Notice2026-06043
Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing of Proposed Rule Change Concerning a New Customer Net Margin Account Option for Agent Clearing Members in the Securities Financing Transaction Clearing Service
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 30, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 60 (Monday, March 30, 2026)</title>
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[Federal Register Volume 91, Number 60 (Monday, March 30, 2026)]
[Notices]
[Pages 15671-15677]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-06043]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105079; File No. SR-NSCC-2026-005]
Self-Regulatory Organizations; National Securities Clearing
Corporation; Notice of Filing of Proposed Rule Change Concerning a New
Customer Net Margin Account Option for Agent Clearing Members in the
Securities Financing Transaction Clearing Service
March 25, 2026.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on March 20, 2026, National Securities Clearing Corporation (``NSCC'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II and III below, which
Items have been prepared by the clearing agency. The Commission
[[Page 15672]]
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
The proposed rule change consists of amendments to the NSCC Rules &
Procedures (``NSCC Rules'') to offer a new net margin account option
for Agent Clearing Members in NSCC's securities financing transaction
(``SFT'') clearing service (``SFT Clearing Service'').\3\
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\3\ Capitalized terms not defined herein shall have the meaning
assigned to such terms in the NSCC Rules, available at <a href="http://www.dtcc.com/legal/rules-and-procedures">www.dtcc.com/legal/rules-and-procedures</a>.
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II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
In its filing with the Commission, the clearing agency included
statements concerning the purpose of and basis for the proposed rule
change and discussed any comments it received on the proposed rule
change. The text of these statements may be examined at the places
specified in Item IV below. The clearing agency has prepared summaries,
set forth in sections A, B, and C below, of the most significant
aspects of such statements.
(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
1. Purpose
The purpose of this proposed rule change is to modify the NSCC
Rules to offer a new net margin account option for Agent Clearing
Members in NSCC's SFT Clearing Service. The proposed rule change is
discussed in detail below.
Background
SFT Clearing Service
In 2022, NSCC introduced its SFT Clearing Service to provide
central clearing for SFTs.\4\ SFTs are, broadly speaking, transactions
where the parties exchange equity securities against cash and
simultaneously agree to exchange the same securities and cash, plus or
minus a rate payment, on a future date. The SFT Clearing Service
established new membership categories and requirements for (i)
Sponsoring Members and Sponsored Members whereby existing Members would
be permitted to sponsor certain institutional firms into membership \5\
and (ii) Agent Clearing Members whereby existing Members would be
permitted to submit, on behalf of their customers, transactions to NSCC
for novation.\6\ The SFT Clearing service is available for SFTs entered
into between (i) a Member and another Member; (ii) a Sponsoring Member
and its Sponsored Member (``Sponsored Member Transaction''); and (iii)
an Agent Clearing Member acting on behalf of a Customer and either (x)
a Member or (y) the same or another Agent Clearing Member acting on
behalf of a Customer (``Agent Clearing Member Transaction'').\7\ An
Agent Clearing Member's clearing of Agent Clearing Member Transactions
for Customers is also referred to in the NSCC Rules as the Customer
Clearing Service.\8\
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\4\ See Securities Exchange Act Release No. 95011 (May 31,
2022), 87 FR 34339 (June 6, 2022) (SR-NSCC-2022-003) (Order
Approving Proposed Rule Change to Introduce Central Clearing for
Securities Financing Transaction Clearing Service). NSCC also filed
the proposal as advance notice SR-NSCC-2022-801. See Securities
Exchange Act Release No. 94998 (May 27, 2022), 87 FR 33528 (June 2,
2022) (SR-NSCC-2022-801) (Notice of No Objection to Advance Notice
to Introduce Central Clearing for Securities Financing Transaction
Clearing Service).
\5\ See id. and NSCC Rule 2C (Sponsoring Members and Sponsored
Members), supra note 3.
\6\ See supra note 4 and NSCC Rule 2D (Agent Clearing Members),
supra note 3.
\7\ See supra note 4 and Section 1 of NSCC Rule 56 (Securities
Financing Transaction Clearing Service), supra note 3.
\8\ See NSCC Rule 1 (Definitions and Descriptions), supra note
3.
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Agent Clearing Member/Customer Clearing Service
The Customer Clearing Service allows Members (in their capacity as
Agent Clearing Members) to play the role of agent and credit
intermediary for their institutional firm clients in clearing SFTs at
NSCC. Under the Customer Clearing Service, Agent Clearing Members may
submit to NSCC for novation Agent Clearing Member Transactions on
behalf of one or more of their Customers. An Agent Clearing Member acts
solely as agent of its Customers in connection with the clearing of
Agent Clearing Member Transactions; however, the Agent Clearing Member
remains fully liable for the performance of all obligations to NSCC
arising in connection with Agent Clearing Member Transactions.
The Customer Clearing Service was primarily designed to accommodate
agent-style trading, in which agent lenders are typically approved to
transact in securities lending transactions on behalf of their
institutional firm clients. For example, an Agent Clearing Member may
submit SFTs executed by it as agent on behalf of its institutional firm
clients (with each such client referred to as a ``Customer'') with a
Member participating in the SFT Clearing Service, which could include a
Member acting in a proprietary capacity within the SFT Clearing Service
as well as an Agent Clearing Member.
An Agent Clearing Member may establish one or more Agent Clearing
Member Customer Omnibus Accounts at NSCC for its Customers' positions
in the name of the Agent Clearing Member for the benefit of its
Customers.\9\ SFT Accounts are generally margined in accordance with
Procedure XV (Clearing Fund Formula and Methodology) of the NSCC Rules,
subject to certain adjustments discussed in Section 12(b) of NSCC Rule
56 (Securities Financing Transaction Clearing Service).\10\ However,
each Agent Clearing Member Customer Omnibus Account may contain only
activity where the Agent Clearing Member is acting either as Transferor
on behalf of its Customers, or as Transferee on behalf of its
Customers, but not both.\11\ An Agent Clearing Member wishing to act as
both Transferee and Transferor on behalf of its Customers currently
must establish separate borrowing and lending Agent Clearing Member
Customer Omnibus Accounts. As a result, the activity within any Agent
Clearing Member Customer Omnibus Account contains only ``long'' or
``short'' positions, and there is no offset or netting for margin and
Clearing Fund purposes. The Agent Clearing Member Customer Omnibus
Accounts are therefore effectively margined on a ``gross'' basis.
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\9\ See Section 5(b) of NSCC Rule 2D (Agent Clearing Members)
and Section 16(b) of NSCC Rule 56 (Securities Financing Transaction
Clearing Service), supra note 3.
\10\ See Section 12 of NSCC Rule 56 (Securities Financing
Transaction Clearing Service) and Procedure XV (Clearing Fund
Formula and Methodology) of the NSCC Rules, supra note 3.
\11\ See Section 16(b) of NSCC Rule 56 (Securities Financing
Transaction Clearing Service), supra note 3.
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NSCC proposes to amend the NSCC Rules to adopt a new Agent Clearing
Member ``net margin'' account option for Agent Clearing Members in the
SFT Clearing Service (as proposed, the ``Agent Clearing Member Customer
Net Margin Account''), which would contain activity where the Agent
Clearing Member may be acting both as Transferor on behalf of its
Customers and as Transferee on behalf of its Customers. The proposed
Agent Clearing Member Customer Net Margin Accounts would also be
margined in accordance with Procedure XV and Section 12(b) of Rule 56
of the NSCC Rules. However, unlike the current Agent Clearing Member
Customer Omnibus Accounts, the proposed Agent Clearing Member Customer
Net Margin Accounts would allow for the offset and
[[Page 15673]]
netting of positions for margin and Clearing Fund purposes, resulting
in reduced margin requirements that would be more similar to the margin
requirements of the SFT Accounts maintained by Members for their own
proprietary activity. The Agent Clearing Member would, however, remain
fully liable for the performance of all obligations to NSCC arising in
connection with Agent Clearing Member Transactions as with the existing
Agent Clearing Member Customer Omnibus Accounts.
Proposed Changes
NSCC proposes to amend the NSCC Rules to adopt new Agent Clearing
Member Customer Net Margin Accounts for its SFT Clearing Service. NSCC
Members and other market participants have expressed interest in NSCC
offering a net margin account option for SFT Members and their
Customers that is similar to the Agent Clearing Service offered by
NSCC's affiliate clearing agency, Fixed Income Clearing Corporation
(``FICC'').\12\ The proposed rule change would provide an additional
way for Agent Clearing Members and their Customers to access NSCC's SFT
Clearing Service while providing enhanced margin and capital efficiency
for users of the service, similar to the benefits offered by FICC's
Agent Clearing Service. The proposed rule change would further promote
the alignment of buyside access models across central counterparties
(``CCPs'') and facilitate broader access to clearance and settlement
services for Members and their Customers.
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\12\ See Securities Exchange Act Release No. 101694 (Nov. 21,
2024), 89 FR 93784 (Nov. 27, 2024) (SR-FICC-2024-005) (Order
Approving a Proposed Rule Change, as Modified by Partial Amendment
No. 1, to Modify the GSD Rules to Facilitate Access to Clearance and
Settlement of All Eligible Secondary Market Transactions in U.S.
Treasury Securities).
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The proposed Agent Clearing Member Customer Net Margin Accounts
would be offered in addition to, but would not replace, NSCC's existing
Agent Clearing Member Customer Omnibus Accounts, which do not allow for
netting within or across accounts and are margined on a gross basis for
margin and Clearing Fund purposes (hereinafter referred to as ``Agent
Clearing Member Customer Gross Margin Accounts'').\13\
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\13\ See supra note 11 and associated text.
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The proposed Agent Clearing Member Customer Net Margin Accounts
would be governed by NSCC's existing Rules for Agent Clearing Members
(NSCC Rule 2D) and the SFT Clearing Service (NSCC Rule 56) and would be
margined and risk managed in the same manner as a Member's proprietary
SFT Account activity at NSCC. However, NSCC would make several
modifications and clarifications to the NSCC Rules to (i) reflect the
establishment and maintenance of the new accounts; (ii) clarify
requirements for the submission of Agent Clearing Member Transactions;
and (iii) clarify the netting and close-out treatment of the new Agent
Clearing Member Customer Net Margin Accounts as compared to NSCC's
existing Agent Clearing Member Customer Omnibus Accounts. The proposed
rule change is discussed in detail below.
Proposed Changes to Definitions and Descriptions
NSCC proposes to add new defined terms to NSCC Rule 1 (Definitions
and Descriptions) to reflect the adoption of the proposed Agent
Clearing Member Customer Net Margin Accounts. Specifically, NSCC would
add a new defined term ``Agent Clearing Member Customer Net Margin
Account'' to mean an Agent Clearing Member Customer Omnibus Account
that may contain activity where the Agent Clearing Member is acting
both as Transferor and as Transferee on behalf of its Customers. NSCC
would also add a new defined term ``Agent Clearing Member Customer
Gross Margin Account'' to mean an Agent Clearing Member Customer
Omnibus Account that may only contain activity where the Agent Clearing
Member is acting as Transferor on behalf of its Customers, or as
Transferee on behalf of its Customers, but not both.\14\
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\14\ The proposed definition would reflect the current
description of activity maintained in Agent Clearing Member Customer
Omnibus Accounts in Section 16(b) of NSCC Rule 56 (Securities
Financing Transaction Clearing Service). See supra note 11.
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Additionally, NSCC would modify the definition of the existing term
``Agent Clearing Member Customer Omnibus Account'' to clarify that, as
proposed, an Agent Clearing Member Customer Omnibus Account may be
maintained as either an Agent Clearing Member Customer Gross Margin
Account or an Agent Clearing Member Customer Net Margin Account.
Proposed Changes Related to Submission of Agent Clearing Member
Transactions
NSCC proposes to modify the NSCC Rules to provide additional
clarity regarding the requirements for submitting Agent Clearing Member
Transaction data for Agent Clearing Member Customer Omnibus Accounts,
including both Agent Clearing Member Customer Gross Margin Accounts and
the proposed Agent Clearing Member Customer Net Margin Accounts.
NSCC would modify Section 5(a) of NSCC Rule 2D (Agent Clearing
Members) to clarify that Agent Clearing Members would be permitted to
submit for novation Agent Clearing Member Transactions entered into by
one or more Customers on whose behalf the Agent Clearing Member is
acting as agent. Currently, Section 5(a) of NSCC Rule 2D provides that
an Agent Clearing Member may submit transactions ``entered into by the
Agent Clearing Member as agent on behalf of one or more Customers.''
The proposed rule change would clarify that NSCC would accept for
novation any Agent Clearing Member Transactions, regardless of whether
such transactions are entered into by (i) the Agent Clearing Member on
behalf of a Customer or (ii) by the Customer itself. In either case,
however, the SFT trade data would be submitted for clearing to NSCC by
an Approved SFT Submitter acting on behalf of the Agent Clearing
Member.
In addition, NSCC would update Section 5(b) of NSCC Rule 2D to
clarify that an Agent Clearing Member may elect to maintain one or more
Agent Clearing Member Customer Gross Margin Accounts or Agent Clearing
Member Customer Net Margin Accounts. The proposed rule change would
conform with the proposed changes to the definition of Agent Clearing
Member Customer Omnibus Account, as discussed above.
NSCC also proposes to add new Section 4(g) of Rule 56 concerning
the submission of Agent Clearing Member Transactions. The proposed rule
change would require that, when submitting an SFT to NSCC, the SFT
transaction data shall designate the account in which the SFT shall be
recorded, and that any such designation shall constitute a
representation by the Agent Clearing Member to NSCC that the SFT is of
a type that may be recorded in such account in accordance with the NSCC
Rules. NSCC notes that an account designation is already a required
input for the submission of SFT transaction data. The proposed rule
change would clarify this requirement and help to ensure that Members
are submitting appropriate SFT activity into their designated account
types.
Proposed Changes Related to Netting, Close-Out and Default Management
Finally, NSCC proposes to update the NSCC Rules to clarify the
netting and close-out treatment of Agent Clearing Member Customer
Omnibus Accounts in the event of an Agent Clearing Member default and,
in particular, the
[[Page 15674]]
netting and close-out of activity in the proposed Agent Clearing Member
Customer Net Margin Accounts.
First, NSCC proposes to update Sections 9(c) and 10(b) of NSCC Rule
2D to clarify that, when NSCC ceases to act for an Agent Clearing
Member in its capacity as an Agent Clearing Member, NSCC would
terminate the ability of such Agent Clearing Member to submit Agent
Clearing Member Transactions for all of its Customers; however, any
Agent Clearing Member Transactions which have been novated by NSCC
shall continue to be processed by NSCC. NSCC notes that under Sections
9(c) and 10(b) of NSCC Rule 2D, NSCC has existing authority to decline
to accept or process data from the Agent Clearing Member, including
Agent Clearing Member Transactions, in the event of a cease to act
scenario. The proposed rule change would simply further clarify actions
that NSCC may take in such a scenario.
In addition, the proposed rule change would provide that, in the
event of a cease to act, NSCC, in its sole discretion, would determine
whether to (i) close out open Agent Clearing Member Transactions or
(ii) permit such Agent Clearing Member Transactions to be settled.\15\
Currently, the NSCC Rules discuss only NSCC's ability to close out open
Agent Clearing Member Transactions. NSCC believes that having the
option to permit such Agent Clearing Member Transactions to settle
would enhance its default management processes by allowing for the
settlement of Agent Clearing Member Transactions, rather than requiring
NSCC to take market action to close out such positions, if
circumstances permit.
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\15\ NSCC would also make related, conforming changes to Section
14(b)(iii) and (iv) of NSCC Rule 56 (Securities Financing
Transaction Clearing Service), which are discussed in further detail
below.
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NSCC would also modify Section 14(b) of NSCC Rule 56 concerning
cease to act procedures for SFT Members with open SFTs to clarify the
profit and loss (``P&L'') netting treatment for the proposed Agent
Clearing Member Customer Net Margin Accounts and related treatment for
Agent Clearing Member Customer Gross Margin Accounts and Sponsored
Member Sub-Accounts. Specifically, NSCC would add new rule text to
Section 14(b) of NSCC Rule 56 providing that, in determining NSCC's
loss or profit resulting from the close-out of SFT Positions
established in any Sponsored Member Sub-Account or Agent Clearing
Member Customer Omnibus Account, NSCC may (i) in the case of a
Sponsored Member Sub-Account, net the SFT Positions in such Sponsored
Member Sub-Account; (ii) in the case of an Agent Clearing Member
Customer Net Margin Account, net the positions in such account as well
as the positions in any other Agent Clearing Member Customer Net Margin
Account; and (iii) in the case of an Agent Clearing Member Customer
Gross Margin Account, not net the positions in the account. NSCC notes
that these proposed changes concerning Sponsored Members and Sponsored
Member Sub-accounts are clarifying and organizational in nature and are
not intended to substantively change any rights, requirements or
obligations associated with such accounts.
NSCC also proposes to clarify its general authority to close out
offsetting SFT Long and Short Positions in the same SFT Security
without taking market action to close such positions. The proposed rule
change would provide that, without limiting NSCC's rights in the NSCC
Rules, NSCC may decline to take market action to the extent that both
SFT Long Position(s) and SFT Short Position(s) are established in
respect of the same SFT Security in relation to a Defaulting SFT Member
or its Sponsored Members or Customers, as applicable. In such a
situation, the proposed rule would provide that NSCC may determine loss
or profit resulting from the close-out of such SFT Positions through
its other market actions or by reference to market data. In such
circumstances, the proposed rule change would allow NSCC to avoid
incurring the costs or risks of market action with respect to
offsetting SFT Positions when closing out the positions of a Defaulting
SFT Member or its Sponsored Members or Customers.
The proposed rule change is primarily intended to clarify the
netting and close-out actions that NSCC may take in the event of an
Agent Clearing Member default. Specifically, the proposed rule change
would clarify that for purposes of determining P&L in a close-out, NSCC
would net any positions in the new proposed Agent Clearing Member
Customer Net Margin Account within such account as well as with the
positions in any other Agent Clearing Member Customer Net Margin
Account. However, NSCC would not net positions in any Agent Clearing
Member Customer Gross Margin Account, either within the account or
across accounts, to preserve the ``gross'' vs. ``net'' nature of the
Agent Clearing Member Customer Gross Margin Account. The proposed rule
change would also provide additional clarification within Section 14(b)
of NSCC Rule 56 concerning existing netting treatment in the NSCC Rules
for Sponsored Member Sub-Accounts.
Finally, NSCC would make other drafting improvements and
clarifications in Section 14 of NSCC Rule 56, which do not materially
affect the substance of the NSCC Rules. For example, the proposed rule
change would further clarify in Section 14 of NSCC Rule 56 that any
Sponsored Member Transactions or Agent Clearing Member Transactions for
which a Defaulting SFT Member is the Sponsoring Member or Agent
Clearing Member, respectively, and which have been novated to NSCC
shall continue to be processed by NSCC. It would also further clarify,
as described above, that NSCC would have discretion to determine
whether to close out the SFT Positions established in an SFT Member's
Sponsored Member Sub-Account and Agent Clearing Member Customer Omnibus
Account (if any) or permit the relevant Sponsored Member Transactions
or Agent Clearing Member Transactions to be settled.
2. Statutory Basis
NSCC believes that the proposed rule change is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to a registered clearing agency. Specifically, NSCC believes
that the proposed rule change is consistent with Section 17A(b)(3)(F)
of the Act \16\ and Rules 17ad-22(e)(6), (13), (19), (21) and (23)
thereunder \17\ for the reasons set forth below.
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\16\ 15 U.S.C. 78q-1(b)(3)(F).
\17\ 17 CFR 240.17ad-22(e)(6), (13), (19), (21) and (23).
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Consistency With Section 17A(b)(3)(F)
Section 17A(b)(3)(F) of Act \18\ 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 to assure the
safeguarding of securities and funds which are in the custody or
control of the clearing agency or for which it is responsible. The
proposed rule change would adopt a new Agent Clearing Member Customer
Net Margin Account option for Agent Clearing Members in the SFT
Clearing Service. The proposed Agent Clearing Member Customer Net
Margin Accounts would be governed by the existing NSCC Rules for Agent
Clearing Members (NSCC Rule 2D) and the SFT Clearing Service (NSCC Rule
56), with certain modifications to the NSCC Rules to (i) reflect the
establishment and
[[Page 15675]]
maintenance of the new accounts; (ii) clarify requirements for the
submission of Agent Clearing Member Transactions; and (iii) clarify the
netting and close-out treatment of the new Agent Clearing Member
Customer Net Margin Accounts as compared to NSCC's existing Agent
Clearing Member Customer Omnibus Accounts.
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\18\ 15 U.S.C. 78q-1(b)(3)(F).
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The proposed rule change is designed to encourage and facilitate
the utilization of NSCC's SFT Clearing Service by a greater number of
market participants. The proposed changes are intended to extend the
benefits of central clearing to a broader segment of the SFT market,
particularly to firms that would offer or participate through NSCC's
SFT Customer Clearing Service using the proposed Agent Clearing Member
Customer Net Margin Accounts. The proposed rule change would promote
the central clearing and settlement of SFTs by providing an additional
way for Agent Clearing Members and their Customers to access NSCC's SFT
Clearing Service that would provide enhanced margin and capital
efficiency for users of the service. Bringing more SFTs into central
clearing would promote the prompt and accurate clearance and settlement
of such transactions and provide benefits to NSCC's participants and
the broader market, such as a reduction in the amount of counterparty
credit risk in the SFT market through the application of NSCC's
guaranty, risk management and default management rules and procedures.
The proposed rule change would incorporate the new Agent Clearing
Member Customer Net Margin Accounts into NSCC's existing risk
management framework. The Agent Clearing Member Transactions submitted
within the proposed Agent Clearing Member Customer Net Margin Accounts
would be margined in accordance with Procedure XV and Section 12(b) of
Rule 56 of the NSCC Rules, in the same manner as a Member's proprietary
SFT Account activity at NSCC, and would be subject to the same trade
acceptance, novation, risk management and operational rules and
safeguards as SFT transactions submitted within other account types
under NSCC's SFT Clearing Service.\19\ Furthermore, Agent Clearing
Members utilizing the proposed Agent Clearing Member Customer Net
Margin Accounts would be subject to the same existing membership
standards and member monitoring requirements that are currently
applicable to Agent Clearing Members under the NSCC Rules. The proposed
rule changes would, therefore, help to assure the safeguarding of
securities and funds which are in the custody and control of NSCC or
for which it is responsible, by minimizing the potential for an Agent
Clearing Member default or, in the event of a default, any associated
default losses, thereby reducing potential risk and losses to NSCC and
non-defaulting Members.
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\19\ See Section 12 of NSCC Rule 56 (Securities Financing
Transaction Clearing Service) and Procedure XV (Clearing Fund
Formula and Methodology) of the NSCC Rules, supra note 3.
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NSCC therefore believes the proposed rule change is designed to
promote the prompt and accurate clearance and settlement of securities
transactions, and to assure the safeguarding of securities and funds
which are in the custody or control of the clearing agency or for which
it is responsible, in accordance with Section 17A(b)(3)(F) of Act.
Consistency With Rule 17ad-22(e)(6)
Rule 17ad-22(e)(6)(i) \20\ under the Act requires that each covered
clearing agency that provides CCP services 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, among other things,
considers, and produces margin levels commensurate with, the risks and
particular attributes of each relevant product, portfolio, and market.
As discussed above, the Agent Clearing Member Transactions submitted
within the proposed Agent Clearing Member Customer Net Margin Accounts
would be margined in accordance with Procedure XV and Section 12(b) of
Rule 56 of the NSCC Rules and would be margined in the same manner as a
Member's proprietary SFT Account activity at NSCC. NSCC uses a risk-
based Clearing Fund formula that accounts for a variety of risk factors
through the application of a number of components, each described in
Procedure XV and Section 12 of Rule 56 of the NSCC Rules. NSCC's margin
methodology is designed to consider, and produce margin levels
commensurate with, the risks and particular attributes of each relevant
product, including SFTs cleared by NSCC. As a result, NSCC believes
that the proposed changes are reasonably designed to allow NSCC to
consider, and produce margin levels commensurate with, the risks and
particular attributes of relevant products, portfolios, and markets, in
accordance with Rule 17ad-22(e)(6)(i) under the Act.
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\20\ 17 CFR 240.17ad-22(e)(6)(i).
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Consistency With Rule 17ad-22(e)(13)
Rule 17ad-22(e)(13) \21\ under the Act requires that each covered
clearing agency establish, implement, maintain, and enforce written
policies and procedures reasonably designed to, among other things,
ensure the covered clearing agency has the authority and operational
capacity to take timely action to contain losses and liquidity demands
and continue to meet its obligations. The proposed Agent Clearing
Member Customer Net Margin Accounts would be subject to NSCC's existing
default management rules and procedures, with certain modifications
designed to (i) clarify the P&L netting treatment of proposed Agent
Clearing Member Customer Net Margin Accounts in a Member default; (ii)
enhance NSCC's default management processes for the Customer Clearing
Service by allowing for the settlement of Agent Clearing Member
Transactions, rather than requiring NSCC to take market action to close
out such positions, if circumstances permit; and (iii) clarifying
NSCC's general authority to close out offsetting SFT Long and Short
Positions in the same SFT Security without taking market action. NSCC
believes that its current default management rules and procedures, as
modified by the proposed rule change, are designed to ensure that NSCC
has the authority and operational capacity to take timely action to
contain losses and liquidity demands and continue to meet its
obligations in the event of an SFT Member default (and particularly, an
Agent Clearing Member default). NSCC therefore believes the proposed
rule change is reasonably designed to comply with the requirements of
Rule 17ad-22(e)(13) under the Act.
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\21\ 17 CFR 240.17ad-22(e)(13).
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Consistency With Rule 17ad-22(e)(19)
Rule 17ad-22(e)(19) \22\ under the Act requires that each 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. As discussed above, Agent Clearing Members
wishing to utilize the proposed Agent Clearing
[[Page 15676]]
Member Customer Net Margin Accounts would be subject to the same
existing membership standards and member monitoring requirements that
are currently applicable to Agent Clearing Members under the NSCC
Rules. Additionally, the proposed Agent Clearing Member Customer Net
Margin Accounts would be margined and risk managed in the same manner
as a Member's proprietary SFT Account activity at NSCC and would be
subject to the same trade acceptance, novation, risk management and
operational rules and safeguards as SFT transactions submitted within
other account types under NSCC's existing SFT Clearing Service
(including the Agent Clearing Member and Sponsoring/Sponsored Member
services). Accordingly, NSCC believes that its existing Rules related
to the Customer Clearing Service, along with the proposed modifications
discussed herein, would continue to be reasonably designed to identify,
monitor, and manage the material risks to NSCC from clearing Customer
activity on a net margin basis within its Customer Clearing Service, in
accordance with Rule 17ad-22(e)(19) under the Act.
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\22\ 17 CFR 240.17ad-22(e)(19).
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Consistency With Rule 17ad-22(e)(21)
Rule 17ad-22(e)(21) \23\ under the Act requires that each covered
clearing agency establish, implement, maintain, and enforce written
policies and procedures reasonably designed to, among other things, be
efficient and effective in meeting the requirements of its participants
and the markets it serves. As discussed above, NSCC Members and other
market participants have expressed interest in NSCC offering a net
margin account option for SFT Members and their Customers that is
similar to the Agent Clearing Service offered by NSCC's affiliate
clearing agency, FICC, which would provide enhanced margin and capital
efficiency for users of the SFT Clearing Service.\24\ The proposed rule
change would offer a new way for Agent Clearing Members and their
Customers to access NSCC's SFT Clearing Service through the use of
Agent Clearing Member Customer Net Margin Accounts in response to this
feedback. NSCC therefore believes the proposed rule change is
reasonably designed to meet the requirements of NSCC's participants and
the markets it serves, consistent with the requirements of Rule 17ad-
22(e)(21) under the Act.
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\23\ 17 CFR 240.17ad-22(e)(21).
\24\ See supra note 12.
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Consistency With Rule 17ad-22(e)(23)
Rule 17ad-22(e)(23)(i) \25\ under the Act requires that each
covered clearing agency establish, implement, maintain, and enforce
written policies and procedures reasonably designed to publicly
disclose all relevant rules and material procedures, including key
aspects of its default rules and procedures. As noted above, the
proposed Agent Clearing Member Customer Net Margin Accounts would be
subject to NSCC's existing default management rules and procedures,
with certain modifications designed to (i) clarify the P&L netting
treatment of proposed Agent Clearing Member Customer Net Margin
Accounts in an Agent Clearing Member default; (ii) enhance NSCC's
default management processes for the Customer Clearing Service by
allowing for the settlement of Agent Clearing Member Transactions; and
(iii) clarify NSCC's general authority to close out offsetting SFT Long
and Short Positions in the same SFT Security without taking market
action. These key aspects of NSCC's default management rules and
procedures would be publicly set forth in the NSCC Rules. NSCC
therefore believes the proposed rule change is reasonably designed to
publicly disclose all relevant rules and material procedures, including
key aspects of its default rules and procedures, in accordance with the
requirements of Rule 17ad-22(e)(23)(i) under the Act.
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\25\ 17 CFR 240.17ad-22(e)(23)(i).
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For the reasons set forth above, NSCC believes the proposed rule
change is consistent with Section 17A(b)(3)(F) of the Act and Rules
17ad-22(e)(6), (13), (19), (21) and (23) thereunder.
(B) Clearing Agency's Statement on Burden on Competition
Section 17A(b)(3)(I) of Act \26\ requires that the rules of a
clearing agency do not impose any burden on competition not necessary
or appropriate in furtherance of the purposes of the Act. NSCC does not
believe the proposed rule change would present any burden or have any
impact on competition. The proposed rule change would adopt a new net
margin account option for Agent Clearing Members in NSCC's SFT Clearing
Service. The proposed Agent Clearing Member Customer Net Margin
Accounts would be available to all Agent Clearing Members and their
customers that wish to use such accounts. The proposed Agent Clearing
Member Customer Net Margin Accounts would be offered in addition to,
and would not replace, the existing ``gross margin'' account option,
which would also continue to be available to Agent Clearing Members and
their customers. NSCC therefore believes that the proposed rule change
would promote competition by expanding access types and account models
available to users of its SFT Clearing Service. The proposed rule
change would not disadvantage or favor any particular Member in
relationship to another Member or unfairly inhibit access to NSCC's
services. As a result, NSCC does not believe that the proposed rule
change would impose any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act.
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\26\ 15 U.S.C. 78q-1(b)(3)(I).
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(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants, or Others
NSCC has not received or solicited any written comments relating to
this proposal. If any written comments are received, they will be
publicly filed as an Exhibit 2 to this filing, as required by Form 19b-
4 and the General Instructions thereto.
Persons submitting comments are cautioned that, according to
Section IV (Solicitation of Comments) of the Exhibit 1A in the General
Instructions to Form 19b-4, the Commission does not edit personal
identifying information from comment submissions. Commenters should
submit only information that they wish to make available publicly,
including their name, email address, and any other identifying
information.
All prospective commenters should follow the Commission's
instructions on how to submit comments, available at <a href="http://www.sec.gov/rules-regulations/how-submit-comment">www.sec.gov/rules-regulations/how-submit-comment</a>. General questions regarding the rule
filing process or logistical questions regarding this filing should be
directed to the Main Office of the Commission's Division of Trading and
Markets at <a href="/cdn-cgi/l/email-protection#c6b2b4a7a2afa8a1a7a8a2aba7b4ada3b2b586b5a3a5e8a1a9b0"><span class="__cf_email__" data-cfemail="e3979182878a8d84828d878e829188869790a3908680cd848c95">[email protected]</span></a> or 202-551-5777.
NSCC reserves the right not to respond to any comments received.
III. Date of Effectiveness of the Proposed Rule Change, and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
[[Page 15677]]
(A) by order approve or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#d6a4a3bab3fbb5b9bbbbb3b8a2a596a5b3b5f8b1b9a0"><span class="__cf_email__" data-cfemail="0270776e672f616d6f6f676c7671427167612c656d74">[email protected]</span></a>. Please include
file number SR-NSCC-2026-005 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-NSCC-2026-005. 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 NSCC and on DTCC's website (<a href="http://dtcc.com/legal/sec-rule-filings">dtcc.com/legal/sec-rule-filings</a>). Do not include personal identifiable information in
submissions; you should submit only information that you wish to make
available publicly. We may redact in part or withhold entirely from
publication submitted material that is obscene or subject to copyright
protection. All submissions should refer to File Number SR-NSCC-2026-
005 and should be submitted on or before April 20, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
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\27\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-06043 Filed 3-27-26; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on March 30, 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.