The Securities and Exchange Commission (SEC) this week proposed new rules that seek to improve the overall governance at registered clearing agencies and reduce conflicts of interest.
Specifically, the proposed rule would establish new governance requirements on board composition, independent directors, nominating committees, and risk management committees. Further, the rule would require new policies and procedures regarding conflicts of interest, board obligations to oversee relationships with service providers for critical services, and a board obligation to consider stakeholder viewpoints. In addition, it would establish new requirements for clearing agencies to identify, mitigate, or eliminate conflicts of interest and document those actions.
“I was pleased to support this proposal because, if adopted, it would enhance governance standards for all registered clearinghouses, particularly with regards to conflicts of interest,” SEC Chair Gary Gensler said. “I think these rules would help to build more transparent and reliable clearinghouses. This in turn would help ensure our markets are more resilient, protecting investors and building trust in our markets.”
If adopted, the proposed rules would increase transparency of the decision-making process on clearing agency boards and committees, reduce conflicts of interest, increase the role of independent directors in board decision-making processes, and help promote fair representation of owners and participants in the selection of directors.
The proposal will be published on SEC.gov and in the Federal Register. The public comment period will remain open for 60 days following publication of the proposal on the SEC’s website or 30 days following publication in the Federal Register, whichever period is longer.