The Securities and Exchange Commission (SEC) has adopted new rules that seek to improve the governance of clearing agencies.
The new rules would, in effect, improve the governance of registered clearing agencies by identifying certain responsibilities of the board, increasing transparency into board governance, and enhancing the alignment of incentives among owners and participants of a registered clearing agency. To accomplish these objectives, the rules establish new requirements for board and committee composition, independent directors, management of conflicts of interest, and board oversight.
“I am pleased to support this adoption because it helps foster more resilient clearinghouses,” SEC Chair Gary Gensler said. “Congress has said that the Commission has an important role relating to clearinghouses. This adoption seeks to enhance standards to achieve several goals: promote board independence, consider the views of relevant stakeholders, and reduce the potential for conflicts of interest with respect to the board and senior management. Taken together, these final rules benefit investors, issuers, and the markets connecting them.”
Specifically, the new rules would establish governance requirements regarding board composition, independent directors, nominating committees, and risk management committees. They would also require new policies and procedures regarding conflicts of interest, management of risks from relationships with service providers for core services, and a board obligation to consider stakeholder viewpoints.
The rules are being adopted pursuant to the Dodd-Frank Act, which directs the commission to adopt rules to mitigate conflicts of interest for security-based swap clearing agencies.
The compliance date for the rule is 12 months after publication in the Federal Register, except for the independence requirements for the board and board committees. In that case, the compliance date is 24 months after publication in the Federal Register.