Notice2026-19957
Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing of Partial Amendment No. 1, and Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Partial Amendment No. 1, To Modify the GSD Rules To Adopt a U.S. Treasury Clearing Trade Submission Requirement
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Published
September 30, 2026
Issuing agencies
Securities and Exchange Commission
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<title>Federal Register, Volume 91 Issue 188 (Wednesday, September 30, 2026)</title>
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[Federal Register Volume 91, Number 188 (Wednesday, September 30, 2026)]
[Notices]
[Pages 61904-61907]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-19957]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-106498; File No. SR-FICC-2026-007]
Self-Regulatory Organizations; Fixed Income Clearing Corporation;
Notice of Filing of Partial Amendment No. 1, and Order Instituting
Proceedings To Determine Whether To Approve or Disapprove a Proposed
Rule Change, as Modified by Partial Amendment No. 1, To Modify the GSD
Rules To Adopt a U.S. Treasury Clearing Trade Submission Requirement
September 25, 2026.
I. Introduction
On June 24, 2026, Fixed Income Clearing Corporation (``FICC'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change SR-FICC-2026-007 pursuant to Section 19(b) of the
Securities Exchange Act of 1934 (``Exchange Act'') \1\ and Rule 19b-4
\2\ thereunder to modify FICC's Government Securities Division
(``GSD'') Rulebook (``GSD Rules'') \3\ to adopt (1) a requirement for
each Netting Member to submit all eligible secondary market
transactions in U.S. Treasury securities to which it is a counterparty
for central clearing, (2) provisions to monitor and enforce the trade
submission requirement, and (3) other revisions to clarify, conform,
and enhance the disclosures of the GSD Rules (the ``Proposed Rule
Change'').\4\ The Proposed Rule Change was published for public comment
in the Federal Register on July 9, 2026.\5\ The Commission has received
comments regarding the substance of the changes proposed in the
Proposed Rule Change.\6\
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Terms not defined herein are defined in the GSD Rules,
available at www.dtcc.com/~/media/Files/Downloads/legal/rules/
ficc_gov_rules.pdf.
\4\ See Notice of Filing, infra note 5.
\5\ Securities Exchange Act Release No. 105849 (July 6, 2026),
91 FR 42571 (July 9, 2026) (File No. SR-FICC-2026-007) (``Notice of
Filing'').
\6\ Comments on the Proposed Rule Change are available at
<a href="https://www.sec.gov/rules-regulations/public-comments/sr-ficc-2026-007">https://www.sec.gov/rules-regulations/public-comments/sr-ficc-2026-007</a>.
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On August 11, 2026, pursuant to Section 19(b)(2) of the Exchange
Act,\7\ 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.\8\ On September 10,
2026, FICC filed Partial Amendment No. 1 to the Proposed Rule
Change,\9\ as described below.
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\7\ 15 U.S.C. 78s(b)(2).
\8\ Securities Exchange Act Release No. 106055 (Aug. 6, 2026),
91 FR 51815 (Aug. 11, 2026) (File No. SR-FICC-2026-007).
\9\ Partial Amendment No. 1 to the Proposed Rule Change is
available at <a href="https://www.sec.gov/comments/SR-FICC-2026-007/srficc2026007-1039500-3452872.pdf">https://www.sec.gov/comments/SR-FICC-2026-007/srficc2026007-1039500-3452872.pdf</a>.
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The Commission is publishing notice to solicit comments on the
Proposed Rule Change, as modified by Partial Amendment No. 1, and is
instituting proceedings pursuant to Section 19(b)(2)(B) of the Exchange
Act,\10\ to determine whether to approve or disapprove the Proposed
Rule Change, as modified by Partial Amendment No. 1.
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\10\ 15 U.S.C. 78s(b)(2)(B).
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II. Summary of the Proposed Rule Change
On December 13, 2023, the Commission adopted amendments to the
covered clearing agency standards that apply to covered clearing
agencies that clear transactions in U.S. Treasury securities, including
FICC.\11\ These amendments require, among other things, that FICC
establish objective, risk-based, and publicly disclosed criteria for
participation that (1) require FICC's Netting Members to submit for
clearance and settlement all of the eligible secondary market
transactions to which they are a counterparty, and (2) identify and
monitor Netting Members' submission of eligible secondary market
transactions to which they are a counterparty, including how FICC would
address a failure to submit transactions in accordance with this
requirement.\12\ FICC states that the
[[Page 61905]]
Proposed Rule Change is designed to comply with the foregoing
requirements.\13\
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\11\ 17 CFR 240.17ad-22(e)(18)(iv)(A) and (B). See Securities
Exchange Act Release No. 99149 (Dec. 13, 2023), 89 FR 2714 (Jan. 16,
2024) (``Adopting Release,'' and the rules adopted therein are
referred to herein as ``Treasury Clearing Rules'').
\12\ Id.
\13\ See Notice of Filing at 42571-72, supra note 5.
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First, the Proposed Rule Change would adopt an ongoing membership
requirement for all Netting Members to submit for clearance and
settlement all eligible secondary market transactions to which they are
a counterparty (the ``Trade Submission Requirement'').\14\ The Proposed
Rule change includes a definition of ``Eligible Secondary Market
Transaction'' by reference to the Treasury Clearing Rules.\15\ FICC
states the proposed definition of Eligible Secondary Market Transaction
is designed to, among other things, ensure that the Trade Submission
Requirement is consistent with the Treasury Clearing Rules.\16\
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\14\ See Notice of Filing at 42572-73, supra note 5.
\15\ See id.; see also 17 CFR 240.17ad-22(a).
\16\ See Notice of Filing at 42571-72, supra note 5.
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Second, the Proposed Rule Change would adopt provisions designed to
enable FICC to identify and monitor Netting Members' ongoing compliance
with the Trade Submission Requirement.\17\ The Proposed Rule Change
includes affirmative obligations on Netting Members to notify FICC of
non-compliance with the Trade Submission Requirement.\18\ The Proposed
Rule Change would also extend FICC's existing authority to request
information or review a Netting Member's books and records to FICC's
monitoring and verification, as needed, of compliance with the Trade
Submission Requirement.\19\
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\17\ See Notice of Filing at 42573-74, supra note 5.
\18\ See Notice of Filing at 42574, supra note 5.
\19\ See id.
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The Proposed Rule Change would also adopt disciplinary measures
that FICC would take if a Netting Member fails to meet its obligations
under the new rules, which would include a fine and notifications to
applicable regulatory authorities.\20\ The fine would be incorporated
into the GSD Fine Schedule and would be waived for any Netting Member
that self-reports non-compliance and remediates such non-compliance
within a specified timeframe.\21\
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\20\ See Notice of Filing at 42574-75, supra note 5.
\21\ See id.
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Finally, the Proposed Rule Change would make non-substantive
revisions to re-organize, clarify, and conform the GSD Rules to improve
their accuracy and transparency.\22\
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\22\ See Notice of Filing at 42575, supra note 5.
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III. Summary of Partial Amendment No. 1 to the Proposed Rule Change
On September 10, 2026, FICC filed Partial Amendment No. 1 to the
Proposed Rule Change.\23\ Partial Amendment No. 1 would modify the
Proposed Rule Change by making revisions to the (1) requirements on
Netting Members to notify FICC of non-compliance with the Trade
Submission Requirement, and (2) enforcement provisions for non-
compliance with the Trade Submission Requirement.\24\
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\23\ See Partial Amendment No. 1, supra note 9.
\24\ See id.
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1. Requirement To Notify FICC of Non-Compliance
As originally proposed in the Proposed Rule Change, the requirement
on Netting Members to notify FICC of non-compliance with the Trade
Submission Requirement would include, among other things, the
identification and contact information of the member of the Netting
Member's Controlling Management that is overseeing the matter.\25\ The
GSD Rules define the term ``Controlling Management'' to mean the Chief
Executive Officer, the Chief Financial Officer, and the Chief
Operations Officer, or their equivalents.\26\ Partial Amendment No. 1
would modify the original proposal by removing the requirement to
identify a member of the Netting Member's Controlling Management,
instead, requiring the Netting Member to identify an officer in the
Netting Member's compliance group (or equivalent function) that is
overseeing the matter.\27\ Additionally, Partial Amendment No. 1 would
modify the original proposal by adding a statement to the GSD Rules
providing that FICC will make available to Netting Members technical
details regarding submission and guidelines on the content for
notifications of non-compliance with the Trade Submission
Requirement.\28\
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\25\ See Notice of Filing at 42574, supra note 5.
\26\ See GSD Rule 1, supra note 3.
\27\ See Partial Amendment No. 1, supra note 9.
\28\ See id.
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As originally proposed in the Proposed Rule Change, the requirement
on Netting Members to notify FICC of non-compliance with the Trade
Submission Requirement would include, among other things, information
regarding the Netting Member's efforts to remediate the non-
compliance.\29\ Partial Amendment No. 1 would provide that FICC would
determine, in its sole discretion, whether the evidence of, or plan
for, remediation provided by the Netting Member is both adequate and
appropriate in consideration of the facts and circumstances surrounding
the occasion of non-compliance.\30\ FICC states that it is appropriate
to retain flexibility in assessing the remediation efforts of Netting
Members because the circumstances in which non-compliance could occur
may vary widely.\31\ For example, human error could lead to one or a
few Eligible Secondary Market Transactions from being submitted or,
alternatively, a wider scope operational failure could cause many
transactions to fail to be submitted over a period of time.\32\ FICC
states that the remediation of different occasions of non-compliance
would likewise vary.\33\ Partial Amendment No. 1 would clarify to
Netting Members that such remediation may include, for example,
addressing the root cause of the occasion of non-compliance and, where
practical and appropriate, submission of any Eligible Secondary Market
Transactions that had not been submitted as a result of the non-
compliance.\34\ Partial Amendment No. 1 would also make clear that a
plan for remediation may be acceptable, for example, when remediation
of a larger operational issue may take some time to implement.\35\
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\29\ See Notice of Filing at 42574, supra note 5.
\30\ FICC states that while it would retain discretion in
assessing Netting Members' evidence or, or plan for, remediation,
FICC would work closely with Netting Members to ensure remediation
efforts are both adequate and appropriate. See Partial Amendment No.
1, supra note 9.
\31\ See id.
\32\ See id.
\33\ See id.
\34\ See id.
\35\ See id.
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2. Enforcement of Trade Submission Requirement
As originally proposed in the Proposed Rule Change, a Netting
Member that fails to comply with the Trade Submission Requirement would
be subject to a fine of $10,000.\36\ However, a Netting Member that
notifies FICC of its non-compliance with the Trade Submission
Requirement before such non-compliance is independently discovered by
FICC would be provided a cure period of 30 Business days before the
applicable disciplinary measures are taken.\37\
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\36\ See Notice of Filing at 42575, supra note 5.
\37\ See id.
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Partial Amendment No. 1 would make several revisions to the Fine
Schedule as originally proposed in the Proposed Rule Change.\38\
Partial Amendment No.
[[Page 61906]]
1 would replace the $10,000 fine with an escalating scale of fines that
would re-set every 12 months.\39\ The first occasion of non-compliance
with the Trade Submission Requirement would result in a warning letter
issued to the Netting Member.\40\ FICC's issuance of the warning letter
to the Netting Member would commence the rolling 12-month period.\41\
The second occasion of non-compliance during the rolling 12-month
period would result in a $5,000 fine, and each subsequent occasion of
non-compliance during the rolling 12-month period would result in a
$10,000 fine.\42\ FICC would determine each occasion of non-compliance,
in its sole discretion, as resulting from the same root cause,
highlighting that one occasion of non-compliance may include one or
more related Eligible Secondary Market Transactions that were not
submitted for central clearing.\43\
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\38\ See Partial Amendment No. 1, supra note 9.
\39\ See id.
\40\ See id.
\41\ See id.
\42\ See id.
\43\ See id.
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Partial Amendment No. 1 would also revise the Fine Schedule to
provide that the fine would be assessed by FICC either on the Business
Day FICC determines the Netting Member has failed to comply with the
Trade Submission Requirement, or for matters that have been reported by
a Netting Member, on a Business Day at least 30 Business Days following
such report, when FICC has determined, in its sole discretion, that the
Netting Member has not provided adequate evidence of remediation or a
plan for remediation.\44\
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\44\ See id.
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IV. Proceedings To Determine Whether To Approve or Disapprove the
Proposed Rule Change, as Modified by Partial Amendment No. 1, and
Grounds for Disapproval Under Consideration
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Exchange Act \45\ to determine whether the Proposed
Rule Change, as modified by Partial Amendment No. 1, should be approved
or disapproved. Institution of such proceedings is appropriate at this
time in view of the legal and policy issues raised by the Proposed Rule
Change, as modified by Partial Amendment No. 1. Institution of
proceedings does not indicate that the Commission has reached any
conclusions with respect to any of the issues involved. Rather, as
described below, the Commission seeks and encourages interested persons
to provide comments on the Proposed Rule Change, as modified by Partial
Amendment No. 1.
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\45\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to Section 19(b)(2)(B) of the Exchange Act,\46\ 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,
consistency of the Proposed Rule Change, as modified by Partial
Amendment No. 1, with Section 17A of the Exchange Act \47\ and the
rules thereunder, including the following provisions:
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\46\ Id.
\47\ 15 U.S.C. 78q-1.
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<bullet> Section 17A(b)(3)(F) of the Exchange Act,\48\ 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; 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, in general, to protect investors and the
public interest;
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\48\ 15 U.S.C. 78q-1(b)(3)(F).
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<bullet> Section 17A(b)(3)(G) of the Exchange Act,\49\ which
requires, among other things, that the rules of a clearing agency
provide its participants shall be appropriately disciplined for
violation of any provision of the rules of the clearing agency by
expulsion, suspension, limitation of activities, functions, and
operations, fine, censure, or any other fitting sanction;
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\49\ 15 U.S.C. 78q-1(b)(3)(G).
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<bullet> Section 17A(b)(3)(I) of the Exchange Act,\50\ which
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 Exchange Act;
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\50\ 15 U.S.C. 78q-1(b)(3)(I).
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<bullet> Rule 17ad-22(e)(18)(iv)(A) under the Exchange Act,\51\
which requires a covered clearing agency that provides central
counterparty services for transactions in U.S. Treasury securities to
require that any direct participant of such covered clearing agency
submit for clearance and settlement all of the eligible secondary
market transactions to which such direct participant is a counterparty;
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\51\ 17 CFR 240.17ad-22(e)(18)(iv)(A).
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<bullet> Rule 17ad-22(e)(18)(iv)(B) under the Exchange Act,\52\
which requires a covered clearing agency that provides central
counterparty services for transactions in U.S. Treasury securities to
identify and monitor its direct participants' submission of
transactions for clearing as required in Rule 17ad-22(e)(18)(iv)(A),
including how the covered clearing agency would address a failure to
submit transactions in accordance with Rule 17ad-22(e)(18)(iv)(A); and
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\52\ 17 CFR 240.17ad-22(e)(18)(iv)(B).
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<bullet> Rule 17ad-22(e)(23)(ii) under the Exchange Act,\53\ which
requires each covered clearing agency to 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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\53\ 17 CFR 240.17ad-22(e)(23)(ii).
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V. 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, as modified by Partial Amendment No. 1.
In particular, the Commission invites the written views of interested
persons concerning whether the proposal is consistent with Sections
17A(b)(3)(F), (G), and (I) \54\ of the Exchange Act and Rules 17ad-
22(e)(18)(iv)(A) and (B), and (e)(23)(ii) \55\ under the Exchange Act,
or any other provision of the Exchange Act, and 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, any request for an opportunity to
make an oral presentation.\56\
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\54\ 15 U.S.C. 78q-1(b)(3)(F) and (G).
\55\ 17 CFR 240.17ad-22(e)(18)(iv)(A) and (B), and (e)(23)(ii).
\56\ Section 19(b)(2) of the Exchange Act, as amended by the
Securities Acts Amendments of 1975, Public Law 94-29 (June 4, 1975),
grants 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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Interested persons are invited to submit written data, views, and
arguments regarding whether the Proposed Rule Change, as modified by
Partial Amendment No. 1, should be approved or disapproved by October
15, 2026. Any person who wishes to file a rebuttal to any other
person's
[[Page 61907]]
submission must file that rebuttal by October 21, 2026.
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#2b595e474e06484446464e455f586b584e48054c445d"><span class="__cf_email__" data-cfemail="a9dbdcc5cc84cac6c4c4ccc7dddae9daccca87cec6df">[email protected]</span></a>. Please include
file number SR-FICC-2026-007 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549.
All submissions should refer to file number SR-FICC-2026-007. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). Copies of the filing will be available for inspection and
copying at the principal office of FICC and on DTCC's website
(<a href="http://www.dtcc.com/legal/sec-rule-filings">www.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-FICC-2026-007 and should be submitted on or
before OCTOBER 14, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\57\
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\57\ 17 CFR 200.30-3(a)(12) and (a)(57).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-19957 Filed 9-29-26; 8:45 am]
BILLING CODE 8011-01-P
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