(d) from Procedure 15-9(c)-- Incorporation of Procedure
mislabeled in the Procedures as Procedure 15-9(c)--mislabeled in
15-9(b)--regarding Outstanding Exposure Procedures as 15-9(b)--as
Settlement for Clear to Hold Transactions new Rule 1505(d).
with two adjustments: (i) clarified that
the ``components'' included in the
Outstanding Exposure Settlement for Clear
to Hold Transactions includes
``settlement variation,''; and (ii)
changed the cross-references of Procedure
15-9(b)(i)-(iii) to Rule 1509(d)(i-(iii).
Rule 1505(d)(i)......................... Added Rule 1505(d)(i) from Procedure 15- Incorporation of Procedure
9(c)(i)--mislabeled in the Procedures as 15-9(c)(i)--mislabeled in
15-9(b)(i)--regarding Haircut Collateral Procedures as 15-9(b)(i)--
for Clear to Hold Transactions. as Rule 1505(d)(i).
Rule 1505(d)(ii)........................ Added Rule 1505(d)(ii) from Procedure 15- Incorporation of Procedure
9(c)(ii)--mislabeled in the Procedures as 15-9(c)(ii)--mislabeled
15-9(b)(ii)--regarding the daily repo in Procedures as 15-
rate accrual for Clear to Hold 9(b)(ii)--as Rule
Transactions. 1505(d)(ii).
[[Page 6679]]
Rule 1505(d)(iii)....................... Added Rule 1505(d)(iii) from Procedure 15- Incorporation of Procedure
9(c)(iii)--mislabeled in the Procedures 15-9(c)(iii)--mislabeled
as 15-9(b)(iii)--regarding Haircut in Procedures as 15-
Collateral for Clear to Hold Transactions. 9(b)(iii)--as Rule
1505(d)(iii).
Rule 1505(e)............................ Relocated existing Rule 1505(b)(iv) to Clarification.
become new Rule 1505(e) regarding
Additional Information Included in Daily
Margin Report to reflect that this
provision applies to all types of
transactions and components thereto; also
made changes to clarify that the Daily
Margin Report will include, among others,
any settlement variation, repo rate
accrual and maturity adjustments for
collateral that expires before securities
settlement.
Rules 1505(f) and (f)(i)-(ii)........... Add Rule 1505(f) and (f)(i)-(ii) from Incorporation of Procedure
Procedure 15-9(d)--mislabeled in the 15-9(d)--mislabeled in
Procedures as 15-9(c)--regarding the Procedures as 15-9(c)--as
intraday clearing cycle for Clear to Rule 1505(f).
Deliver Transactions, Cash Treasury
Transactions, and Clera to Hold
Transactions.
Rule 1506(b)............................ Capitalized ``Repo Transaction'' to Clarification.
reflect that it is a defined term.
Rule 1506(b)(i)......................... Uncapitalized ``For'' to conform with Technical.
other items in Rule 1506(b)(i)-(iii).
Rules 1506(c) and (c)(i)................ Added ``will'' before the colon and Technical.
removed ``will'' at the beginning of Rule
1506(c)(i).
Rule 1506(h)............................ Moved lead-in language of Rule 1506(h) to Clarification.
new subparagraph (h)(i).
Rule 1506(h)(i)......................... Added new Rule 1506(h)(i) from Procedure Incorporation of Procedure
15-10(a) regarding buy-in procedure where 15-10(a) as Rule
a Member or User has failed to satisfy 1506(h)(i).
its obligations to deliver Eligible
Securities to the Corporation.
Rule 1506(h)(ii)........................ Removed reference to Procedure 15-10 to Clarification.
reflect the removal of the Procedures and
collapsing the same into the Rulebook.
Added new Rule 1506(h)(ii) using language Incorporation of
from existing Rule 1506(h) and adding Procedures 15-10(b)-(d)
language to new Rule 1506(h)(ii) from as Rule 1506(h)(ii).
Procedures 15-10(b)-(d) regarding the
Notice of Intention to Buy-In.
Rule 1506(h)(iii)....................... Added Rule 1506(h)(iii) using language Incorporation of Procedure
from existing Rule 1506(h) and revised 15-10(e) as Rule
language in the same to reflect the 1506(h)(iii).
language in Procedure 15-10(e) regarding
procedure for settling a buy-in and
calculation of the settlement.
Rule 1506(h)(iv)........................ Relocated existing Rule 1506(h) to Clarification.
becoming new Rule 1506(h)(iv) with
additional language reflecting that Rule
1506(h)(iv) provides an alternative to
the settlement procedure in Rule
1506(h)(iii).
Rule 1507(a)............................ Removed the reference to ``and Clarification.
Procedures'' to reflect the removal of
the Procedures and collapsing the same
into the Rulebook.
Rules 1507(b)-(d), (e)(iii), (f)........ Changed the format of the cross-references Technical.
to combine the subparagraphs with the
Rules.
Rule 1507(e)(iii)....................... Deleted the reference to ``Procedures'' to Clarification.
reflect the removal of the Procedures and
collapsing the same into the Rulebook.
Also corrected the cross-references in
Rule 1507(e)(iii) to refer to Rules
1506(c) and 1506(h)(iii) regarding the
processes for close-outs and buy-ins.
Rule 1507(f)............................ Removed the reference to ``Procedure 15- Clarification.
11'' to reflect the removal of the
Procedures and collapsing the same into
the Rulebook. Also capitalized ``Repo
Transactions'' to reflect that it is a
defined term. Also removed language
regarding notification to Members or
Users subject to acceleration of the
details of the accelerated positions,
because the same is reflected in new Rule
1507(g).
Rule 1507(g)............................ Added Rule 1507(g) from Procedure 15-11(b) Incorporation of Procedure
regarding notification to non-Defaulting 15-11(b) as Rule 1507(g).
Members or Non-Defaulting Users of the
Corporation's acceleration rights and the
terms of accelerated transactions, and
also added language from existing Rule
1507(f) regarding compensation to Members
or Users equal to the reasonable costs of
entering into a replacement Repo
Transaction.
Rule 1508(a)............................ Changed reference to Rule 405(c) to 405(d) Correction and
to reflect the correct cross-reference, Clarification.
and removed the reference to Procedure 4-
4.
Changed the format of the cross-reference Technical.
to combine the subparagraph with the Rule.
Rule 1508(e)............................ Changed reference to Rule 405(c) to 405(d) Correction and
to reflect the correct cross-reference, Clarification.
and removed the reference to Procedure 4-
4.
Changed the format of the cross-reference Technical.
to combine the subparagraph with the Rule.
Rule 1508(g)(i)......................... Changed ``borrow of''--with respect to Clarification.
paired sales--to ``reverse repo
transaction involving'' to improve
clarity.
Rules 1508(g)(i)-(ii)................... Capitalized references to ``Repo Clarification.
Transaction'' to reflect that it is a
defined term.
Rule 1508(g)(ii)........................ Changed ``borrow of''--with respect to Clarification.
paired purchases--to ``repo transaction
for'' to improve clarity.
Rule 1508(g)(iii)....................... Changed the format of the cross-reference Technical.
to combine the subparagraphs with the
Rule.
Rule 1509(a)............................ Added language to Rule 1509(a) to reflect Clarification.
that the terms of offsetting repo
transactions will be determined based on
current market values. Also added ``(2)''
after ``two'' for clarity.
Rules 1509(a)-(b)....................... Capitalized references to ``Repo Clarification.
Transaction'' to reflect that it is a
defined term.
----------------------------------------------------------------------------------------------------------------
2. Statutory Basis
Section 17A(b)(3)(F) of the Act requires, in part, that the rules
of a clearing agency be designed to promote the prompt and accurate
clearance and settlement of securities transactions and, in general, to
protect investors and the public interest.\6\ CMESC believes that the
proposed changes are consistent with these provisions of Section
17A(b)(3)(F) because they would provide greater clarity, consistency,
and understanding of CMESC's clearance and settlement practices and
further the goals of Section 17A(b)(3)(F). The primary purpose of the
proposed rule change is to consolidate and relocate CMESC's current
Procedures into the Rules. Currently, CMESC's specific procedures
related to clearance and settlement are, in many cases, described in
Procedures separate from the Rules. CMESC believes that consolidating
these provisions into the Rules--which will allow Members and Users and
the public to review a single document relating to CMESC's clearing
services rather than separate Procedures and Rules--will improve the
readability of CMESC's policies and procedures for clearance and
settlement and facilitate greater understanding of the same. CMESC
believes that greater understanding of CMESC's Rules in turn helps
promote the prompt and accurate clearance and settlement of securities
transactions. CMESC also believes that greater understanding of its
Rules promotes the protection of investors and the public interest by
similarly reducing uncertainty with respect to clearance and settlement
of securities transactions.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------
In addition to consolidating its Procedures and Rules, CMESC also
proposes changes to the current text of
[[Page 6680]]
certain Rules to eliminate redundancy and promote clarity for Members
and Users. Greater clarity regarding Participants' rights and
obligations as set forth in the Rules makes it more likely that they
will act in accordance with the Rules, which CMESC believes would
promote the prompt and accurate clearance and settlement of securities
transactions. CMESC therefore believes that the proposed rule change is
consistent with Section 17A(b)(3)(F) of the Act.\7\
---------------------------------------------------------------------------
\7\ Id.
---------------------------------------------------------------------------
CMESC also believes that the proposed rule change is consistent
with Rule 17ad-22(e)(1) under the Act, which requires that a covered
clearing agency's policies and procedures provide for a well-founded,
clear, transparent, and enforceable legal basis for each aspect of its
activities in all relevant jurisdictions.\8\ Specifically, CMESC
believes that by improving the readability of its Rules through the
consolidation of the Procedures into the Rules, and by providing
additional clarity with technical changes and corrections, CMESC's
Rules will be more clear and transparent, which in turn supports their
enforceability.
---------------------------------------------------------------------------
\8\ 17 CFR 240.17ad-22(e)(1).
---------------------------------------------------------------------------
(B) CMESC's Statement on Burden on Competition
CMESC does not believe that the proposed rule change will impose
any burden on competition not necessary or appropriate in furtherance
of the purposes of the Act. The proposed rule change is designed to
improve the Rules' accuracy and clarity for Members and Users, and to
be consistent with the Act. These proposed changes would not affect
CMESC's operations that are already provided in the existing Rules and
Procedures or create additional rights and obligations of Members and
Users. As such, CMESC does not believe the proposed rule change would
have any impact on burden on competition that does not already exist
under the existing Rules and Procedures or is not necessary or
appropriate in furtherance of the purposes of the Act.
(C) CMESC's Statement on Comments on the Proposed Rule Change Received
From Members, Participants, or Others
CMESC currently does not have any Members or Users and has not
received nor solicited any written comments from others related to this
proposal. CMESC has not received any unsolicited written comments from
any interested parties. 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-submit-comments">https://www.sec.gov/regulatory-actions/how-to-submit-comments</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#1165637075787f76707f757c70637a746562516274723f767e67"><span class="__cf_email__" data-cfemail="2155534045484f46404f454c40534a445552615244420f464e57">[email protected]</span></a> or 222-551-5777. CMESC reserves the right to
not respond to any comments received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
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; and
(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 \9\ and
Rule 19b-4(f)(6) \10\ thereunder.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
A proposed rule change filed under rule 19b-4(f)(6) \11\ normally
does not become operative prior to 30 days after the date of filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\12\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Clearing Agency
has asked the Commission to waive the 30-day operative delay so that
the proposed rule change may become operative immediately upon filing.
The Clearing Agency states that this waiver would be appropriate to
allow CMESC to maintain clear and accurate Rules in one document
(instead of maintaining separate Rules and Procedures in two documents)
and avoid any internal confusion or errors in carrying out the
important responsibilities described in the Rules and existing
Procedures. The Clearing Agency also stated that in anticipation of the
launch of its clearing services, it is imperative that the proposed
rule change become operative as soon as possible in order to provide
market participants the needed clarity and transparency for evaluating
their choices of clearing services. The Commission agrees that a waiver
of the 30-day operative delay is appropriate under the particular facts
and circumstances here, and that this waiver is consistent with the
protection of investors and the public interest.\13\
---------------------------------------------------------------------------
\11\ Id.
\12\ 17 CFR 240.19b-4(f)(6)(iii).
\13\ For purposes only of waiving the 30-day operative delay,
the Commission also has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
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="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#acded9c0c981cfc3c1c1c9c2d8dfecdfc9cf82cbc3da"><span class="__cf_email__" data-cfemail="80f2f5ece5ade3efedede5eef4f3c0f3e5e3aee7eff6">[email protected]</span></a>). Please include
File Number SR-CMESC-2026-001 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-CMESC-2026-001. 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="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
Copies of the filing will be available for inspection and copying at
the principal office of CMESC. Do not include personal identifiable
information in submissions; you should submit only information that you
wish to make available publicly. We may
[[Page 6681]]
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-CMESC-2026-001 and should be submitted
on or before March 5, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
---------------------------------------------------------------------------
\14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-02800 Filed 2-11-26; 8:45 am]
BILLING CODE 8011-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on February 12, 2026.
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.