Notice2026-09743
Self-Regulatory Organizations; National Securities Clearing Corporation; Order Approving 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
May 15, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 94 (Friday, May 15, 2026)</title>
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[Federal Register Volume 91, Number 94 (Friday, May 15, 2026)]
[Notices]
[Pages 28000-28004]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-09743]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105464; File No. SR-NSCC-2026-005]
Self-Regulatory Organizations; National Securities Clearing
Corporation; Order Approving Proposed Rule Change Concerning a New
Customer Net Margin Account Option for Agent Clearing Members in the
Securities Financing Transaction Clearing Service
May 12, 2026.
On March 20, 2026, National Securities Clearing Corporation
(``NSCC'') filed with the Securities and Exchange Commission
(``Commission'') proposed rule change SR-NSCC-2026-005, pursuant to
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\
and Rule 19b-4 thereunder \2\ (the ``Proposed Rule Change''). The
Proposed Rule Change would modify the NSCC Rules and Procedures \3\
(``NSCC Rules'') to offer a new net margin account option for Agent
Clearing Members in NSCC's Securities Financing Transaction (``SFT'')
Clearing Service. The Proposed Rule Change was published for comment in
the Federal Register on March 30, 2026.\4\ The Commission has received
no comments on the changes proposed. For the reasons discussed below,
the Commission is approving the Proposed Rule Change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ The NSCC Rules are available at <a href="https://www.dtcc.com/-/media/Files/Downloads/legal/rules/nscc_rules.pdf">https://www.dtcc.com/-/media/Files/Downloads/legal/rules/nscc_rules.pdf</a>. Capitalized terms
not otherwise defined herein are defined in the NSCC Rules.
\4\ See Securities Exchange Act Release No. 105079 (March 25,
2026), 91 FR 15671 (March 30, 2026) (File No. SR-NSCC-2026-005)
(``Notice of Filing'').
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[[Page 28001]]
I. Description of the Proposed Rule Change
A. Background
NSCC is a central counterparty (``CCP'') and provider of clearance
and settlement services for transactions in broker-to-broker equity,
corporate and municipal bond, and unit investment trust transactions in
the U.S. markets. As a CCP, NSCC novates transactions between
counterparties, effectively becoming the buyer to every seller and the
seller to every buyer, and guarantees settlement of the novated
transactions. NSCC's CCP services are available to entities that are
approved under the NSCC Rules to be direct NSCC Members and to other
market participants through NSCC's indirect access models (e.g., as the
Sponsored Member of a Sponsoring Member or as the Customer of an Agent
Clearing Member).\5\
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\5\ In accordance with the NSCC Rules, Sponsoring Members are
permitted to sponsor certain institutional firms into NSCC
membership as Sponsored Members, and Agent Clearing Members are
permitted to submit, on behalf of their Customers, transactions to
NSCC for novation. See NSCC Rule 2C and NSCC Rule 2D, supra note 3.
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Securities Financing Transactions (commonly referred to as
``securities lending transactions'') consist of a pair of transactions
between two parties in which one party (``Transferor'') agrees to
transfer securities in exchange for the other party's (``Transferee'')
transfer of cash, and, when clearing such transactions at NSCC, the
parties reverse those transfers on the following Business Day.\6\ NSCC
introduced its SFT Clearing Service to provide central clearing for
SFTs in 2022.\7\ The SFT Clearing Service is available for SFTs entered
into between (1) a Member and another Member, (2) a Sponsoring Member
and its Sponsored Member (``Sponsored Member Transaction''), and (3) an
Agent Clearing Member acting on behalf of a Customer and either a
Member or the same or another Agent Clearing Member acting on behalf of
a Customer (``Agent Clearing Member Transaction'').\8\ 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.\9\
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\6\ See NSCC Rule 1, supra note 3.
\7\ 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). he SFT Clearing
Service is governed by NSCC Rule 56, supra note 3.
\8\ See Section 1 of NSCC Rule 56, supra note 3.
\9\ See NSCC Rule 1, supra note 3.
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The Customer Clearing Service allows an Agent Clearing Member to
act as agent and credit intermediary for its Customers in clearing SFTs
at NSCC. 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. NSCC primarily designed the Customer
Clearing Service 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. 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.\10\
SFT Accounts are generally margined in accordance with Procedure XV of
the NSCC Rules, subject to certain adjustments discussed in Section
12(b) of NSCC Rule 56.\11\ However, each Agent Clearing Member Customer
Omnibus Account may contain only activity where the Agent Clearing
Member is acting on behalf of its Customers either as Transferor or
Transferee, but not both.\12\ 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.\13\ The Agent Clearing Member Customer
Omnibus Accounts are, therefore, effectively margined on a ``gross''
basis.\14\
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\10\ See Section 5(b) of NSCC Rule 2D and Section 16(b) of NSCC
Rule 56, supra note 3.
\11\ See Section 12 of NSCC Rule 56 and Procedure XV of the NSCC
Rules, supra note 3.
\12\ See Section 16(b) of NSCC Rule 56, supra note 3. 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.
\13\ See Notice of Filing at 15672, supra note 4.
\14\ See id.
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NSCC states that 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'').\15\
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\15\ See Notice of Filing at 15673, supra note 4; 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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B. Proposed Changes
1. Establishment and Maintenance of Agent Clearing Member Customer Net
Margin Accounts
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 on behalf of its Customers both as
Transferor and Transferee. 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 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.
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'').\16\ Thus, 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.\17\ NSCC states
[[Page 28002]]
that the Proposed Rule Change would further promote the alignment of
buyside access models across CCPs and facilitate broader access to
clearance and settlement services for Members and their Customers.\18\
The proposed Agent Clearing Member Customer Net Margin Accounts would
be governed by NSCC's existing Rules for Agent Clearing Members \19\
and the SFT Clearing Service \20\ and would be margined and risk-
managed in the same manner as a Member's proprietary SFT Account
activity at NSCC.
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\16\ See supra note 12 and associated text.
\17\ For example, within FICC's Agent Clearing Service, Clearing
Fund requirements for certain customer transactions are calculated
on a net basis across all customers whose transactions are recorded
within the same account. For other customer transactions, Agent
Clearing Members do not bear the cost of financing margin
obligations for customer positions. This results in lower margin
obligations. Additionally, by allowing Agent Clearing Members to net
margin obligations across multiple customers, FICC's Agent Clearing
Service reduces capital requirements for Agent Clearing members. By
reducing margin obligations and capital requirements, Agent Clearing
Members can lower their costs and potentially pass these savings on
to their customers. See 89 FR 93784-85, 93799, supra note 15.
\18\ See Notice of Filing at 15673, supra note 4.
\19\ See NSCC Rule 2D, supra note 3.
\20\ See NSCC Rule 56, supra note 3.
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2. General Clarifications Regarding the Submission of Agent Clearing
Member Transactions
The Proposed Rule Change would make several revisions to the NSCC
Rules regarding the SFT Clearing Service that are not exclusive to the
new Agent Clearing Member Customer Net Margin Accounts. Specifically,
the Proposed Rule Change would revise the NSCC Rules to clarify that an
Agent Clearing Member (1) acts as agent on behalf of its Customer(s)
when the Agent Clearing Member submits Agent Clearing Member
Transactions to NSCC for novation, and (2) may elect to maintain one or
more Agent Clearing Member Customer Omnibus Accounts. Additionally, the
Proposed Rule Change would revise the NSCC Rules to clarify the
existing requirement for submitted SFT transaction data to include a
designated account in which the SFT shall be recorded, and that any
such designation shall constitute a representation that the SFT is of a
type that may be recorded in such account. NSCC states that these
revisions are designed to provide additional clarity for market
participants to better understand the requirements for submitting Agent
Clearing Member Transaction data for Agent Clearing Member Customer
Omnibus Accounts, including the new Agent Clearing Member Customer Net
Margin Accounts and the existing Agent Clearing Member Customer Gross
Margin Accounts.\21\
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\21\ See Notice of Filing at 15673, supra note 4.
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3. Clarifications Regarding Netting, Close-Out, and Default Management
Within the SFT Clearing Service
The Proposed Rule Change would revise certain NSCC Rule provisions
regarding netting, close-out, and default management within the SFT
Clearing Service. Specifically, the Proposed Rule Change would revise
the NSCC Rule provisions regarding the netting and close-out treatment
of Agent Clearing Member Customer Omnibus Accounts in the event of an
Agent Clearing Member Default. The revised NSCC Rules would provide
that when NSCC ceases to act for an Agent Clearing Member, NSCC would
terminate the ability of the Agent Clearing Member to submit Agent
Clearing Member Transactions; however, NSCC would continue to process
any Agent Clearing Member Transactions that NSCC has already novated.
The revised NSCC Rules would further provide that in the event of a
cease to act, NSCC would have the authority to determine whether to
close-out open Agent Clearing Member Transactions or permit them to
settle.\22\
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\22\ The current NSCC Rules only provide for NSCC's ability to
close-out open Agent Clearing Member Transactions. See Section 9(c)
of NSCC Rule 2D, supra note 3.
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Additionally, the Proposed Rule Change would revise the NSCC Rule
provisions regarding NSCC's cease to act procedures for SFT Members
with open SFTs established in an Agent Clearing Member Customer Net
Margin Account, Agent Clearing Member Customer Gross Margin Account, or
Sponsored Member Sub-Account. Specifically, the revised NSCC Rules
would clarify the netting treatment for closed-out SFT Positions in
each type of account to correspond with the ``gross'' or ``net'' nature
of the account. The revised NSCC Rules would also provide for NSCC's
authority to close-out offsetting SFT Long and Short Positions in the
same SFT Security without taking market action to close-out such
positions. In such a situation, NSCC would be allowed to determine the
loss or profit resulting from the close-out of such SFT Positions
through its other market actions or by reference to market data,
thereby avoiding the costs or risks of market action.\23\
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\23\ See Notice of Filing at 15674, supra note 4.
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4. Other Non-Substantive Clarifications
Finally, the Proposed Rule Change would make non-substantive
drafting changes to Section 14 of NSCC Rule 56 to clarify (1) that any
Sponsored Member Transactions or Agent Clearing Member Transactions for
which the Defaulting SFT Member is the Sponsoring Member or Agent
Clearing Member, and which have been novated to NSCC, shall continue to
be processed by NSCC, and (2) NSCC's discretion to determine whether to
close-out or settle the relevant SFT Positions in a Defaulting SFT
Member's account(s).
II. Discussion and Commission Findings
Section 19(b)(2)(C) of the Act \24\ directs the Commission to
approve a proposed rule change of a self-regulatory organization if it
finds that such proposed rule change is consistent with the
requirements of the Act and rules and regulations thereunder applicable
to such organization. After carefully considering the Proposed Rule
Change, the Commission finds that the Proposed Rule Change is
consistent with the requirements of the Act and the rules and
regulations thereunder applicable to NSCC. In particular, the
Commission finds that the Proposed Rule Change is consistent with
Section 17A(b)(3)(F) of the Act \25\ and Rules 17ad-22(e)(6),\26\ 17ad-
22(e)(13),\27\ 17ad-22(e)(19),\28\ and 17ad-22(e)(21),\29\ each
promulgated under the Act.
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\24\ 15 U.S.C. 78s(b)(2)(C).
\25\ 15 U.S.C. 78q-1(b)(3)(F).
\26\ 17 CFR 240.17ad-22(e)(6).
\27\ 17 CFR 240.17ad-22(e)(13).
\28\ 17 CFR 240.17ad-22(e)(19).
\29\ 17 CFR 240.17ad-22(e)(21).
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A. Consistency With Section 17A(b)(3)(F) of the Act
Section 17A(b)(3)(F) of Act \30\ 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, and
protect investors and the public interest.
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\30\ 15 U.S.C. 78q-1(b)(3)(F).
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As described above in section I.B.1, NSCC proposes to adopt a new
account option for Agent Clearing Members in the SFT Clearing Service
that would allow for the offset and netting of positions for margin and
Clearing Fund purposes. Additionally, NSCC proposes changes to the NSCC
Rules concerning the SFT Clearing Service in general, to (1) clarify
certain requirements for the submission of Agent Clearing Member
Transactions, as described above in section I.B.2, (2) provide updated
default management provisions regarding Agent Clearing Member Customer
Omnibus Accounts and Sponsored Member Sub-Accounts, as described above
in section I.B.3, and (3) make non-substantive drafting changes to
Section 14 of NSCC Rule 56, as described above in section I.B.4.
NSCC's proposed changes to establish Agent Clearing Member Customer
Net Margin Accounts described above in
[[Page 28003]]
section I.B.1 are designed to encourage and facilitate the utilization
of NSCC's SFT Clearing Service by a greater number of market
participants. Specifically, the proposed changes would extend the
benefits of central clearing to a broader segment of the SFT market,
including firms that would offer or participate through NSCC's SFT
Customer Clearing Service using the proposed Agent Clearing Member
Customer Net Margin Accounts.
Additionally, the proposed changes described above in section I.B.2
to clarify the NSCC Rules regarding (1) an Agent Clearing Member's
agent obligations, (2) the ability of an Agent Clearing Member to
maintain one or more Agent Clearing Member Customer Omnibus Accounts,
and (3) account designation when submitting SFT transaction data to
NSCC, would also encourage participation in central clearing by
improving market participants' understanding of their rights and
obligations when participating in the SFT Clearing Service. Similarly,
the proposed changes described above in section I.B.3 to adopt and
clarify the relevant default management provisions in the NSCC Rules
would encourage participation in central clearing by improving market
participants' understanding of NSCC's default management procedures
applicable to the SFT Clearing Service and should help market
participants better evaluate whether and how the SFT Clearing Service
fits their individual needs.
CCP rules that encourage market participants to centrally clear
their securities transactions promote the prompt and accurate clearance
and settlement of such transactions, providing benefits to the CCP, its
participants, and the broader market. Greater participation in central
clearing decreases the overall amount of counterparty credit risk in
the securities markets because a CCP guarantees trade settlement in the
event of a default and the CCP is able to centrally risk-manage more
transactions, pursuant to risk management procedures that the
Commission has reviewed and approved.\31\ Additionally, greater
participation in central clearing promotes the prompt and accurate
clearance and settlement of securities transactions by helping market
participants avoid potential disorderly default scenarios. A CCP, which
has guaranteed both sides of a trade, is uniquely positioned to
coordinate a defaulting participant's transactions. The CCP's non-
defaulting participants can rely on the CCP to complete the defaulting
participant's transactions and cover any resulting losses using the
defaulting participant's resources and/or other default management
tools. By contrast, defaults in non-centrally cleared bilaterally
settled transactions are likely to be less orderly and subject to
variable default management techniques because such transactions are
not subject to default management procedures that are required to be in
place and publicly disclosed by a CCP.\32\
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\31\ See Section 19(b) of the Act and Rule 19b-4 thereunder.
\32\ A covered clearing agency is required to establish,
implement, maintain and enforce written policies and procedures
reasonably designed to, as applicable, ensure that it has the
authority and operational capacity to contain losses and liquidity
demands and continue to meet its obligations, which must be tested
annually, and publicly disclose all relevant rules and material
procedures, including key aspects of its default rules and
procedures. See Rule 17ad-22(e)(13) and (e)(23)(i). See also Covered
Clearing Agency Standards Proposing Release, Securities Exchange Act
Release No. 71699 (Mar. 12, 2014), 79 FR 29507, 29545 (May 27, 2014)
(stating that a CCP's default management procedures would provide
certainty and predictability about the measures available to a CCP
in the event of a default which would, in turn facilitate the
orderly handling of member defaults and would enable members to
understand their obligations to the CCP in extreme circumstances).
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CCP rules that are clear and comprehensible encourage greater
participation in central clearing by enabling market participants to
better understand the rights and obligations of participating in the
CCP. Encouraging greater participation in central clearing would extend
the risk mitigation benefits of central clearing to more securities
transactions. Therefore, clear and comprehensible CCP rules would
promote the prompt and accurate clearance and settlement of securities
transactions, and protect investors and the public interest. Moreover,
CCP rules that are designed to increase the clarity of the CCP's
default management procedures promote the prompt and accurate clearance
and settlement of securities transactions, and protect investors and
the public interest, by ensuring that the CCP and its participants can
manage a default smoothly and with less risk to the market.
NSCC's proposals to (1) establish Agent Clearing Member Customer
Net Margin Accounts, as described above in section I.B.1, (2) clarify
the rights and obligations of Agent Clearing Members, as described
above in section I.B.2, and (3) adopt relevant default management
provisions in the NSCC Rules, as described above in section I.B.3 would
promote the prompt and accurate clearance and settlement of securities
transactions, and protect investors and the public interest, by
encouraging greater participation in central clearing, thereby ensuring
that a greater proportion of securities transactions are subject to the
risk mitigation benefits of central clearing described above.\33\
Additionally, NSCC's proposed non-substantive clarifications to the
NSCC Rules, as described above in section I.B.4, would also promote the
prompt and accurate clearance and settlement of securities
transactions, and protect investors and the public interest, by
ensuring that the NSCC Rules are clear and comprehensible, which would
enable market participants to better understand their rights and
obligations in connection with NSCC's clearance and settlement
services.\34\
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\33\ See 15 U.S.C. 78q-1(b)(3)(F).
\34\ See id.
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Finally, NSCC's proposal to adopt default management provisions
relevant to the SFT Clearing Service in the NSCC Rules, as described in
section I.B.3, would provide clarity to better prepare market
participants to deal with a participant default, resulting in a more
orderly management of such an event, minimizing default losses and
reducing potential risk to NSCC and its non-defaulting participants.
Accordingly, the proposed changes would ensure the safeguarding of
securities and funds in NSCC's custody or control.\35\
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\35\ See id.
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For the foregoing reasons, the Proposed Rule Change is consistent
with promoting the prompt and accurate clearance and settlement of
securities transactions, protecting investors and the public interest,
and assuring the safeguarding of securities and funds which are in
NSCC's custody or control, consistent with Section 17A(b)(3)(F) of the
Act.\36\
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\36\ See id.
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B. Consistency With Rule 17ad-22(e)(6)(i)
Rule 17ad-22(e)(6)(i) \37\ 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.
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\37\ 17 CFR 240.17ad-22(e)(6)(i).
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As described above in section I.B.1, the Agent Clearing Member
Transactions submitted within the new Agent Clearing Member Customer
Net Margin Accounts would be margined in
[[Page 28004]]
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. NSCC's margin methodology with respect to the SFT
Clearing Service has already been subject to the Commission's review
and approval.\38\ Because NSCC applies a risk-based margin methodology,
tailored to address SFTs, the Proposed Rule Change is reasonably
designed to cover NSCC's credit exposures from SFT participants,
consistent with Rule 17ad-22(e)(6)(i).\39\
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\38\ See Securities Exchange Act Release No. 95011 (May 31,
2022), 87 FR 34339, 34344 (June 6, 2022) (File No. SR-NSCC-2022-
003).
\39\ 17 CFR 240.17ad-22(e)(6)(i).
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C. Consistency With Rule 17ad-22(e)(13)
Rule 17ad-22(e)(13) \40\ 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.
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\40\ 17 CFR 240.17ad-22(e)(13).
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As described above in section I.B.3, NSCC proposes to adopt and
clarify the default management provisions in the NSCC Rules applicable
to the SFT Clearing Service. Adopting and clarifying the relevant
default management provisions in the NSCC Rules would improve market
participants' understanding of NSCC's default management procedures.
NSCC's proposals in this regard would better prepare market
participants to deal with default scenarios, resulting in more orderly
management of such events, minimizing default losses and reducing
potential risk to NSCC and its non-defaulting participants.
Accordingly, the Proposed Rule Change is consistent with Rule 17ad-
22(e)(13) because implementing rules that govern default management
procedures would help ensure that NSCC has the authority and capacity
to take timely action to contain losses and liquidity demands and
continue to meet its obligations.\41\
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\41\ See id.
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D. Consistency With Rule 17ad-22(e)(19)
Rule 17ad-22(e)(19) \42\ 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.
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\42\ 17 CFR 240.17ad-22(e)(19).
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As described above in section I.B.3, NSCC proposes to adopt and
clarify the default management provisions in the NSCC Rules applicable
to the SFT Clearing Service that address default scenarios affecting,
among others, NSCC's indirect participants (i.e., Sponsored Members and
Customers). The revised NSCC Rules include targeted risk management
provisions regarding NSCC's netting and close-out procedures designed
to enhance NSCC's ability to manage its exposures in the event of an
Agent Clearing Member or Sponsoring Member Default. The revised NSCC
Rules should, therefore, better prepare NSCC to deal with default
scenarios, resulting in more orderly management of such events,
minimizing default losses and reducing potential risk to NSCC and its
non-defaulting participants.
Accordingly, the Proposed Rule Change is consistent with Rule 17ad-
22(e)(19) because adopting and clarifying the NSCC Rules regarding the
default management provisions affecting NSCC's indirect participants
would better enable NSCC to manage the material risks arising from
arrangements in which indirect participants rely on direct participants
to access NSCC's payment, clearing, and settlement facilities.\43\
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\43\ See id.
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E. Consistency With Rule 17ad-22(e)(21)
Rule 17ad-22(e)(21) \44\ 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.
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\44\ 17 CFR 240.17ad-22(e)(21).
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As described above in section I.B.1, NSCC states that Members and
other market participants have expressed interest in NSCC offering a
net margin account option for SFT Members and their Customers. The
Proposed Rule Change is consistent with Rule 17ad-22(e)(21) because
establishing Agent Clearing Member Customer Net Margin Accounts is
responsive to meeting the requirements of NSCC's participants and the
SFT market.\45\
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\45\ See id.
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III. Conclusion
On the basis of the foregoing, the Commission finds that the
Proposed Rule Change is consistent with the requirements of the Act and
the rules and regulations promulgated thereunder.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act
\46\ that proposed rule change SR-NSCC-2026-005 be, and hereby is,
approved.\47\
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\46\ 15 U.S.C. 78s(b)(2).
\47\ In approving the proposed rule change, the Commission
considered the proposals' impact on efficiency, competition, and
capital formation. 15 U.S.C. 78c(f).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\48\
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\48\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2026-09743 Filed 5-14-26; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on May 15, 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.