The Securities and Exchange Commission (SEC) has proposed rule changes the agency indicated would address clearing services continuity.
The proposal would requires a covered clearing agency to have policies and procedures establishing a risk-based margin system
monitoring intraday exposure on an ongoing basis and includes the authority and operational capacity to make intraday margin calls as frequently as circumstances warrant.
Included in the guidance, according to the SEC, would be risk thresholds specified by the covered clearing agency are breached or when the products cleared or markets served display elevated volatility.
SEC Chair Gary Gensler said the proposal would help ensure the continuity of clearing services during times of significant stress.
“Well-regulated and well-managed clearinghouses help lower risk for the public,” Gensler said. “I am pleased to support the proposal because, if adopted, it would help enhance the resiliency of this part of our market plumbing, which is fundamental for the capital markets to operate. That benefits investors, issuers, and the markets alike.”
Additionally, the SEC outlined a a new rule building upon the existing requirement that a covered clearing agency have a recovery and wind-down plan, specifying nine elements a covered clearing agency would be required to include in its recovery and wind-down plan.
The public comment period will remain open for 60 days following publication of the proposing release on the SEC website or 30 days following publication of the proposing release in the Federal Register, whichever period is longer.