Notice2026-05558
Self-Regulatory Organizations; Fixed Income Clearing Corporation; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change To Amend and Restate the Second Amended and Restated Cross-Margining Agreement Between FICC and CME and Amend Related GSD 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
March 23, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 55 (Monday, March 23, 2026)</title>
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[Federal Register Volume 91, Number 55 (Monday, March 23, 2026)]
[Notices]
[Pages 13912-13915]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-05558]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105041; File No. SR-FICC-2025-025]
Self-Regulatory Organizations; Fixed Income Clearing Corporation;
Order Instituting Proceedings To Determine Whether To Approve or
Disapprove a Proposed Rule Change To Amend and Restate the Second
Amended and Restated Cross-Margining Agreement Between FICC and CME and
Amend Related GSD Rules
March 18, 2026.
I. Introduction
On December 12, 2025, Fixed Income Clearing Corporation (``FICC'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change SR-FICC-2025-025 pursuant to Section 19(b) of the
Securities Exchange Act of 1934 (``Exchange Act'') \1\ and Rule 19b-4
\2\ thereunder concerning changes to the Cross-Margining Agreement with
the Chicago Mercantile Exchange Inc. (``CME'') and related rule changes
to FICC Government Securities Division (``GSD'') Rulebook (``GSD
Rules'') to extend the availability of cross-margining to positions
cleared and carried for customers by a dually registered broker-dealer
and futures commission merchant that is a common member of FICC and CME
(``Eligible BD-FCM''). The Proposed Rule Change was published for
public comment in the Federal Register on December 29, 2025.\3\ The
Commission has received comments regarding the substance of the changes
proposed in the Proposed Rule Change.\4\
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Securities Exchange Act Release No. 104485 (Dec. 22, 2025),
90 FR 60791 (Dec. 29, 2025) (File No. SR-NSCC-2025-025) (``Notice of
Filing'').
\4\ Comments on the Proposed Rule Change are available at
<a href="https://www.sec.gov/comments/sr-ficc-2024-009/srficc2024009.htm">https://www.sec.gov/comments/sr-ficc-2024-009/srficc2024009.htm</a>.
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On January 26, 2026, pursuant to Section 19(b)(2) of the Exchange
Act,\5\ the Commission designated a longer period within which to
approve, disapprove, or institute proceedings to determine whether to
approve or disapprove the Proposed Rule Change.\6\ The Commission is
instituting proceedings, pursuant to Section 19(b)(2)(B) of the
Exchange Act,\7\ to
[[Page 13913]]
determine whether to approve or disapprove the Proposed Rule Change.
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\5\ 15 U.S.C. 78s(b)(2).
\6\ Securities Exchange Act Release No. 104690 (Jan. 26, 2026),
91 FR 3944 (Jan. 29, 2026) (File No. SR-FICC-2025-025).
\7\ 15 U.S.C. 78s(b)(2)(B).
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II. Summary of the Proposed Rule Change
A. Background
FICC's GSD provides trade comparison, netting, risk management,
settlement, and central counterparty (``CCP'') services for the U.S.
Government securities market.\8\ As a CCP, FICC novates the
transactions submitted to it by its members, which means it interposes
itself as the buyer to every seller and seller to every buyer for the
financial transactions it clears. As such, FICC is exposed to the risk
that one or more of its members may fail to make a payment or to
deliver securities.
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\8\ FICC's Mortgage-Backed Securities Division provides similar
services for mortgage-backed securities. For purposes of this Order,
``FICC'' refers to GSD.
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A key tool that FICC uses to manage its credit exposures to its
members is the daily collection of margin from each member. A member's
margin is designed to mitigate potential losses associated with
liquidation of the member's portfolio in the event of that member's
default. Margin requirements are typically designed, in part, to
recognize the potential relationship between products in a member's
portfolio (e.g., some products may naturally gain value when others
lose value), to accurately manage the risk that two offsetting
transactions may present.
To recognize potential offsets in the risk presented by related
products, FICC has a Cross-Margining Arrangement with CME,\9\ which
acts as a CCP for futures related to the debt instruments that FICC
clears.\10\ Under the Existing Agreement, a joint clearing member of
both Clearing Organizations (a ``Joint Clearing Member'') that
participates in the Cross-Margining Arrangement may designate any of
its accounts at FICC (except its Sponsoring Member Omnibus Account) to
be cross-margined with a cross-margining account on the books of CME.
FICC states that any resulting margin reductions create capital
efficiencies for the Cross-Margining Participants and incentivize them
to maintain or carry portfolios that present lower overall risk.\11\
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\9\ In 2023, FICC and CME entered into the Amended and Restated
Cross-Margining Agreement that allows FICC and CME to consider the
net risk of a participant's eligible positions at each Clearing
Organization when setting margin requirements for such positions.
See Securities Exchange Act Release No. 98327 (Sept. 8, 2023), 88 FR
63185 (Sept. 14, 2023). In 2025, FICC and CME entered into the
Second Amended and Restated Cross-Margining Agreement (the
``Existing Agreement''), which made certain changes to account for
requirements under amended Rule 17ad-22 to hold margin for
transactions in U.S. Treasury securities that a Netting Member
submits to FICC on behalf of an indirect participant separately and
independently from margin for the Netting Member's proprietary
positions. See Securities Exchange Act Release No. 103399 (July 8,
2025), 90 FR 31043 (July 11, 2025) (File No. SR-FICC-2025-014). The
Existing Agreement is incorporated by reference in the GSD Rules,
available at <a href="http://www.dtcc.com/legal/rules-and-procedures.aspx">www.dtcc.com/legal/rules-and-procedures.aspx</a>. Unless
otherwise specified, capitalized terms not defined herein shall have
the meanings ascribed to them in the GSD Rules, which includes the
Existing Agreement.
\10\ CME provides central counterparty services for futures,
options, and swaps. See Financial Stability Oversight Council
(``FSOC'') 2012 Annual Report, Appendix A, available at <a href="https://home.treasury.gov/system/files/261/here.pdf">https://home.treasury.gov/system/files/261/here.pdf</a> (last visited July 17,
2023).
\11\ See Notice of Filing, supra note 3, 90 FR at 60792.
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FICC is proposing to extend the availability of the Cross-Margining
Arrangement to positions cleared and carried for customers other than
an Eligible Affiliate (``Cross-Margining Customers''). FICC states that
this would allow Cross-Margining Customers to benefit from the margin
reductions that are currently only available to Cross-Margining
Participants and their Eligible Affiliates under the Existing
Agreement.\12\ FICC and CME have also submitted to the Commission and
the Commodity Futures Trading Commission (``CFTC'') petitions for
exemptive relief from certain provisions of the Commodity Exchange Act
and Exchange Act that would enable FICC and CME to make cross-margining
available to Cross-Margining Customers.\13\
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\12\ Id.
\13\ See Securities Exchange Act Release No. 104748 (Jan. 30,
2026), 91 FR 4994 (Feb. 3, 2026) (File No. S7-2026-03) (the ``SEC
Petition''); CFTC, Proposal to Provide Exemptive Relief to
Facilitate Cross-Margining of Customer Positions Cleared at Chicago
Mercantile Exchange, Inc. and Fixed Income Clearing Corporation, 90
FR 58525 (Dec. 17, 2025) (the ``CFTC Petition'', and collective with
the SEC Petition, the ``Petitions'', and the proposed Commission and
CFTC orders as described in the Petitions, the ``Proposed Orders'').
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B. Proposed Changes
To extend the availability of cross-margining to Cross-Margining
Customers, FICC is proposing to replace the Existing Agreement with the
proposed Third Amended and Restated Cross-Margining Agreement (the
``Third A&R Agreement''), incorporate it into the GSD Rules, and adopt
related changes to the GSD Rules.\14\
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\14\ See Notice of Filing, supra note 3, 90 FR at 60792.
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The amendments to the Existing Agreement would address eligibility
criteria and participation requirements for customer cross-margining,
establishment of customer cross-margining accounts, margin methodology
for customer cross-margining, default management of a Joint-Clearing
Member carrying positions for Cross-Margining Customers, and other
conforming changes and clarifying edits.\15\ For participation in the
Cross-Margining Arrangement, the amendments would also require Eligible
BD-FCMs to enter into the Customer Cross-Margining Clearing Member
Agreement as set forth in Appendix C to the Third A&R Agreement, as
well as require Cross-Margining Customers to enter into an agreement
with the Eligible BD-FCM that includes certain terms also set forth in
Appendix C.\16\ The amendments would also provide for consistency with
the Petitions.
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\15\ Id. at 60793-97.
\16\ Id. at 60797-99.
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FICC is also proposing related changes to the GSD Rules to
effectuate and conform with the Customer Cross-Margining Arrangement,
as well as the adoption of new defined terms to effectuate these
changes.\17\ The proposed changes include provisions addressing the
establishment of customer cross-margining accounts, treatment of Cross-
Margining Customer margin, and description of the Customer Cross-
Margining Arrangement.
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\17\ Id. at 60799-803.
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FICC states that the adoption of the Third A&R Agreement and
related changes to the GSD Rules would promote the maintenance of more
balanced portfolios that present lower risk and facilitate the access
of indirect participants to central clearing, in accordance with Rule
17ad-22 under the Exchange Act.\18\
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\18\ Id. at 60792.
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III. Proceedings To Determine Whether To Approve or Disapprove the
Proposed Rule Change and Grounds for Disapproval Under Consideration
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Exchange Act to determine whether the Proposed Rule
Change should be approved or disapproved.\19\ Institution of
proceedings is appropriate at this time in view of the legal and policy
issues raised by the Proposed Rule Change. Institution of proceedings
does not indicate that the Commission has reached any conclusions with
respect to any of the issues involved. Rather, the Commission seeks and
encourages interested persons to comment on the Proposed Rule Change,
which would provide the Commission with arguments to support the
Commission's
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analysis as to whether to approve or disapprove the Proposed Rule
Change.
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\19\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to Section 19(b)(2)(B) of the Exchange Act,\20\ the
Commission is providing notice of the grounds for disapproval under
consideration. The Commission is instituting proceedings to allow for
additional analysis of, and input from commenters with respect to, the
Proposed Rule Change's consistency with Section 17A of the Exchange Act
\21\ and the rules thereunder, including the following provisions:
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\20\ Id.
\21\ 15 U.S.C. 78q-1.
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<bullet> Section 17A(b)(3)(F) of the Exchange Act,\22\ which
requires, among other things, that the rules of a clearing agency are
designed to promote the prompt and accurate clearance and settlement of
securities transactions, as well as to foster cooperation and
coordination with persons engaged in the clearance and settlement of
securities transactions; and, in general, to protect investors and the
public interest;
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\22\ 15 U.S.C. 78q-1(b)(3)(F).
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<bullet> Rule 17ad-22(e)(4)(i) under the Exchange Act,\23\ which
requires that a covered clearing agency establish, implement, maintain,
and enforce written policies and procedures reasonably designed to
effectively identify, measure, monitor, and manage its credit exposures
to participants and those arising from its payment, clearing, and
settlement processes, including by maintaining sufficient financial
resources to cover its credit exposure to each participant fully with a
high degree of confidence;
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\23\ 17 CFR 240.17ad-22(e)(4)(i).
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<bullet> Rule 17ad-22(e)(6)(i) under the Exchange Act,\24\ which
requires that a covered clearing agency establish, implement, maintain,
and enforce written policies and procedures reasonably designed to
cover its credit exposures to its participants by establishing a risk-
based margin system that, at a minimum, considers, and produces margin
levels commensurate with, the risks and particular attributes of each
relevant product, portfolio, and market, and, if the covered clearing
agency provides central counterparty services for U.S. Treasury
securities, calculates, collects, and holds margin amounts from a
direct participant for its proprietary positions in Treasury securities
separately and independently from margin calculated and collected from
that direct participant in connection with U.S. Treasury securities
transactions by an indirect participant that relies on the services
provided by the direct participant to access the covered clearing
agency's payment, clearing, or settlement facilities;
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\24\ 17 CFR 240.17ad-22(e)(6)(i).
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<bullet> Rule 17ad-22(e)(18)(iv)(C) under the Exchange Act,\25\
which requires that a covered clearing agency establish, implement,
maintain, and enforce written policies and procedures reasonably
designed to establish objective, risk-based, and publicly disclosed
criteria for participation, which, when the covered clearing agency
provides central counterparty services in transactions in U.S. Treasury
securities, ensure that it has appropriate means to facilitate access
to clearance and settlement services of all eligible secondary market
transactions in U.S. Treasury securities, including those of indirect
participants, which policies and procedures the board of directors of
such covered clearing agency reviews annually;
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\25\ 17 CFR 240.17ad-22(e)(18)(iv)(C).
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<bullet> Rule 17ad-22(e)(19) under the Exchange Act,\26\ which
requires that a covered clearing agency establish, implement, maintain,
and enforce written policies and procedures reasonably designed to
identify, monitor, and manage the material risks to the covered
clearing agency arising from arrangements in which firms that are
indirect participants in the covered clearing agency rely on the
services provided by direct participants to access the covered clearing
agency's payment, clearing, or settlement facilities; and
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\26\ 17 CFR 240.17ad-22(e)(19).
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<bullet> Rule 17ad-22(e)(23)(ii) under the Exchange Act,\27\ which
requires that a covered clearing agency establish, implement, maintain,
and enforce written policies and procedures reasonably designed to
provide sufficient information to enable participants to identify and
evaluate the risks, fees, and other material costs they incur by
participating in the covered clearing agency.
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\27\ 17 CFR 240.17ad-22(e)(23)(ii).
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IV. Procedure: Request for Written Comments
The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the Proposed Rule Change. In particular, the Commission invites
the written views of interested persons concerning whether the Proposed
Rule Change is consistent with Section 17A(b)(3)(F),\28\ and Rules
17ad-22(e)(4)(i), (e)(6)(i), (e)(18)(iv)(C), (e)(19), and (e)(23)(ii)
\29\ of the Exchange Act, or any other provision of the Exchange Act,
or the rules and regulations thereunder. Although there do not appear
to be any issues relevant to approval or disapproval that would be
facilitated by an oral presentation of views, data, and arguments, the
Commission will consider, pursuant to Rule 19b-4(g) under the Exchange
Act,\30\ any request for an opportunity to make an oral
presentation.\31\
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\28\ 15 U.S.C. 78q-1(b)(3)(F).
\29\ 17 CFR 240.17Ad-22(e)(4)(i), 17 CFR 240.17Ad-22(e)(6)(i),
17 CFR 240.17Ad-22(e)(18)(iv)(C), 17 CFR 240.17ad-22(e)(19) and 17
CFR 240.17ad-22(e)(23)(ii).
\30\ 17 CFR 240.19b-4(g).
\31\ Section 19(b)(2) of the Exchange Act grants to the
Commission flexibility to determine what type of proceeding--either
oral or notice and opportunity for written comments--is appropriate
for consideration of a particular proposal by a self-regulatory
organization. See Securities Acts Amendments of 1975, Senate Comm.
on Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st
Sess. 30 (1975).
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The Commission asks that commenters address the sufficiency of
FICC's statements in support of the Proposed Rule Change, which are set
forth in the Notice of Filing \32\ in addition to any other comments
they may wish to submit about the Proposed Rule Change.
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\32\ See Notice of Filing, supra note 3.
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Comments may be submitted by any of the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#0d7f786168206e6260606863797e4d7e686e236a627b"><span class="__cf_email__" data-cfemail="3c4e495059115f5351515952484f7c4f595f125b534a">[email protected]</span></a>. Please include
file number SR-FICC-2025-025 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-FICC-2025-025. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). Copies of such filing also will be available for inspection
and copying at the principal office of FICC and on FICC's website
(<a href="http://www.dtcc.com/legal/second">www.dtcc.com/legal/second</a> rule-filings). Do not include personal
identifiable information in submissions; you should submit only
information that you wish to make available publicly. We may redact in
part or withhold entirely from
[[Page 13915]]
publication submitted material that is obscene or subject to copyright
protection. All submissions should refer to File Number SR-FICC-2025-
025 and should be submitted on or before April 13, 2026. Rebuttal
comments should be submitted by April 27, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\33\
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\33\ 17 CFR 200.30-3(a)(31).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2026-05558 Filed 3-20-26; 8:45 am]
BILLING CODE 8011-01-P
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