Self-Regulatory Organizations; LCH SA; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change Relating to Liquidity Risk Modelling Framework, 25906-25908 [2024-07749]
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25906
Federal Register / Vol. 89, No. 72 / Friday, April 12, 2024 / Notices
There are 17 options markets 1 that
must comply with Rule 9b–1. These
respondents work together to prepare a
single ODD covering options traded on
each market, as well as amendments to
the ODD. These respondents file
approximately 3 amendments per year.
The staff calculates that the preparation
and filing of amendments should take
no more than eight hours per options
market. Thus, the total time burden for
options markets per year is
approximately 408 hours (17 options
markets × 8 hours per amendment × 3
amendments per year). The estimated
cost for an in-house attorney is $483 per
hour,2 resulting in a total internal cost
of compliance for these respondents of
approximately $197,064 per year (408
hours at $483 per hour).
In addition, approximately 955
broker-dealers 3 must comply with Rule
9b–1. Each of these respondents will
process an average of 3 new customers
for options each week and, therefore,
will have to furnish approximately 156
ODDs per year. The postal mailing or
electronic delivery of the ODD takes
respondents no more than 30 seconds to
complete for an annual compliance
burden for each of these respondents of
approximately 78 minutes or 1.3 hours.
Thus, the total time burden per year for
broker-dealers is approximately 1,242
hours (955 broker-dealers × 1.3 hours).
The estimated cost for a general clerk of
a broker-dealer is $81 per hour,4
resulting in a total internal cost of
compliance for these respondents of
approximately $100,602 per year (1,242
hours at $81 per hour).
The total time burden for all
respondents under this rule (both
options markets and broker-dealers) is
approximately 1,650 hours per year (408
+ 1,242), and the total internal cost of
compliance is approximately $297,666
per year ($197,064 + $100,602).
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
under the PRA unless it displays a
currently valid OMB control number.
The public may view background
documentation for this information
collection at the following website:
www.reginfo.gov. Find this particular
information collection by selecting
‘‘Currently under 30-day Review—Open
for Public Comments’’ or by using the
search function. Written comments and
recommendations for the proposed
information collection should be sent by
May 13, 2024 to (i) www.reginfo.gov/
public/do/PRAMain and (ii) David
Bottom, Director/Chief Information
Officer, Securities and Exchange
Commission, c/o John Pezzullo, 100 F
Street NE, Washington, DC 20549, or by
sending an email to: PRA_Mailbox@
sec.gov.
1 The seventeen options markets are as follows:
BOX Exchange LLC, Cboe BZX Exchange, Inc., Cboe
C2 Exchange, Inc., Cboe EDGX Exchange, Inc., Cboe
Exchange, Inc., MEMX, LLC, Miami International
Securities Exchange LLC, MIAX Emerald, LLC,
MIAX PEARL, LLC, Nasdaq BX, Inc., Nasdaq
GEMX, LLC, Nasdaq ISE, LLC, Nasdaq MRX, LLC,
Nasdaq PHLX LLC, the Nasdaq Options Market
(NOM), NYSE Arca, Inc., and NYSE American LLC.
2 SIFMA did its last annual survey in 2013 and
will not resume the survey process. Accordingly,
the $483 figure is based on the 2013 figure ($380)
adjusted by the inflation rate calculated using the
Bureau of Labor Statistics’ CPI Inflation Calculator.
The $380 per hour figure for an Attorney is from
SIFMA’s Management & Professional Earnings in
the Securities Industry 2013, modified by
Commission staff to account for an 1800-hour workyear and multiplied by 5.35 to account for bonuses,
firm size, employee benefits and overhead.
3 The estimate of 955 broker-dealers required to
comply with Rule 9b–1 is derived from Item 12 of
the Form BD (OMB Control No. 3235–0012). This
estimate may be high as it includes broker-dealers
that engage in only a proprietary business, and as
a result are not required to deliver an ODD, as well
as those broker-dealers subject to Rule 9b–1.
4 The $81 figure is based on the 2013 figure ($57)
adjusted for inflation. See supra note 2. As noted
above, SIFMA did its last annual survey in 2013
and will not resume the survey process.
Accordingly, the $81 figure is based on the 2013
figure ($57) adjusted for inflation. The $57 per hour
figure for a General Clerk is from SIFMA’s Office
Salaries in the Securities Industry 2013, modified
by Commission staff to account for an 1800-hour
work-year and multiplied by 2.93 to account for
bonuses, firm size, employee benefits and overhead.
[FR Doc. 2024–07807 Filed 4–11–24; 8:45 am]
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Dated: April 9, 2024.
Sherry R. Haywood,
Assistant Secretary.
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99922; File No. SR–LCH
SA–2023–007]
Self-Regulatory Organizations; LCH
SA; Order Instituting Proceedings To
Determine Whether To Approve or
Disapprove a Proposed Rule Change
Relating to Liquidity Risk Modelling
Framework
April 8, 2024.
I. Introduction
On December 22, 2023, Banque
Centrale de Compensation, which
conducts business under the name LCH
SA (‘‘LCH SA’’), filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change SR–LCH SA–2023–007
(‘‘Proposed Rule Change’’) pursuant to
The staff believes that the ODD would be mailed or
electronically delivered to customers by a general
clerk of the broker-dealer or some other equivalent
position.
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section 19(b) of the Securities Exchange
Act of 1934 (‘‘Exchange Act’’) 1 and Rule
19b–4 2 thereunder to amend its
Liquidity Risk Modelling Framework
(the ‘‘Framework’’). The Proposed Rule
Change was published for public
comment in the Federal Register on
January 11, 2024.3 The Commission has
received no comments regarding the
Proposed Rule Change.
On February 21, 2024, pursuant to
Section 19(b)(2) of the Exchange Act,4
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,
until April 10, 2024.5 The Commission
is instituting proceedings, pursuant to
section 19(b)(2)(B) of the Exchange Act,6
to determine whether to approve or
disapprove the proposed rule change.
II. Summary of the Proposed Rule
Change
LCH SA is a clearing agency that
offers clearing of, among other things,
credit-default swaps (‘‘CDS’’).7 LCH SA
is registered with the Commission for
clearing CDS that are security-based
swaps and with the Commodity Futures
Trading Commission for clearing CDS
that are swaps. As part of its clearing
business, LCH SA maintains cash and
other liquid financial resources to meet
its financial obligations. The Framework
and other procedures describe how LCH
SA maintains these resources and
manages its liquidity risk, meaning the
risk that LCH SA will not have enough
liquid financial resources to meet its
financial obligations.8 The Framework
specifically describes how LCH SA’s
Collateral and Liquidity Risk
Management department ensures that
LCH SA has enough cash available to
meet any financial obligations, both
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Exchange Act Release No. 99277 (Jan. 5, 2024),
89 FR 1952 (Jan. 11, 2024) (File No. SR–LCH SA–
2023–007) (‘‘Notice’’).
4 15 U.S.C. 78s(b)(2).
5 Exchange Act Release No. 99569 (Feb. 21, 2024),
89 FR 14538 (Feb. 27, 2024) (File No. SR–LCH SA–
2023–007).
6 15 U.S.C. 78s(b)(2)(B).
7 Capitalized terms used but not defined herein
have the meanings specified in the LCH SA Rule
Book or Framework as applicable.
8 LCH SA, a subsidiary of LCH Group and an
indirect subsidiary of the London Stock Exchange
Group plc (‘‘LSEG’’), manages its liquidity risk
pursuant to, among other policies and procedures,
the Group Liquidity Risk Policy and the Group
Liquidity Plan applicable to each entity within LCH
Group. In addition to its CDSClear service, LCH SA
provides clearing services in connection with cash
equities and derivatives listed for trading on
Euronext (EquityClear), commodity derivatives
listed for trading on Euronext (CommodityClear),
and tri-party Repo transactions (RepoClear).
2 17
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Federal Register / Vol. 89, No. 72 / Friday, April 12, 2024 / Notices
expected and unexpected, that may
arise over the liquidation period for
each of LCH SA’s clearing services.
The Framework describes LCH SA’s
liquidity in terms of sources and needs.
The Framework lists various sources of
liquidity for LCH SA, such as cash and
non-cash collateral provided by Clearing
Members to meet their margin and
default fund requirements. With respect
to needs for liquidity, the Framework
places these into three broad categories:
(i) those arising from LCH SA’s
business-as-usual operations; (ii) those
arising from Clearing Members’ defaults;
and (iii) those arising from the default
of LCH SA’s interoperating central
counterparty (‘‘CCP’’).
The purpose of the Proposed Rule
Change is to make a variety of updates
to the Framework. In general, these
changes will: (a) revise the manner in
which settlement obligation liquidity
requirements are calculated; (b) revise
the way LCH SA determines the
potential value of liquidity obtained
from pledging securities to the Banque
de France; (c) extend the length of time
for which LCH SA must maintain
liquidity resources sufficient to meet its
liquidity requirements; (d) include the
liquidity needs generated by the
expiration of physically settled stock
futures in determining overall liquidity
needs; and (e) require LCH SA, in
calculating its required liquidity
resources, to consider that Clearing
Members may switch from depositing
non-cash collateral in a Full Title
Transfer Account to depositing noncash collateral instead in a Single
Pledged Account.
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III. Proceedings To Determine Whether
To Approve or Disapprove the
Proposed Rule Change and Grounds for
Disapproval Under Consideration
The Commission is instituting
proceedings pursuant to section
19(b)(2)(B) of the Exchange Act to
determine whether the Proposed Rule
Change should be approved or
disapproved.9 Institution of proceedings
is appropriate at this time in view of the
legal and policy issues raised by the
Proposed Rule Change. Institution of
proceedings does not indicate that the
Commission has reached any
conclusions with respect to any of the
issues involved. Rather, the Commission
seeks and encourages interested persons
to comment on the Proposed Rule
Change, which would provide the
Commission with arguments to support
the Commission’s analysis as to whether
9 15
U.S.C. 78s(b)(2)(B).
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to approve or disapprove the Proposed
Rule Change.
Pursuant to section 19(b)(2)(B) of the
Exchange Act,10 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,
the Proposed Rule Change’s consistency
with section 17A of the Exchange Act 11
and the rules thereunder, including the
following provisions:
• Section 17A(b)(3)(F) of the
Exchange Act,12 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 and
derivative agreements, contracts, and
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; to foster
cooperation and coordination with
persons engaged in the clearance and
settlement of securities transactions;
and, in general, to protect investors and
the public interest;
• Rule 17Ad–22(e)(7) under the
Exchange Act,13 which requires, in part,
that a covered clearing agency establish,
implement, maintain, and enforce
written policies and procedures
reasonably designed to effectively
measure, monitor, and manage the
liquidity risk that arises in or is borne
by the covered clearing agency,
including measuring, monitoring, and
managing its settlement and funding
flows on an ongoing and timely basis,
and its use of intraday liquidity; and
• Rules 17Ad–22(e)(7)(vi)(B) and (C)
under the Exchange Act,14 which
requires that a covered clearing agency
establish, implement, maintain, and
enforce written policies and procedures
reasonably designed to determine the
amount and regularly testing the
sufficiency of the liquid resources held
for purposes of meeting the minimum
liquid resource requirement under Rule
17Ad–22(e)(7)(i) by, at a minimum: (i)
conducting a comprehensive analysis on
at least a monthly basis of the existing
stress testing scenarios, models, and
underlying parameters and assumptions
used in evaluating liquidity needs and
resources, and considering
modifications to ensure they are
appropriate for determining its
identified liquidity needs and resources
in light of current and evolving market
10 Id.
11 15
U.S.C. 78q–1.
U.S.C. 78q–1(b)(3)(F).
13 17 CFR 240.17Ad–22(e)(7).
14 Id.
12 15
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25907
conditions and (ii) conducting a
comprehensive analysis of the
scenarios, models, and underlying
parameters and assumptions used in
evaluating its liquidity needs and
resources more frequently than monthly
when the products cleared or markets
served display high volatility or become
less liquid, when the size or
concentration of positions held by its
participants increases significantly, or
in other appropriate circumstances
described in such policies and
procedures that a covered clearing
agency establish, implement, maintain,
and enforce written policies and
procedures reasonably designed to
identify, monitor, and manage risks
related to any link the covered clearing
agency establishes with one or more
other clearing agencies, financial market
utilities, or trading markets.
IV. 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. In particular, the
Commission invites the written views of
interested persons concerning whether
the Proposed Rule Change is consistent
with section 17A(b)(3)(F) 15 and Rules
17Ad–22(e)(7), and (e)(7)(vi)(B) and
(C) 16 of the Exchange Act, or any other
provision of the Exchange Act, or 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(g)
under the Exchange Act,17 any request
for an opportunity to make an oral
presentation.18
The Commission asks that
commenters address the sufficiency of
LCH SA’s statements in support of the
Proposed Rule Change, which are set
forth in the Notice, in addition to any
other comments they may wish to
submit about the Proposed Rule Change.
Comments may be submitted by any
of the following methods:
15 15
U.S.C. 78q–1(b)(3)(F).
CFR 240.17Ad–22(e)(7).
17 17 CFR 240.19b–4(g).
18 Section 19(b)(2) of the Exchange Act grants to
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 selfregulatory organization. See Securities Act
Amendments of 1975, Senate Comm. on Banking,
Housing & Urban Affairs, S. Rep. No. 75, 94th
Cong., 1st Sess. 30 (1975).
16 17
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25908
Federal Register / Vol. 89, No. 72 / Friday, April 12, 2024 / Notices
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
LCH SA–2023–007 on the subject line.
Paper Comments
lotter on DSK11XQN23PROD with NOTICES1
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–LCH SA–2023–007. 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 (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the Proposed Rule
Change that are filed with the
Commission, and all written
communications relating to the
Proposed Rule Change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of 10
a.m. and 3 p.m. Copies of such filing
also will be available for inspection and
copying at the principal office of LCH
SA and on LCH SA’s website at https://
www.lch.com/resources/rulebooks/
proposed-rule-changes.
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–LCH SA–2023–007 and
should be submitted on or before May
3, 2024. Rebuttal comments should be
submitted by May 17, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–07749 Filed 4–11–24; 8:45 am]
BILLING CODE 8011–01–P
19 17
CFR 200.30–3(a)(31).
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99921; File No. SR–
NYSEAMER–2024–10]
Self-Regulatory Organizations; NYSE
American LLC; Notice of Designation
of a Longer Period for Commission
Action on a Proposed Rule Change To
Amend Rule 915 To Permit the Listing
and Trading of Options on the Bitwise
Bitcoin ETF, the Grayscale Bitcoin
Trust, and Any Trust That Holds
Bitcoin
April 8, 2024.
On February 9, 2024, NYSE American
LLC filed with the Securities and
Exchange Commission (‘‘Commission’’),
pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a
proposed rule change to amend Rule
915 to permit the listing and trading of
Opptions on the Bitwise Bitcoin ETF,
the Grayscale Bitcoin Trust, and any
trust that holds Bitcoin. The proposed
rule change was published for comment
in the Federal Register on February 29,
2024.3 The Commission has received
two comments on the proposed rule
change.4
Section 19(b)(2) of the Act 5 provides
that within 45 days of the publication of
notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding, or as to which the
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
disapproved. The 45th day after
publication of the notice for this
proposed rule change is April 14, 2024.
The Commission is extending this 45day time period.
The Commission finds it appropriate
to designate a longer period within
which to take action on the proposed
rule change so that it has sufficient time
to consider the proposed rule change.
Accordingly, the Commission, pursuant
to Section 19(b)(2) of the Act,6
designates May 29, 2024 as the date by
which the Commission shall either
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 99593
(February 23, 2024), 89 FR 14911.
4 Comments are available at https://www.sec.gov/
comments/sr-nyseamer-2024-10/srnyseamer
202410.htm.
5 15 U.S.C. 78s(b)(2).
6 Id.
2 17
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approve or disapprove, or institute
proceedings to determine whether to
disapprove, the proposed rule change
(File No. SR–NYSEAMER–2024–10).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–07748 Filed 4–11–24; 8:45 am]
BILLING CODE 8011–01–P
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #20155 and #20156;
Wrangell Cooperative Association Disaster
Number AK–20001]
Presidential Declaration of a Major
Disaster for the Wrangell Cooperative
Association
Small Business Administration.
Notice.
AGENCY:
ACTION:
This is a Notice of the
Presidential declaration of a major
disaster for the Wrangell Cooperative
Association (FEMA–4763–DR), dated
03/15/2024.
Incident: Severe Storm, Landslides,
and Mudslides.
Incident Period: 11/20/2023.
DATES: Issued on 04/08/2024.
Physical Loan Application Deadline
Date: 05/14/2024.
Economic Injury (EIDL) Loan
Application Deadline Date: 12/16/2024.
ADDRESSES: Visit the MySBA Loan
Portal at https://lending.sba.gov to
apply for a disaster assistance loan.
FOR FURTHER INFORMATION CONTACT:
Alan Escobar, Office of Disaster
Recovery & Resilience, U.S. Small
Business Administration, 409 3rd Street
SW, Suite 6050, Washington, DC 20416,
(202) 205–6734.
SUPPLEMENTARY INFORMATION: Notice is
hereby given that as a result of the
President’s major disaster declaration
for the Wrangell Cooperative
Association, members of the tribal
community, including all residents of
the City and Borough of Wrangell, may
submit applications for disaster loans
online using the MySBA Loan Portal
https://lending.sba.gov or other locally
announced locations. Please contact the
SBA disaster assistance customer
service center by email at
disastercustomerservice@sba.gov or by
phone at 1–800–659–2955 for further
assistance.
The following areas have been
determined to be adversely affected by
the disaster:
SUMMARY:
7 17
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CFR 200.30–3(a)(31).
12APN1
]]>Agencies
[Federal Register Volume 89, Number 72 (Friday, April 12, 2024)]
[Notices]
[Pages 25906-25908]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-07749]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99922; File No. SR-LCH SA-2023-007]
Self-Regulatory Organizations; LCH SA; Order Instituting
Proceedings To Determine Whether To Approve or Disapprove a Proposed
Rule Change Relating to Liquidity Risk Modelling Framework
April 8, 2024.
I. Introduction
On December 22, 2023, Banque Centrale de Compensation, which
conducts business under the name LCH SA (``LCH SA''), filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change SR-LCH SA-2023-007 (``Proposed Rule Change'') pursuant to
section 19(b) of the Securities Exchange Act of 1934 (``Exchange Act'')
\1\ and Rule 19b-4 \2\ thereunder to amend its Liquidity Risk Modelling
Framework (the ``Framework''). The Proposed Rule Change was published
for public comment in the Federal Register on January 11, 2024.\3\ The
Commission has received no comments regarding the Proposed Rule Change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Exchange Act Release No. 99277 (Jan. 5, 2024), 89 FR 1952
(Jan. 11, 2024) (File No. SR-LCH SA-2023-007) (``Notice'').
---------------------------------------------------------------------------
On February 21, 2024, pursuant to Section 19(b)(2) of the Exchange
Act,\4\ 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, until April 10,
2024.\5\ The Commission is instituting proceedings, pursuant to section
19(b)(2)(B) of the Exchange Act,\6\ to determine whether to approve or
disapprove the proposed rule change.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78s(b)(2).
\5\ Exchange Act Release No. 99569 (Feb. 21, 2024), 89 FR 14538
(Feb. 27, 2024) (File No. SR-LCH SA-2023-007).
\6\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
II. Summary of the Proposed Rule Change
LCH SA is a clearing agency that offers clearing of, among other
things, credit-default swaps (``CDS'').\7\ LCH SA is registered with
the Commission for clearing CDS that are security-based swaps and with
the Commodity Futures Trading Commission for clearing CDS that are
swaps. As part of its clearing business, LCH SA maintains cash and
other liquid financial resources to meet its financial obligations. The
Framework and other procedures describe how LCH SA maintains these
resources and manages its liquidity risk, meaning the risk that LCH SA
will not have enough liquid financial resources to meet its financial
obligations.\8\ The Framework specifically describes how LCH SA's
Collateral and Liquidity Risk Management department ensures that LCH SA
has enough cash available to meet any financial obligations, both
[[Page 25907]]
expected and unexpected, that may arise over the liquidation period for
each of LCH SA's clearing services.
---------------------------------------------------------------------------
\7\ Capitalized terms used but not defined herein have the
meanings specified in the LCH SA Rule Book or Framework as
applicable.
\8\ LCH SA, a subsidiary of LCH Group and an indirect subsidiary
of the London Stock Exchange Group plc (``LSEG''), manages its
liquidity risk pursuant to, among other policies and procedures, the
Group Liquidity Risk Policy and the Group Liquidity Plan applicable
to each entity within LCH Group. In addition to its CDSClear
service, LCH SA provides clearing services in connection with cash
equities and derivatives listed for trading on Euronext
(EquityClear), commodity derivatives listed for trading on Euronext
(CommodityClear), and tri-party Repo transactions (RepoClear).
---------------------------------------------------------------------------
The Framework describes LCH SA's liquidity in terms of sources and
needs. The Framework lists various sources of liquidity for LCH SA,
such as cash and non-cash collateral provided by Clearing Members to
meet their margin and default fund requirements. With respect to needs
for liquidity, the Framework places these into three broad categories:
(i) those arising from LCH SA's business-as-usual operations; (ii)
those arising from Clearing Members' defaults; and (iii) those arising
from the default of LCH SA's interoperating central counterparty
(``CCP'').
The purpose of the Proposed Rule Change is to make a variety of
updates to the Framework. In general, these changes will: (a) revise
the manner in which settlement obligation liquidity requirements are
calculated; (b) revise the way LCH SA determines the potential value of
liquidity obtained from pledging securities to the Banque de France;
(c) extend the length of time for which LCH SA must maintain liquidity
resources sufficient to meet its liquidity requirements; (d) include
the liquidity needs generated by the expiration of physically settled
stock futures in determining overall liquidity needs; and (e) require
LCH SA, in calculating its required liquidity resources, to consider
that Clearing Members may switch from depositing non-cash collateral in
a Full Title Transfer Account to depositing non-cash collateral instead
in a Single Pledged Account.
III. Proceedings To Determine Whether To Approve or Disapprove the
Proposed Rule Change and Grounds for Disapproval Under Consideration
The Commission is instituting proceedings pursuant to section
19(b)(2)(B) of the Exchange Act to determine whether the Proposed Rule
Change should be approved or disapproved.\9\ Institution of proceedings
is appropriate at this time in view of the legal and policy issues
raised by the Proposed Rule Change. Institution of proceedings does not
indicate that the Commission has reached any conclusions with respect
to any of the issues involved. Rather, the Commission seeks and
encourages interested persons to comment on the Proposed Rule Change,
which would provide the Commission with arguments to support the
Commission's analysis as to whether to approve or disapprove the
Proposed Rule Change.
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\9\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to section 19(b)(2)(B) of the Exchange Act,\10\ 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, the
Proposed Rule Change's consistency with section 17A of the Exchange Act
\11\ and the rules thereunder, including the following provisions:
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\10\ Id.
\11\ 15 U.S.C. 78q-1.
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Section 17A(b)(3)(F) of the Exchange Act,\12\ 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 and derivative agreements, contracts, and
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; to foster cooperation and coordination with persons
engaged in the clearance and settlement of securities transactions;
and, in general, to protect investors and the public interest;
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\12\ 15 U.S.C. 78q-1(b)(3)(F).
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Rule 17Ad-22(e)(7) under the Exchange Act,\13\ which
requires, in part, that a covered clearing agency establish, implement,
maintain, and enforce written policies and procedures reasonably
designed to effectively measure, monitor, and manage the liquidity risk
that arises in or is borne by the covered clearing agency, including
measuring, monitoring, and managing its settlement and funding flows on
an ongoing and timely basis, and its use of intraday liquidity; and
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\13\ 17 CFR 240.17Ad-22(e)(7).
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Rules 17Ad-22(e)(7)(vi)(B) and (C) under the Exchange
Act,\14\ which requires that a covered clearing agency establish,
implement, maintain, and enforce written policies and procedures
reasonably designed to determine the amount and regularly testing the
sufficiency of the liquid resources held for purposes of meeting the
minimum liquid resource requirement under Rule 17Ad-22(e)(7)(i) by, at
a minimum: (i) conducting a comprehensive analysis on at least a
monthly basis of the existing stress testing scenarios, models, and
underlying parameters and assumptions used in evaluating liquidity
needs and resources, and considering modifications to ensure they are
appropriate for determining its identified liquidity needs and
resources in light of current and evolving market conditions and (ii)
conducting a comprehensive analysis of the scenarios, models, and
underlying parameters and assumptions used in evaluating its liquidity
needs and resources more frequently than monthly when the products
cleared or markets served display high volatility or become less
liquid, when the size or concentration of positions held by its
participants increases significantly, or in other appropriate
circumstances described in such policies and procedures that a covered
clearing agency establish, implement, maintain, and enforce written
policies and procedures reasonably designed to identify, monitor, and
manage risks related to any link the covered clearing agency
establishes with one or more other clearing agencies, financial market
utilities, or trading markets.
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\14\ Id.
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IV. 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. In particular, the Commission invites
the written views of interested persons concerning whether the Proposed
Rule Change is consistent with section 17A(b)(3)(F) \15\ and Rules
17Ad-22(e)(7), and (e)(7)(vi)(B) and (C) \16\ of the Exchange Act, or
any other provision of the Exchange Act, or 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(g) under the Exchange Act,\17\ any
request for an opportunity to make an oral presentation.\18\
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\15\ 15 U.S.C. 78q-1(b)(3)(F).
\16\ 17 CFR 240.17Ad-22(e)(7).
\17\ 17 CFR 240.19b-4(g).
\18\ Section 19(b)(2) of the Exchange Act grants to 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 Act Amendments of 1975, Senate Comm. on
Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st
Sess. 30 (1975).
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The Commission asks that commenters address the sufficiency of LCH
SA's statements in support of the Proposed Rule Change, which are set
forth in the Notice, in addition to any other comments they may wish to
submit about the Proposed Rule Change.
Comments may be submitted by any of the following methods:
[[Page 25908]]
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-LCH SA-2023-007 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-LCH SA-2023-007. 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 (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the Proposed Rule Change that are
filed with the Commission, and all written communications relating to
the Proposed Rule Change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for website viewing and
printing in the Commission's Public Reference Room, 100 F Street NE,
Washington, DC 20549 on official business days between the hours of 10
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of LCH SA and on LCH
SA's website at https://www.lch.com/resources/rulebooks/proposed-rule-changes.
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-LCH SA-2023-007 and
should be submitted on or before May 3, 2024. Rebuttal comments should
be submitted by May 17, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(31).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-07749 Filed 4-11-24; 8:45 am]
BILLING CODE 8011-01-P
