Self-Regulatory Organizations; The Depository Trust Company; Fixed Income Clearing Corporation; National Securities Clearing Corporation; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change To Amend the Clearing Agency Risk Management Framework, 53674-53676 [2024-14064]
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Federal Register / Vol. 89, No. 124 / Thursday, June 27, 2024 / Notices
techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication by August 26, 2024.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid
control number.
Please direct your written comment to
David Bottom, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o John
Pezzullo, 100 F Street NE, Washington,
DC 20549 or send an email to: PRA_
Mailbox@sec.gov.
Dated: June 21, 2024.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2024–14077 Filed 6–26–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100400; File Nos. SR–DTC–
2024–003; SR–FICC–2024–006; SR–NSCC–
2024–003]
Self-Regulatory Organizations; The
Depository Trust Company; Fixed
Income Clearing Corporation; National
Securities Clearing Corporation; Order
Instituting Proceedings To Determine
Whether To Approve or Disapprove a
Proposed Rule Change To Amend the
Clearing Agency Risk Management
Framework
June 21, 2024.
lotter on DSK11XQN23PROD with NOTICES1
I. Introduction
On March 11, 2024, The Depository
Trust Company (‘‘DTC’’), Fixed Income
Clearing Corporation (‘‘FICC’’), and
National Securities Clearing Corporation
(‘‘NSCC,’’ each a ‘‘Clearing Agency,’’
and collectively, the ‘‘Clearing
Agencies’’), filed with the Securities and
Exchange Commission (‘‘Commission’’)
proposed rule changes SR–DTC–2024–
003, SR–FICC–2024–006, and SR–
NSCC–2024–003, respectively (each, a
‘‘Proposed Rule Change, and
collectively, the ‘‘Proposed Rule
Changes’’), pursuant to Section 19(b)(1)
of the Securities Exchange Act of 1934
(‘‘Act’’ or ‘‘Exchange Act’’) 1 and Rule
19b–4 thereunder.2 The Proposed Rule
Changes were published for comment in
the Federal Register on March 26,
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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2024.3 The Commission has received
comments on the changes proposed.4
On May 14, 2024, pursuant to Section
19(b)(2) of the Exchange Act,5 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.6 The
Commission is instituting proceedings,
pursuant to Section 19(b)(2)(B) of the
Exchange Act,7 to determine whether to
approve or disapprove the Proposed
Rule Change.
II. Summary of the Proposed Rule
Change
A. Background
The Clearing Agency Risk
Management Framework (‘‘Framework’’)
provides an outline for, among other
things, how each of the Clearing
Agencies comprehensively manages the
risks, including the legal, credit,
liquidity, operational, general business,
investment, custody, and other risks,
that arise in or are borne by it.
On December 13, 2023, the
Commission adopted rules under the
Act to amend the standards applicable
to covered clearing agencies providing
central counterparty services for
transactions in U.S. Treasury securities
to require policies and procedures be
reasonably designed to ensure that the
covered clearing agency has appropriate
means to facilitate access to clearance
and settlement services of all eligible
secondary market transactions in U.S.
Treasury securities, including those of
indirect participants.8 The adopted
rules also require that these policies and
procedures be reviewed annually by the
board of directors of such covered
clearing agencies for U.S. Treasury
securities.9 Currently, FICC is the only
Clearing Agency providing clearance
3 See Securities Exchange Act Release No. 99802
(Mar. 20, 2024), 89 FR 21118 (Mar. 26, 2024) (File
No. SR–DTC–2024–003) (‘‘DTC Notice of Filing’’);
Securities Exchange Act Release No. 99805 (Mar.
20, 2024), 89 FR 21068 (Mar. 26, 2024) (File No.
SR–FICC–2024–006) (‘‘FICC Notice of Filing’’);
Securities Exchange Act Release No. 99803 (Mar.
20, 2024), 89 FR 21091 (Mar. 26, 2024) (File No.
SR–NSCC–2024–003)(‘‘NSCC Notice of Filing’’)
(collectively, ‘‘Notices of Filing’’).
4 Specifically, the Commission received
comments on the FICC Notice of Filing, and the
comments are available at https://www.sec.gov/
comments/sr-ficc-2024-006/srficc2024006.htm.
5 15 U.S.C. 78s(b)(2).
6 See Notices of Filing, supra note 3.
7 15 U.S.C. 78s(b)(2)(B).
8 See Securities Exchange Act Release No. 99149
(Dec. 13, 2023), 89 FR 2714 (Jan. 16, 2024) (S7–23–
22) (Standards for Covered Clearing Agencies for
U.S. Treasury Securities and Application of the
Broker-Dealer Customer Protection Rule with
Respect to U.S. Treasury Securities).
9 17 CFR 240.17Ad–22(e)(18)(iv)(C).
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and settlement services to the U.S.
Treasury securities market.
B. Proposed Rule Changes
The Proposed Rule Changes would
amend the Framework to: (i) describe
generally Clearing Agency participant
and industry stakeholder outreach in
the development and evaluation of new
programs or risk management practices;
(ii) provide for the annual review of
FICC’s Government Securities Division
(‘‘GSD’’) access models by FICC’s Board
of Directors; and (iii) make other
conforming and clean up changes to the
text of the Framework. Other than those
described in (iii), these changes would
be set forth in a new section 3.4
‘‘Solicitation of Participant and
Stakeholder Views,’’ consisting of two
subsections described below.
First, new subsection 3.4.1 (General
Solicitation of Views) would codify an
existing practice, that is, that the
Clearing Agencies routinely solicit their
participants’ and other industry
stakeholders’ views when developing
and evaluating products, services, or
risk management practices so they may
best meet the industry’s needs.10 This
new subsection would describe several
ways that the Clearing Agencies may
seek the views of participants and
stakeholders, including, but not limited
to, targeted outreach to firms expected
to be impacted by a proposal, widely
distributed surveys, ad hoc forums, and
standing and temporary advisory
councils assembled to consider issues
relevant to a proposal. The subsection
would also identify the stakeholders
that may participate in such advisory
councils, including for example,
representatives from transfer agents,
liquidity providers, market
infrastructures, institutional and retail
investors, customers of the Clearing
Agencies’ participants, securities
issuers, and securities holders. The
Clearing Agencies state that the
proposed changes in sub-section 3.4.1
do not create any particular obligation
for the Clearing Agencies to conduct
such outreach in any circumstance.11
Second, the Clearing Agencies
proposed new sub-section 3.4.2
(Required Solicitation of Views—
Annual Review of GSD Access Models)
in connection with the recently adopted
requirement, noted above, that the
Board of Directors of all covered
clearing agencies serving the U.S.
Treasury securities market conduct an
annual review of their policies and
10 See DTC Notice of Filing, supra note 3, 89 FR
at 21119; FICC Notice of Filing, supra note 3, 89
FR at 21069; NSCC Notice of Filing, supra note 3,
89 FR at 21092.
11 Id.
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Federal Register / Vol. 89, No. 124 / Thursday, June 27, 2024 / Notices
procedures to ensure that they have
appropriate means to facilitate access to
clearance and settlement services of all
eligible secondary market transactions
in U.S. Treasury securities, including
those of indirect participants. To
address the new requirement, the new
subsection would provide that FICC
would establish an advisory council
which would assist in the annual review
of GSD’s access models. The advisory
council will be comprised of
participants, their customers, and other
industry stakeholders. This annual
advisory council review of GSD’s access
models would precede an annual review
of GSD’s access models by the FICC
Board, which would also be required by
this new subsection.12 The new
subsection would require that the
annual review include the following: (1)
document any instance in which FICC
treats transactions differently and
confirm that any variation in treatment
is both necessary and appropriate; (2)
consider whether to enable GSD’s
Netting Members to submit eligible
transactions for clearance and
settlement that have been executed by
two indirect participants of FICC/GSD
(‘‘done-away’’); (3) consider the volumes
and proportion of the markets that are
being centrally cleared through different
access models; and (4) consider whether
it is appropriate to develop and propose
an additional category or categories of
Netting Members to the GSD Rules to
reflect the types of legal entities that
applied to be a Netting Member over the
prior 12 months and did not fit into one
of the existing Netting Member
categories.
lotter on DSK11XQN23PROD with NOTICES1
i. Other Conforming and Clean Up
Changes
Third, the Proposed Rule Changes
would make other conforming, nonsubstantive changes to the release to
reflect the inclusion of the new
subsections described above and to
remove the defined term ‘‘Management
Committee’’ wherever referenced and
replace it with ‘‘senior management
committee’’ while maintaining the
current makeup and responsibilities of
the current Management Committee, as
described in the Framework. The
Clearing Agencies state that the
Proposed Rule Changes would allow the
Framework to continue to be accurate
notwithstanding any future name
changes to the committee.13 Other
minor grammatical and clean up
12 17
CFR 240.17Ad–22(e)(18)(iv)(C).
DTC Notice of Filing, supra note 3, 89 FR
at 21120; FICC Notice of Filing, supra note 3, 89
FR at 21070; NSCC Notice of Filing, supra note 3,
89 FR at 21093.
13 See
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changes would also be made to the
Framework.
III. Proceedings To Determine Whether
To Approve or Disapprove the
Proposed Rule Change and Grounds for
Dispproval Under Consideration
The Commission is instituting
proceedings pursuant to Section
19(b)(2)(B) of the Exchange Act to
determine whether the Proposed Rule
Changes should be approved or
disapproved.14 Institution of
proceedings is appropriate at this time
in view of the legal and policy issues
raised by the Proposed Rule Changes.
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 Changes, which would
provide the Commission with
arguments to support the Commission’s
analysis as to whether to approve or
disapprove the Proposed Rule Changes.
Pursuant to Section 19(b)(2)(B) of the
Exchange Act,15 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 Changes’ consistency
with Section 17A of the Exchange Act 16
and the rules thereunder, including the
following provisions:
• Section 17A(b)(3)(F) of the
Exchange Act,17 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, as well as to
foster cooperation and coordination
with persons engaged in the clearance
and settlement of securities
transactions; and to protect investors
and the public interest;
• Rule 17ad–22(e)(2) under the
Exchange Act,18 which requires that a
covered clearing agency establish,
implement, maintain, and enforce
written policies and procedures
reasonably designed to provide for
governance arrangements that: (i) are
clear and transparent; (ii) clearly
prioritize the safety and efficiency of the
covered clearing agency; (iii) support
14 15
U.S.C. 78s(b)(2)(B).
the public interest requirements in
Section 17A of the Exchange Act (15
U.S.C. 78q–1) applicable to clearing
agencies, and the objectives of owners
and participants; (iv) establish that the
board of directors and senior
management have appropriate
experience and skills to discharge their
duties and responsibilities; (v) specify
clear and direct lines of responsibility;
and (vi) consider the interests of
participants’ customers, securities
issuers and holders, and other relevant
stakeholders of the covered clearing
agency;
• Rule 17ad–22(e)(3)(i) under the
Exchange Act,19 which requires that a
covered clearing agency establish,
implement, maintain, and enforce
written policies and procedures
reasonably designed to maintain a
sound risk management framework for
comprehensively managing legal, credit,
liquidity, operational, general business,
investment, custody, and other risks
that arise in or are borne by the covered
clearing agency, which includes risk
management policies, procedures, and
systems designed to identify, measure,
monitor, and manage the range of risks
that arise in or are borne by the covered
clearing agency, that are subject to
review on a specified periodic basis and
approved by the board of directors
annually;
• Rule 17ad–22(e)(18)(iv)(C) under
the Exchange Act,20 which requires that
a covered clearing agency establish,
implement, maintain, and enforce
written policies and procedures
reasonably designed to ensure that it has
appropriate means to facilitate access to
clearance and settlement services of all
eligible secondary market transactions
in U.S. Treasury securities, including
those of indirect participants, which
policies the U.S. Treasury securities
covered clearing agency board of
directors reviews annually; and,
• Rule 17ad–25(j) of the Exchange
Act,21 which requires each registered
clearing agency establish, implement,
maintain and enforce written policies
and procedures reasonably designed to
solicit, consider, and document its
consideration of the views of
participants and other relevant
stakeholders of the registered clearing
agency regarding material developments
in its governance and operations on a
recurring basis.
15 Id.
16 15
19 17
17 15
20 17
U.S.C. 78q–1.
U.S.C. 78q–1(b)(3)(F).
18 17 CFR 240.17ad–22(e)(2).
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CFR 240.17ad–22(e)(3)(i).
CFR 240.17ad–22(e)(18)(iv)(C).
21 17 CFR 240.17ad–25(j).
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Federal Register / Vol. 89, No. 124 / Thursday, June 27, 2024 / Notices
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 Changes. In particular,
the Commission invites the written
views of interested persons concerning
whether the Proposed Rule Changes are
consistent with Section 17A(b)(3)(F) 22
and Rules 17ad–22(e)(2), 17ad–
22(e)(3)(i), 17ad–22(e)(18)(iv)(C), and
17ad–25(j) 23 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,24 any request for an opportunity to
make an oral presentation.25
The Commission asks that
commenters address the sufficiency of
FICC’s statements in support of the
Proposed Rule Changes, which are set
forth in the Notices of Filing 26 in
addition to any other comments they
may wish to submit about the Proposed
Rule Changes.
Comments may be submitted by any
of the following methods:
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 numbers SR–
DTC–2024–003; SR–FICC–2024–006;
SR–FICC–2024–003 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
numbers SR–DTC–2024–003; SR–FICC–
2024–006; SR–FICC–2024–003. This file
number should be included on the
U.S.C. 78q–1(b)(3)(F).
CFR 240.17ad–22(e)(2), (e)(3)(i), and
(e)(18)(iv)(C), and 17 CFR 240.17ad–25(j).
24 17 CFR 240.19b–4(g).
25 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).
26 See Notice of Filing, supra note 3.
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
Changes that are filed with the
Commission, and all written
communications relating to the
Proposed Rule Changes 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 FICC
and on FICC’s website (www.dtcc.com/
legal/sec-rule-filings).
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
Numbers SR–DTC–2024–003; SR–FICC–
2024–006; SR–FICC–2024–003 and
should be submitted on or before July
18, 2024. Rebuttal comments should be
submitted by August 1, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.27
Vanessa A. Countryman,
Secretary.
[FR Doc. 2024–14064 Filed 6–26–24; 8:45 am]
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[Release No. 34–100398; File No. SR–BOX–
2024–16]
Self-Regulatory Organizations; BOX
Exchange LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend the Fee
Schedule Relating to BOX Connectivity
Fees and Port Fees for Trading on the
BOX Options Market LLC Facility
(‘‘BOX’’)
June 21, 2024.
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on June 18,
2024, BOX Exchange LLC (the
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III, below, which Items have been
prepared by the Exchange. The
Exchange filed the proposed rule change
pursuant to section 19(b)(3)(A)(ii) of the
Act,3 and Rule 19b–4(f)(2) thereunder,4
which renders the proposal effective
upon filing with the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of Terms of Substance of the
Proposed Rule Change
The Exchange is filing with the
Securities and Exchange Commission
(‘‘Commission’’) a proposed rule change
to amend the Fee Schedule relating to
BOX Connectivity Fees and Port Fees on
the BOX Options Market LLC (‘‘BOX’’)
options facility. The text of the
proposed rule change is available from
the principal office of the Exchange, at
the Commission’s Public Reference
Room and also on the Exchange’s
internet website at https://
rules.boxexchange.com/rulefilings.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
BILLING CODE 8011–01–P
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1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(ii).
4 17 CFR 240.19b–4(f)(2).
2 17
27 17
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CFR 200.30–3(a)(31).
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]]>Agencies
[Federal Register Volume 89, Number 124 (Thursday, June 27, 2024)]
[Notices]
[Pages 53674-53676]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-14064]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100400; File Nos. SR-DTC-2024-003; SR-FICC-2024-006;
SR-NSCC-2024-003]
Self-Regulatory Organizations; The Depository Trust Company;
Fixed Income Clearing Corporation; National Securities Clearing
Corporation; Order Instituting Proceedings To Determine Whether To
Approve or Disapprove a Proposed Rule Change To Amend the Clearing
Agency Risk Management Framework
June 21, 2024.
I. Introduction
On March 11, 2024, The Depository Trust Company (``DTC''), Fixed
Income Clearing Corporation (``FICC''), and National Securities
Clearing Corporation (``NSCC,'' each a ``Clearing Agency,'' and
collectively, the ``Clearing Agencies''), filed with the Securities and
Exchange Commission (``Commission'') proposed rule changes SR-DTC-2024-
003, SR-FICC-2024-006, and SR-NSCC-2024-003, respectively (each, a
``Proposed Rule Change, and collectively, the ``Proposed Rule
Changes''), pursuant to Section 19(b)(1) of the Securities Exchange Act
of 1934 (``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder.\2\
The Proposed Rule Changes were published for comment in the Federal
Register on March 26, 2024.\3\ The Commission has received comments on
the changes proposed.\4\
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 99802 (Mar. 20,
2024), 89 FR 21118 (Mar. 26, 2024) (File No. SR-DTC-2024-003) (``DTC
Notice of Filing''); Securities Exchange Act Release No. 99805 (Mar.
20, 2024), 89 FR 21068 (Mar. 26, 2024) (File No. SR-FICC-2024-006)
(``FICC Notice of Filing''); Securities Exchange Act Release No.
99803 (Mar. 20, 2024), 89 FR 21091 (Mar. 26, 2024) (File No. SR-
NSCC-2024-003)(``NSCC Notice of Filing'') (collectively, ``Notices
of Filing'').
\4\ Specifically, the Commission received comments on the FICC
Notice of Filing, and the comments are available at https://www.sec.gov/comments/sr-ficc-2024-006/srficc2024006.htm.
---------------------------------------------------------------------------
On May 14, 2024, pursuant to Section 19(b)(2) of the Exchange
Act,\5\ 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.\6\ The Commission is
instituting proceedings, pursuant to Section 19(b)(2)(B) of the
Exchange Act,\7\ to determine whether to approve or disapprove the
Proposed Rule Change.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78s(b)(2).
\6\ See Notices of Filing, supra note 3.
\7\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
II. Summary of the Proposed Rule Change
A. Background
The Clearing Agency Risk Management Framework (``Framework'')
provides an outline for, among other things, how each of the Clearing
Agencies comprehensively manages the risks, including the legal,
credit, liquidity, operational, general business, investment, custody,
and other risks, that arise in or are borne by it.
On December 13, 2023, the Commission adopted rules under the Act to
amend the standards applicable to covered clearing agencies providing
central counterparty services for transactions in U.S. Treasury
securities to require policies and procedures be reasonably designed to
ensure that the covered clearing agency has appropriate means to
facilitate access to clearance and settlement services of all eligible
secondary market transactions in U.S. Treasury securities, including
those of indirect participants.\8\ The adopted rules also require that
these policies and procedures be reviewed annually by the board of
directors of such covered clearing agencies for U.S. Treasury
securities.\9\ Currently, FICC is the only Clearing Agency providing
clearance and settlement services to the U.S. Treasury securities
market.
---------------------------------------------------------------------------
\8\ See Securities Exchange Act Release No. 99149 (Dec. 13,
2023), 89 FR 2714 (Jan. 16, 2024) (S7-23-22) (Standards for Covered
Clearing Agencies for U.S. Treasury Securities and Application of
the Broker-Dealer Customer Protection Rule with Respect to U.S.
Treasury Securities).
\9\ 17 CFR 240.17Ad-22(e)(18)(iv)(C).
---------------------------------------------------------------------------
B. Proposed Rule Changes
The Proposed Rule Changes would amend the Framework to: (i)
describe generally Clearing Agency participant and industry stakeholder
outreach in the development and evaluation of new programs or risk
management practices; (ii) provide for the annual review of FICC's
Government Securities Division (``GSD'') access models by FICC's Board
of Directors; and (iii) make other conforming and clean up changes to
the text of the Framework. Other than those described in (iii), these
changes would be set forth in a new section 3.4 ``Solicitation of
Participant and Stakeholder Views,'' consisting of two subsections
described below.
First, new subsection 3.4.1 (General Solicitation of Views) would
codify an existing practice, that is, that the Clearing Agencies
routinely solicit their participants' and other industry stakeholders'
views when developing and evaluating products, services, or risk
management practices so they may best meet the industry's needs.\10\
This new subsection would describe several ways that the Clearing
Agencies may seek the views of participants and stakeholders,
including, but not limited to, targeted outreach to firms expected to
be impacted by a proposal, widely distributed surveys, ad hoc forums,
and standing and temporary advisory councils assembled to consider
issues relevant to a proposal. The subsection would also identify the
stakeholders that may participate in such advisory councils, including
for example, representatives from transfer agents, liquidity providers,
market infrastructures, institutional and retail investors, customers
of the Clearing Agencies' participants, securities issuers, and
securities holders. The Clearing Agencies state that the proposed
changes in sub-section 3.4.1 do not create any particular obligation
for the Clearing Agencies to conduct such outreach in any
circumstance.\11\
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\10\ See DTC Notice of Filing, supra note 3, 89 FR at 21119;
FICC Notice of Filing, supra note 3, 89 FR at 21069; NSCC Notice of
Filing, supra note 3, 89 FR at 21092.
\11\ Id.
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Second, the Clearing Agencies proposed new sub-section 3.4.2
(Required Solicitation of Views--Annual Review of GSD Access Models) in
connection with the recently adopted requirement, noted above, that the
Board of Directors of all covered clearing agencies serving the U.S.
Treasury securities market conduct an annual review of their policies
and
[[Page 53675]]
procedures to ensure that they have appropriate means to facilitate
access to clearance and settlement services of all eligible secondary
market transactions in U.S. Treasury securities, including those of
indirect participants. To address the new requirement, the new
subsection would provide that FICC would establish an advisory council
which would assist in the annual review of GSD's access models. The
advisory council will be comprised of participants, their customers,
and other industry stakeholders. This annual advisory council review of
GSD's access models would precede an annual review of GSD's access
models by the FICC Board, which would also be required by this new
subsection.\12\ The new subsection would require that the annual review
include the following: (1) document any instance in which FICC treats
transactions differently and confirm that any variation in treatment is
both necessary and appropriate; (2) consider whether to enable GSD's
Netting Members to submit eligible transactions for clearance and
settlement that have been executed by two indirect participants of
FICC/GSD (``done-away''); (3) consider the volumes and proportion of
the markets that are being centrally cleared through different access
models; and (4) consider whether it is appropriate to develop and
propose an additional category or categories of Netting Members to the
GSD Rules to reflect the types of legal entities that applied to be a
Netting Member over the prior 12 months and did not fit into one of the
existing Netting Member categories.
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\12\ 17 CFR 240.17Ad-22(e)(18)(iv)(C).
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i. Other Conforming and Clean Up Changes
Third, the Proposed Rule Changes would make other conforming, non-
substantive changes to the release to reflect the inclusion of the new
subsections described above and to remove the defined term ``Management
Committee'' wherever referenced and replace it with ``senior management
committee'' while maintaining the current makeup and responsibilities
of the current Management Committee, as described in the Framework. The
Clearing Agencies state that the Proposed Rule Changes would allow the
Framework to continue to be accurate notwithstanding any future name
changes to the committee.\13\ Other minor grammatical and clean up
changes would also be made to the Framework.
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\13\ See DTC Notice of Filing, supra note 3, 89 FR at 21120;
FICC Notice of Filing, supra note 3, 89 FR at 21070; NSCC Notice of
Filing, supra note 3, 89 FR at 21093.
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III. Proceedings To Determine Whether To Approve or Disapprove the
Proposed Rule Change and Grounds for Dispproval Under Consideration
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Exchange Act to determine whether the Proposed Rule
Changes should be approved or disapproved.\14\ Institution of
proceedings is appropriate at this time in view of the legal and policy
issues raised by the Proposed Rule Changes. 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 Changes,
which would provide the Commission with arguments to support the
Commission's analysis as to whether to approve or disapprove the
Proposed Rule Changes.
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\14\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to Section 19(b)(2)(B) of the Exchange Act,\15\ 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 Changes' consistency with Section 17A of the Exchange Act
\16\ and the rules thereunder, including the following provisions:
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\15\ Id.
\16\ 15 U.S.C. 78q-1.
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Section 17A(b)(3)(F) of the Exchange Act,\17\ 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, as well as to foster cooperation and
coordination with persons engaged in the clearance and settlement of
securities transactions; and to protect investors and the public
interest;
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\17\ 15 U.S.C. 78q-1(b)(3)(F).
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Rule 17ad-22(e)(2) under the Exchange Act,\18\ which
requires that a covered clearing agency establish, implement, maintain,
and enforce written policies and procedures reasonably designed to
provide for governance arrangements that: (i) are clear and
transparent; (ii) clearly prioritize the safety and efficiency of the
covered clearing agency; (iii) support the public interest requirements
in Section 17A of the Exchange Act (15 U.S.C. 78q-1) applicable to
clearing agencies, and the objectives of owners and participants; (iv)
establish that the board of directors and senior management have
appropriate experience and skills to discharge their duties and
responsibilities; (v) specify clear and direct lines of responsibility;
and (vi) consider the interests of participants' customers, securities
issuers and holders, and other relevant stakeholders of the covered
clearing agency;
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\18\ 17 CFR 240.17ad-22(e)(2).
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Rule 17ad-22(e)(3)(i) under the Exchange Act,\19\ which
requires that a covered clearing agency establish, implement, maintain,
and enforce written policies and procedures reasonably designed to
maintain a sound risk management framework for comprehensively managing
legal, credit, liquidity, operational, general business, investment,
custody, and other risks that arise in or are borne by the covered
clearing agency, which includes risk management policies, procedures,
and systems designed to identify, measure, monitor, and manage the
range of risks that arise in or are borne by the covered clearing
agency, that are subject to review on a specified periodic basis and
approved by the board of directors annually;
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\19\ 17 CFR 240.17ad-22(e)(3)(i).
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Rule 17ad-22(e)(18)(iv)(C) under the Exchange Act,\20\
which requires that a covered clearing agency establish, implement,
maintain, and enforce written policies and procedures reasonably
designed to ensure that it has appropriate means to facilitate access
to clearance and settlement services of all eligible secondary market
transactions in U.S. Treasury securities, including those of indirect
participants, which policies the U.S. Treasury securities covered
clearing agency board of directors reviews annually; and,
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\20\ 17 CFR 240.17ad-22(e)(18)(iv)(C).
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Rule 17ad-25(j) of the Exchange Act,\21\ which requires
each registered clearing agency establish, implement, maintain and
enforce written policies and procedures reasonably designed to solicit,
consider, and document its consideration of the views of participants
and other relevant stakeholders of the registered clearing agency
regarding material developments in its governance and operations on a
recurring basis.
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\21\ 17 CFR 240.17ad-25(j).
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[[Page 53676]]
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 Changes. In particular, the Commission invites
the written views of interested persons concerning whether the Proposed
Rule Changes are consistent with Section 17A(b)(3)(F) \22\ and Rules
17ad-22(e)(2), 17ad-22(e)(3)(i), 17ad-22(e)(18)(iv)(C), and 17ad-25(j)
\23\ 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,\24\ any request for an opportunity to make an oral
presentation.\25\
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\22\ 15 U.S.C. 78q-1(b)(3)(F).
\23\ 17 CFR 240.17ad-22(e)(2), (e)(3)(i), and (e)(18)(iv)(C),
and 17 CFR 240.17ad-25(j).
\24\ 17 CFR 240.19b-4(g).
\25\ 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
FICC's statements in support of the Proposed Rule Changes, which are
set forth in the Notices of Filing \26\ in addition to any other
comments they may wish to submit about the Proposed Rule Changes.
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\26\ See Notice of Filing, supra note 3.
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Comments may be submitted by any of the following methods:
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 numbers SR-DTC-2024-003; SR-FICC-2024-006; SR-FICC-2024-003 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 numbers SR-DTC-2024-003; SR-FICC-
2024-006; SR-FICC-2024-003. 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 Changes that are filed with the Commission, and all
written communications relating to the Proposed Rule Changes 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 FICC and on FICC's website (www.dtcc.com/legal/sec-rule-filings).
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 Numbers SR-DTC-2024-003; SR-
FICC-2024-006; SR-FICC-2024-003 and should be submitted on or before
July 18, 2024. Rebuttal comments should be submitted by August 1, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
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\27\ 17 CFR 200.30-3(a)(31).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-14064 Filed 6-26-24; 8:45 am]
BILLING CODE 8011-01-P
