Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing of Proposed Rule Change To Adopt the Clearing Agency Framework for Certain Requirements on Governance and Conflicts of Interest, 71646-71650 [2024-19656]
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Federal Register / Vol. 89, No. 170 / Tuesday, September 3, 2024 / Notices
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act,59 and Rule
19b–4(f)(2) 60 thereunder. At any time
within 60 days of the filing of the
proposed rule change, the Commission
summarily may temporarily suspend
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act. If the Commission
takes such action, the Commission shall
institute proceedings to determine
whether the proposed rule should be
approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
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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–
SAPPHIRE–2024–22 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–SAPPHIRE–2024–22. 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 the filing also
will be available for inspection and
copying at the principal office of the
Exchange. 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–SAPPHIRE–2024–22 and should be
submitted on or before September 24,
2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.61
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–19660 Filed 8–30–24; 8:45 am]
BILLING CODE 8011–01–P
60 17
(A) Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
[Release No. 34–100841; File No. SR–
NSCC–2024–006]
1. Purpose
Recently, the Commission adopted a
new rule on governance and conflicts of
interest for registered clearing agencies,
Rule 17ad–25.4 The proposed rule
changes would establish the
Framework, which would outline the
way in which the Clearing Agencies and
their Boards, as applicable, comply with
sections (g), (h), (i) and (j) of the new
rule.5 The proposed rule changes are
discussed in more detail below.
Self-Regulatory Organizations;
National Securities Clearing
Corporation; Notice of Filing of
Proposed Rule Change To Adopt the
Clearing Agency Framework for
Certain Requirements on Governance
and Conflicts of Interest
August 27, 2024.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on August
15, 2024, National Securities Clearing
Corporation (‘‘NSCC’’) 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 clearing agency. The Commission
is publishing this notice to solicit
comments on the proposed rule change
from interested persons.
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(i) Proposed Section 1 and Section 2 of
the Framework
Proposed Section 1 of the Framework
would constitute the executive
summary of the Framework. Section 1
notes, among other things, that the
Framework provides an outline for the
way in which the Clearing Agencies and
their Boards comply with the
requirements of Rule 17ad–25(g), (h), (i)
and (j) 6 and that the Clearing Agencies
may develop policies, procedures and
3 See
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b 4(f)(2).
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission, the
clearing agency 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
clearing agency has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
SECURITIES AND EXCHANGE
COMMISSION
61 17
59 15
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
The proposed rule change would
adopt a new framework entitled the
‘‘Clearing Agency Framework for
Certain Requirements on Governance
and Conflicts of Interest’’
(‘‘Framework’’) of NSCC and its
affiliates, Fixed Income Clearing
Corporation (‘‘FICC’’) and The
Depository Trust Company (‘‘DTC,’’ and
together with NSCC and FICC, the
‘‘Clearing Agencies’’). The Framework
would outline the way in which the
Clearing Agencies and their Boards of
Directors (‘‘Boards’’), as applicable,
comply with certain sections of Rule
17ad–25,3 as described below.
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17 CFR 240.17ad–25 (‘‘Rule 17ad–25’’).
id.
5 See 17 CFR 240.17ad–25(g), (h), (i) and (j).
6 See id.
4 See
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other supplemental documentation to
support execution of the Framework.
The Framework states that individuals
elected to the DTCC Board of Directors
are also elected to the Boards of each of
the Clearing Agencies, and that the
Framework is applicable to the directors
of each of the Clearing Agencies and
DTCC separately with respect to their
role on each Board.
Section 1 also notes that references in
the Framework to the Clearing Agencies
and governance bodies should be read
in the singular or the plural as the
context requires, and references to
individual officers or employees,
management, or functional areas
generally refer to employees or
functions of DTCC,7 acting on behalf of
the relevant Clearing Agencies.
Proposed Section 2 of the Framework
would cover Framework ownership and
change management. The Framework
would be owned and managed by an
officer, within the General Counsel’s
Office of DTCC, on behalf of each
Clearing Agency. Regarding change
management, Section 2 would state that
changes to the Framework would be
approved by either (1) the Boards, (2)
such Board committees as may be
delegated authority by the Boards from
time to time pursuant to their charters,
or (3) with respect to certain changes,
the General Counsel or Deputy General
Counsels of the Clearing Agencies,
pursuant to authority delegated by the
Boards and with the advice and
direction of the Framework owner.
Section 2 also states that the Framework
would be reviewed and approved
annually by the Boards, or duly
authorized committees of the Boards.
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(ii) Proposed Section 3 on Rules 17ad–
25(g) and (h)
Proposed Section 3 of the Framework
would describe how the Clearing
Agencies comply with sections (g) and
(h) of Rule 17ad–25.8 The Clearing
Agencies would maintain applicable
policies and procedures applicable to
Board directors and management of the
Clearing Agencies, respectively. Such
policies and procedures would provide
that the Clearing Agencies identify and
document existing or potential conflicts
of interest in the decision-making
process of the Clearing Agencies
involving directors or senior managers
of the Clearing Agencies, and mitigate or
eliminate and document the mitigation
7 The Depository Trust & Clearing Corporation
(‘‘DTCC’’) is the parent company of the Clearing
Agencies.
8 See 17 CFR 240.17ad–25(g) and (h).
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or elimination of such conflicts of
interest.
Regarding the directors, the
Framework would describe that
directors are required to exercise their
powers in good faith and in the best
interests of the Clearing Agencies, rather
than their own interests or the interests
of another entity or person. Directors
have a duty to each Clearing Agency
that applies separately. A conflict of
interest is present whenever the
interests of the Clearing Agencies
compete with the interests of a director,
the director’s employer, or any other
party with which a director is
associated, or otherwise whenever a
director’s corporate or personal interests
could be viewed as affecting his or her
objectivity or independent judgment in
fulfilling the director’s duties to the
Clearing Agencies.
The Framework would state that
directors are required to document and
inform the Corporate Secretary of the
Clearing Agencies promptly of the
existence of any relationship or interest
that reasonably could affect the
independent judgment or decisionmaking of the director. The Framework
would provide that the Corporate
Secretary would escalate any disclosure
to the General Counsel for evaluation. If
such disclosure is deemed to be an
actual conflict of interest, the General
Counsel would notify the NonExecutive Chairman of the Board and
discuss how such conflict can be
mitigated or eliminated. In certain cases,
it may be advisable for the involved
director to recuse himself/herself from
any discussion or vote related to the
matter. In other cases, where the conflict
is limited or indirect, the Non-Executive
Chairman in consultation with the
General Counsel may determine that the
conflict should be disclosed to the full
Board of Directors, but in light of such
disclosure to the Board, recusal of the
director is unnecessary. Further, there
may be cases where a conflict is so
significant or pervasive that the director
would be unable to continue to serve on
the Boards. In such instances, the NonExecutive Chairman and General
Counsel would discuss with the
Governance Committee. Any measures
taken to address a conflict of interest
would be documented by the Corporate
Secretary’s Office.
Regarding senior management, the
Framework would state that all staff,
including senior managers, must avoid
activities or relationships that might
affect objectivity in business decisions
throughout employment with the
Clearing Agencies. Staff, including
senior managers, are required to
disclose a relationship or interest that
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reasonably could affect objectivity in
business decisions for review and
determination on the appropriate course
of action. A course of action for a
conflict of interest could include actions
such as recusal of the staff member from
the particular matter, such as a vendor
selection process or disallowing a staff
member from being on the board of
directors of a Clearing Agency vendor or
client. The course of action will be
documented.
(iii) Proposed Section 4 on Rule 17ad–
25(i)
Proposed Section 4 of the Framework
would describe how the Clearing
Agencies comply with section (i) of Rule
17ad–25.9 The Clearing Agencies would
adopt the definition of ‘‘service provider
for core services’’ from Rule 17ad–
25(a),10 which is ‘‘any person that,
through a written service provider
agreement for services provided to or on
behalf of the registered clearing agency,
on an ongoing basis, directly supports
the delivery of clearance or settlement
functionality or any other purposes
material to the business of the registered
clearing agency.’’ Additionally, the
Clearing Agencies would identify
service providers for core services and
manage risks related to agreements with
such service providers. Specifically,
senior management would be required
to: (1) evaluate and document the risks
related to agreements with service
providers for core services, including
under changes to circumstances and
potential disruptions, and whether the
risks can be managed in a manner
consistent with the Clearing Agencies’
risk management framework; and (2)
perform ongoing monitoring of the
relationship and report to the Boards for
their evaluation of any action taken by
senior management to remedy
significant deterioration in performance
or address changing risks or material
issues identified through such
monitoring, or if the risk or material
issues identified cannot be remedied,
assess and document weaknesses or
deficiencies in the relationship with the
service provider for core services for
submission to the Board.
Further, the Boards of the Clearing
Agencies would: (1) review and approve
the procedures described in the
previous paragraph; (2) review and
approve any agreement that would
establish a relationship with a service
provider for core services along with the
required risk evaluation prepared by
senior management; and (3) evaluate
any action taken by senior management
9 See
17 CFR 240.17ad–25(i).
17 CFR 240.17ad–25(a).
10 See
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to remedy significant deterioration in
performance or address changing risks
or material issues identified through
senior management’s monitoring of
service providers for core services.
Importantly, consistent with the
definition from Rule 17ad–25(a), service
providers for core services to the
Clearing Agencies can be external
service providers or intercompany
affiliates (i.e., DTCC or one of its
subsidiaries). As a general matter, the
Clearing Agencies employ a
proportionate and risk-based approach
adapted to the distinct characteristics
and risks presented by these two
different categories of service
providers.11 One core distinction is that
the Clearing Agencies and their affiliate
service providers are all held
accountable via enterprise-wide risk
management systems, processes, and
controls administered under a common
governance arrangement (i.e., one
holding company). Moreover, this
common governance arrangement and
the related systems, processes, and
controls are based upon and largely
derived from the stringent legal and
regulatory compliance standards
applicable to the Clearing Agencies.
Therefore, the Clearing Agencies and
their affiliates are all held directly
accountable by a common governance
arrangement to a set of performance
level and risk management standards
based upon the Clearing Agencies’
requirements, which is administered via
enterprise-wide systems, processes, and
internal controls. In contrast, because
external service providers are not
subject to the same governance
arrangements and standards that ensure
accountability for intercompany
affiliates, the Clearing Agencies must
use different mechanisms (e.g.,
negotiating and enforcing express
contractual terms) to ensure a
comparable degree of risk management
and monitoring. Given this fundamental
difference in accountability
mechanisms, the Clearing Agencies
therefore rely upon a dedicated third
party risk management function to
manage and monitor external
relationship risks separately from the
internal functions described above
applied for affiliated service provider
relationships.
11 The concept of proportional treatment of
affiliated and unaffiliated third party service
providers is well-documented in risk management
guidance for financial institutions. See, for
example, the Financial Stability Board’s guidance
on Enhancing Third-Party Risk Management and
Oversight: A toolkit for financial institutions and
financial authorities available at https://
www.fsb.org/wp-content/uploads/P041223-1.pdf.
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(iv) Proposed Section 5 on Rule 17ad–
25(j)
Proposed Section 5 of the Framework
would state that in support of their
compliance with Rule 17ad–25(j),12 the
Clearing Agencies have established
various advisory councils (‘‘Advisory
Councils’’) made up of representatives
of the Clearing Agencies’ participants
and other relevant stakeholders. In order
to ensure appropriate stakeholders are
consulted for different types of material
developments at the Clearing Agencies,
the Clearing Agencies have established
a joint Advisory Council to consider
material developments in risk
management across the Clearing
Agencies and separate business-line
specific Advisory Councils to consider
material developments in operations.
The Clearing Agencies may also use
other mechanisms, such as ad hoc group
meetings of Clearing Agency
participants and other relevant
stakeholders, to assist the Boards of the
Clearing Agencies in meeting their
obligations under Rule 17ad–25(j).
The Framework would state further
that the Advisory Councils and the ad
hoc mechanisms assist the Boards of the
Clearing Agencies in their obligation to
solicit, consider, and document their
consideration of the views of
participants and other relevant
stakeholders of the Clearing Agencies
regarding material developments in
their respective risk management and
operations on a recurring basis.
Specifically, senior management of the
Clearing Agencies would bring material
developments in the Clearing Agencies’
risk management and operations to the
Advisory Councils (or ad hoc
mechanisms) for their consideration.
Senior management would document
the views of the stakeholders
participating in these Advisory Councils
and mechanisms on such developments.
Senior management would then escalate
the views on material developments in
the Clearing Agencies risk management
and operations to the Boards for their
consideration.
The proposed rule changes also define
‘‘material developments’’ in the Clearing
Agencies’ risk management and
operations as including developments
that would significantly affect the risk
and/or operational profile of a Clearing
Agency and/or would significantly
affect the rights and obligations of
relevant stakeholders. Providing
information on such material
developments would enable
stakeholders to identify and evaluate the
risk, fees and other significant costs they
incur by participating or otherwise
interacting with a Clearing Agency.
‘‘Material developments’’ in the
Clearing Agencies’ risk management and
operations would cover areas such as
financial risk management, margin
methodologies, cyber and operational
resiliency, default management, fee
structures, the introduction of new
cleared products and services, access
models, and the design and functioning
of the processes and technology systems
that support the infrastructure of the
Clearing Agencies and the way that
participants and other relevant
stakeholders connect to such systems.
(v) Implementation Timeframe
Subject to approval by the
Commission, the Clearing Agencies
would implement the proposed rule
changes on December 5, 2024.
2. Statutory Basis
The Clearing Agencies believe that the
proposed changes are consistent with
Section 17A(b)(3)(F) of the Act 13 for the
reasons described below. Section
17A(b)(3)(F) of the Act requires, in part,
that the rules of a registered clearing
agency be designed to promote the
prompt and accurate clearance and
settlement of securities transactions,
safeguard the securities and funds
which are in the custody or control of
the clearing agency or for which it is
responsible, and foster cooperation and
coordination with persons engaged in
the clearance and settlement of
securities transactions.14
The proposed rule changes would
address potential conflicts of interest, as
described more fully in Item II(A)1(ii)
above. The proposed rule changes
would help ensure that the Clearing
Agencies are able to identify potential
conflicts of interest at the senior
management and Board level and
subject such conflicts to a uniform
process of review, mitigation or
elimination, and documentation. In
addition, the proposed changes would
address the situation where the Clearing
Agencies may not have access to
information necessary to identify a
potential conflict of interest by requiring
that a director be required to document
and inform the Clearing Agencies
promptly of the existence of any
relationship or interest that reasonably
could affect the independent judgment
or decision-making of the director. The
Clearing Agencies believe that including
the foregoing requirements in the
Framework would help ensure the
integrity of the governance processes of
13 15
12 See
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U.S.C. 78q–1(b)(3)(F).
14 Id.
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the Clearing Agencies and thereby
promote the prompt and accurate
clearance and settlement of securities
transactions and safeguard the securities
and funds which are in the custody or
control of the Clearing Agencies or for
which they are responsible, consistent
with Section 17A(b)(3)(F) of the Act.15
The proposed rule changes would
also address risks presented by service
providers for core services, as described
more fully in Item II(A)1(iii) above. The
proposed rule changes in this regard
would require senior management of the
Clearing Agencies to manage the risks
presented by evaluating and
documenting such risks, including
under changes to circumstances and
potential disruptions, among other
things. The proposed rule changes
would also provide for Board oversight
of senior management regarding the
management of risks presented by
service providers for core services.
These requirements for both senior
management and the Boards would help
prevent situations where a service
provider for core services does not
perform its obligations and therefore
help prevent undermining the Clearing
Agencies’ sound risk management and
operational resiliency. The Clearing
Agencies believe that by helping to
maintain their sound risk management
and operational resiliency, the proposed
rule changes would promote the prompt
and accurate clearance and settlement of
securities transactions and safeguard the
securities and funds which are in the
custody or control of the Clearing
Agencies or for which they are
responsible, consistent with Section
17A(b)(3)(F) of the Act.16
The proposed changes would also
address the obligation of the Boards to
solicit and consider viewpoints of
participants and other relevant
stakeholders, as described more fully in
Item II(A)1(iv) above. The proposed rule
changes in this regard would require the
Boards to solicit, consider and
document their consideration of
participant and relevant stakeholder
viewpoints regarding material
developments in their risk management
and operations on a recurring basis.
Obtaining viewpoints from participants
and relevant stakeholders on material
developments in the Clearing Agencies’
risk management and operations would
help optimize the Clearing Agencies’
decisions, rules and procedures because
it could provide the Clearing Agencies
with a wider breadth of useful
information as they make developments
in these key areas. The Clearing
(B) Clearing Agency’s Statement on
Burden on Competition
The Clearing Agencies believe that the
proposed rule changes could promote
competition. Specifically, the Clearing
Agencies believe, as the Commission
noted in its adopting release regarding
the adoption of Rule 17ad–25(g) and
Rule 17ad–25(h),18 that the changes on
conflicts of interest described in Item
II(A)1(ii) above would help promote the
integrity of the Clearing Agencies’
governance arrangements by helping to
ensure the Clearing Agencies are
capable of both identifying potential
conflicts and subjecting such conflicts
to a uniform process of review,
mitigation or elimination and
documentation. In addition, the
proposed changes would address the
situation where the Clearing Agencies
may not have access to information
necessary to identify a potential conflict
of interest by requiring that a director be
required to document and inform the
Clearing Agencies promptly of the
existence of any relationship or interest
that reasonably could affect the
independent judgment or decisionmaking of the director. The Clearing
Agencies believe that these changes
taken as a whole serve to ensure the
equitable treatment of clearing members
or other market participants by the
Clearing Agencies and therefore could
promote competition.
The Clearing Agencies also believe
that the proposed rule changes on the
management of risks presented by
service providers for core services
described in Item II(A)1(iii) above could
also promote competition. The proposed
rule changes in this regard would
require senior management of the
Clearing Agencies to manage the risks
presented by evaluating and
documenting such risks, including
under changes to circumstances and
potential disruptions, among other
things. The proposed rule changes
would also provide for Board oversight
17 Id.
18 See Securities Exchange Act Release No. 98959
(Nov. 16, 2023), 88 FR 84454 (Dec. 5, 2023), at
84474.
15 Id.
16 Id.
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Agencies believe that because the
proposed rule changes could lead to
better decisions, rules and procedures in
these key areas, the proposed rule
changes would promote the prompt and
accurate clearance and settlement of
securities transactions and foster
cooperation and coordination with
persons engaged in the clearance and
settlement of securities transactions,
consistent with the requirements of
Section 17A(b)(3)(F) of the Act.17
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of senior management regarding the
management of risks presented by
service providers for core services.
These requirements for both senior
management and the Boards would help
prevent situations where a service
provider for core services does not
perform its obligations, and therefore
help prevent undermining the Clearing
Agencies’ sound risk management and
operational resiliency, which could also
be costly for members of the Clearing
Agencies. The Clearing Agencies believe
that by implementing the proposed
changes described in Item II(A)1(iii)
above and thereby helping to avoid
costs that members may incur if a
service provider for core services does
not meet its obligations, the proposed
rule changes could promote
competition.
The Clearing Agencies also believe
that the proposed changes on the
obligation of the Boards to solicit and
consider viewpoints of participants and
other relevant stakeholders described in
Item II(A)1(iv) above could also promote
competition. The proposed rule changes
in this regard would require the Boards
to solicit, consider and document their
consideration of participant and
relevant stakeholder viewpoints
regarding material developments in
their risk management and operations
on a recurring basis. The Clearing
Agencies believe that the proposed rule
changes could promote competition
because they would formalize a process
by which multiple interested parties
(that is, participants and relevant
stakeholders) would have their
viewpoints on material developments in
risk management and operations
considered by the Boards, and the
Boards could have useful information
on how emerging topics in these areas
might impact participants and
stakeholders.
(C) Clearing Agency’s Statement on
Comments on the Proposed Rule
Change Received From Members,
Participants, or Others
The Clearing Agencies have not
received or solicited any written
comments relating to this proposal. If
any written comments are received, they
will be publicly filed as an Exhibit 2 to
this filing, as required by Form 19b–4
and the General Instructions thereto.
Persons submitting comments are
cautioned that, according to Section IV
(Solicitation of Comments) of the
Exhibit 1A in the General Instructions to
Form 19b–4, the Commission does not
edit personal identifying information
from comment submissions.
Commenters should submit only
information that they wish to make
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available publicly, including their
name, email address, and any other
identifying information.
All prospective commenters should
follow the Commission’s instructions on
how to submit comments, available at
https://www.sec.gov/regulatory-actions/
how-to-submitcomments. General
questions regarding the rule filing
process or logistical questions regarding
this filing should be directed to the
Main Office of the Commission’s
Division of Trading and Markets at
tradingandmarkets@sec.gov or 202–
551–5777.
The Clearing Agencies reserve the
right not to respond to any comments
received.
III. Date of Effectiveness of the
Proposed Rule Change, and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the self-regulatory organization
consents, the Commission will:
(A) by order approve or disapprove
such proposed rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
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 Number SR–
NSCC–2024–006 on the subject line.
tkelley on LAP7H3WLY3PROD with NOTICES2
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549.
All submissions should refer to File
Number SR–NSCC–2024–006. 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/
VerDate Sep<11>2014
22:46 Aug 30, 2024
Jkt 262001
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
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of NSCC and on DTCC’s website
(https://dtcc.com/legal/sec-rulefilings.aspx). 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–NSCC–2024–006 and
should be submitted on or before
September 24, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–19656 Filed 8–30–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100833; File No. SR–
CboeBYX–2024–029]
Self-Regulatory Organizations; Cboe
BYX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change to Establish
Fees for Industry Members Related to
Reasonably Budgeted Costs of the
National Market System Plan
Governing the Consolidated Audit Trail
for the Period From July 16, 2024
Through December 31, 2024
August 27, 2024.
Pursuant to Section 19(b)(1) under the
Securities Exchange Act of 1934 (the
‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on August
19 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00401
Fmt 4703
Sfmt 4703
15, 2024, Cboe BYX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BYX’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe BYX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘Cboe BYX’’) proposes to
adopt a fee schedule entitled
‘‘Consolidated Audit Trail Funding
Fees’’ 3 to establish fees for Industry
Members 4 related to reasonably
budgeted CAT costs of the National
Market System Plan Governing the
Consolidated Audit Trail (the ‘‘CAT
NMS Plan’’ or ‘‘Plan’’) for the period
from July 16, 2024 through December
31, 2024. The text of the proposed rule
change is provided in Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
equities/regulation/rule_filings/BYX/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
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
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
3 The Exchange and each of its affiliated
exchanges (Cboe BZX Exchange, Inc., Cboe C2
Exchange, Inc., Cboe Exchange, Inc., Cboe EDGA
Exchange, Inc., and Cboe EDGX Exchange, Inc.) are
filing to adopt this fee schedule.
4 An ‘‘Industry Member’’ is defined as ‘‘a member
of a national securities exchange or a member of a
national securities association.’’ See Exchange Rule
7.20(u); see also Section 1.1 of the CAT NMS Plan.
Unless otherwise specified, capitalized terms used
in this rule filing are defined as set forth in the CAT
NMS Plan and/or the CAT Compliance Rule. See
Exchange Rules 4.5—4.17.
U:\REGISTER\03SEN1.SGM
03SEN1
]]>Agencies
[Federal Register Volume 89, Number 170 (Tuesday, September 3, 2024)]
[Notices]
[Pages 71646-71650]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-19656]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100841; File No. SR-NSCC-2024-006]
Self-Regulatory Organizations; National Securities Clearing
Corporation; Notice of Filing of Proposed Rule Change To Adopt the
Clearing Agency Framework for Certain Requirements on Governance and
Conflicts of Interest
August 27, 2024.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on August 15, 2024, National Securities Clearing Corporation (``NSCC'')
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 clearing agency. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
The proposed rule change would adopt a new framework entitled the
``Clearing Agency Framework for Certain Requirements on Governance and
Conflicts of Interest'' (``Framework'') of NSCC and its affiliates,
Fixed Income Clearing Corporation (``FICC'') and The Depository Trust
Company (``DTC,'' and together with NSCC and FICC, the ``Clearing
Agencies''). The Framework would outline the way in which the Clearing
Agencies and their Boards of Directors (``Boards''), as applicable,
comply with certain sections of Rule 17ad-25,\3\ as described below.
---------------------------------------------------------------------------
\3\ See 17 CFR 240.17ad-25 (``Rule 17ad-25'').
---------------------------------------------------------------------------
II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
In its filing with the Commission, the clearing agency 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 clearing agency has prepared summaries,
set forth in sections A, B, and C below, of the most significant
aspects of such statements.
(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
1. Purpose
Recently, the Commission adopted a new rule on governance and
conflicts of interest for registered clearing agencies, Rule 17ad-
25.\4\ The proposed rule changes would establish the Framework, which
would outline the way in which the Clearing Agencies and their Boards,
as applicable, comply with sections (g), (h), (i) and (j) of the new
rule.\5\ The proposed rule changes are discussed in more detail below.
---------------------------------------------------------------------------
\4\ See id.
\5\ See 17 CFR 240.17ad-25(g), (h), (i) and (j).
---------------------------------------------------------------------------
(i) Proposed Section 1 and Section 2 of the Framework
Proposed Section 1 of the Framework would constitute the executive
summary of the Framework. Section 1 notes, among other things, that the
Framework provides an outline for the way in which the Clearing
Agencies and their Boards comply with the requirements of Rule 17ad-
25(g), (h), (i) and (j) \6\ and that the Clearing Agencies may develop
policies, procedures and
[[Page 71647]]
other supplemental documentation to support execution of the Framework.
The Framework states that individuals elected to the DTCC Board of
Directors are also elected to the Boards of each of the Clearing
Agencies, and that the Framework is applicable to the directors of each
of the Clearing Agencies and DTCC separately with respect to their role
on each Board.
---------------------------------------------------------------------------
\6\ See id.
---------------------------------------------------------------------------
Section 1 also notes that references in the Framework to the
Clearing Agencies and governance bodies should be read in the singular
or the plural as the context requires, and references to individual
officers or employees, management, or functional areas generally refer
to employees or functions of DTCC,\7\ acting on behalf of the relevant
Clearing Agencies.
---------------------------------------------------------------------------
\7\ The Depository Trust & Clearing Corporation (``DTCC'') is
the parent company of the Clearing Agencies.
---------------------------------------------------------------------------
Proposed Section 2 of the Framework would cover Framework ownership
and change management. The Framework would be owned and managed by an
officer, within the General Counsel's Office of DTCC, on behalf of each
Clearing Agency. Regarding change management, Section 2 would state
that changes to the Framework would be approved by either (1) the
Boards, (2) such Board committees as may be delegated authority by the
Boards from time to time pursuant to their charters, or (3) with
respect to certain changes, the General Counsel or Deputy General
Counsels of the Clearing Agencies, pursuant to authority delegated by
the Boards and with the advice and direction of the Framework owner.
Section 2 also states that the Framework would be reviewed and approved
annually by the Boards, or duly authorized committees of the Boards.
(ii) Proposed Section 3 on Rules 17ad-25(g) and (h)
Proposed Section 3 of the Framework would describe how the Clearing
Agencies comply with sections (g) and (h) of Rule 17ad-25.\8\ The
Clearing Agencies would maintain applicable policies and procedures
applicable to Board directors and management of the Clearing Agencies,
respectively. Such policies and procedures would provide that the
Clearing Agencies identify and document existing or potential conflicts
of interest in the decision-making process of the Clearing Agencies
involving directors or senior managers of the Clearing Agencies, and
mitigate or eliminate and document the mitigation or elimination of
such conflicts of interest.
---------------------------------------------------------------------------
\8\ See 17 CFR 240.17ad-25(g) and (h).
---------------------------------------------------------------------------
Regarding the directors, the Framework would describe that
directors are required to exercise their powers in good faith and in
the best interests of the Clearing Agencies, rather than their own
interests or the interests of another entity or person. Directors have
a duty to each Clearing Agency that applies separately. A conflict of
interest is present whenever the interests of the Clearing Agencies
compete with the interests of a director, the director's employer, or
any other party with which a director is associated, or otherwise
whenever a director's corporate or personal interests could be viewed
as affecting his or her objectivity or independent judgment in
fulfilling the director's duties to the Clearing Agencies.
The Framework would state that directors are required to document
and inform the Corporate Secretary of the Clearing Agencies promptly of
the existence of any relationship or interest that reasonably could
affect the independent judgment or decision-making of the director. The
Framework would provide that the Corporate Secretary would escalate any
disclosure to the General Counsel for evaluation. If such disclosure is
deemed to be an actual conflict of interest, the General Counsel would
notify the Non-Executive Chairman of the Board and discuss how such
conflict can be mitigated or eliminated. In certain cases, it may be
advisable for the involved director to recuse himself/herself from any
discussion or vote related to the matter. In other cases, where the
conflict is limited or indirect, the Non-Executive Chairman in
consultation with the General Counsel may determine that the conflict
should be disclosed to the full Board of Directors, but in light of
such disclosure to the Board, recusal of the director is unnecessary.
Further, there may be cases where a conflict is so significant or
pervasive that the director would be unable to continue to serve on the
Boards. In such instances, the Non-Executive Chairman and General
Counsel would discuss with the Governance Committee. Any measures taken
to address a conflict of interest would be documented by the Corporate
Secretary's Office.
Regarding senior management, the Framework would state that all
staff, including senior managers, must avoid activities or
relationships that might affect objectivity in business decisions
throughout employment with the Clearing Agencies. Staff, including
senior managers, are required to disclose a relationship or interest
that reasonably could affect objectivity in business decisions for
review and determination on the appropriate course of action. A course
of action for a conflict of interest could include actions such as
recusal of the staff member from the particular matter, such as a
vendor selection process or disallowing a staff member from being on
the board of directors of a Clearing Agency vendor or client. The
course of action will be documented.
(iii) Proposed Section 4 on Rule 17ad-25(i)
Proposed Section 4 of the Framework would describe how the Clearing
Agencies comply with section (i) of Rule 17ad-25.\9\ The Clearing
Agencies would adopt the definition of ``service provider for core
services'' from Rule 17ad-25(a),\10\ which is ``any person that,
through a written service provider agreement for services provided to
or on behalf of the registered clearing agency, on an ongoing basis,
directly supports the delivery of clearance or settlement functionality
or any other purposes material to the business of the registered
clearing agency.'' Additionally, the Clearing Agencies would identify
service providers for core services and manage risks related to
agreements with such service providers. Specifically, senior management
would be required to: (1) evaluate and document the risks related to
agreements with service providers for core services, including under
changes to circumstances and potential disruptions, and whether the
risks can be managed in a manner consistent with the Clearing Agencies'
risk management framework; and (2) perform ongoing monitoring of the
relationship and report to the Boards for their evaluation of any
action taken by senior management to remedy significant deterioration
in performance or address changing risks or material issues identified
through such monitoring, or if the risk or material issues identified
cannot be remedied, assess and document weaknesses or deficiencies in
the relationship with the service provider for core services for
submission to the Board.
---------------------------------------------------------------------------
\9\ See 17 CFR 240.17ad-25(i).
\10\ See 17 CFR 240.17ad-25(a).
---------------------------------------------------------------------------
Further, the Boards of the Clearing Agencies would: (1) review and
approve the procedures described in the previous paragraph; (2) review
and approve any agreement that would establish a relationship with a
service provider for core services along with the required risk
evaluation prepared by senior management; and (3) evaluate any action
taken by senior management
[[Page 71648]]
to remedy significant deterioration in performance or address changing
risks or material issues identified through senior management's
monitoring of service providers for core services.
Importantly, consistent with the definition from Rule 17ad-25(a),
service providers for core services to the Clearing Agencies can be
external service providers or intercompany affiliates (i.e., DTCC or
one of its subsidiaries). As a general matter, the Clearing Agencies
employ a proportionate and risk-based approach adapted to the distinct
characteristics and risks presented by these two different categories
of service providers.\11\ One core distinction is that the Clearing
Agencies and their affiliate service providers are all held accountable
via enterprise-wide risk management systems, processes, and controls
administered under a common governance arrangement (i.e., one holding
company). Moreover, this common governance arrangement and the related
systems, processes, and controls are based upon and largely derived
from the stringent legal and regulatory compliance standards applicable
to the Clearing Agencies. Therefore, the Clearing Agencies and their
affiliates are all held directly accountable by a common governance
arrangement to a set of performance level and risk management standards
based upon the Clearing Agencies' requirements, which is administered
via enterprise-wide systems, processes, and internal controls. In
contrast, because external service providers are not subject to the
same governance arrangements and standards that ensure accountability
for intercompany affiliates, the Clearing Agencies must use different
mechanisms (e.g., negotiating and enforcing express contractual terms)
to ensure a comparable degree of risk management and monitoring. Given
this fundamental difference in accountability mechanisms, the Clearing
Agencies therefore rely upon a dedicated third party risk management
function to manage and monitor external relationship risks separately
from the internal functions described above applied for affiliated
service provider relationships.
---------------------------------------------------------------------------
\11\ The concept of proportional treatment of affiliated and
unaffiliated third party service providers is well-documented in
risk management guidance for financial institutions. See, for
example, the Financial Stability Board's guidance on Enhancing
Third-Party Risk Management and Oversight: A toolkit for financial
institutions and financial authorities available at https://www.fsb.org/wp-content/uploads/P041223-1.pdf.
---------------------------------------------------------------------------
(iv) Proposed Section 5 on Rule 17ad-25(j)
Proposed Section 5 of the Framework would state that in support of
their compliance with Rule 17ad-25(j),\12\ the Clearing Agencies have
established various advisory councils (``Advisory Councils'') made up
of representatives of the Clearing Agencies' participants and other
relevant stakeholders. In order to ensure appropriate stakeholders are
consulted for different types of material developments at the Clearing
Agencies, the Clearing Agencies have established a joint Advisory
Council to consider material developments in risk management across the
Clearing Agencies and separate business-line specific Advisory Councils
to consider material developments in operations. The Clearing Agencies
may also use other mechanisms, such as ad hoc group meetings of
Clearing Agency participants and other relevant stakeholders, to assist
the Boards of the Clearing Agencies in meeting their obligations under
Rule 17ad-25(j).
---------------------------------------------------------------------------
\12\ See 17 CFR 240.17ad-25(j).
---------------------------------------------------------------------------
The Framework would state further that the Advisory Councils and
the ad hoc mechanisms assist the Boards of the Clearing Agencies in
their obligation to solicit, consider, and document their consideration
of the views of participants and other relevant stakeholders of the
Clearing Agencies regarding material developments in their respective
risk management and operations on a recurring basis. Specifically,
senior management of the Clearing Agencies would bring material
developments in the Clearing Agencies' risk management and operations
to the Advisory Councils (or ad hoc mechanisms) for their
consideration. Senior management would document the views of the
stakeholders participating in these Advisory Councils and mechanisms on
such developments. Senior management would then escalate the views on
material developments in the Clearing Agencies risk management and
operations to the Boards for their consideration.
The proposed rule changes also define ``material developments'' in
the Clearing Agencies' risk management and operations as including
developments that would significantly affect the risk and/or
operational profile of a Clearing Agency and/or would significantly
affect the rights and obligations of relevant stakeholders. Providing
information on such material developments would enable stakeholders to
identify and evaluate the risk, fees and other significant costs they
incur by participating or otherwise interacting with a Clearing Agency.
``Material developments'' in the Clearing Agencies' risk management and
operations would cover areas such as financial risk management, margin
methodologies, cyber and operational resiliency, default management,
fee structures, the introduction of new cleared products and services,
access models, and the design and functioning of the processes and
technology systems that support the infrastructure of the Clearing
Agencies and the way that participants and other relevant stakeholders
connect to such systems.
(v) Implementation Timeframe
Subject to approval by the Commission, the Clearing Agencies would
implement the proposed rule changes on December 5, 2024.
2. Statutory Basis
The Clearing Agencies believe that the proposed changes are
consistent with Section 17A(b)(3)(F) of the Act \13\ for the reasons
described below. Section 17A(b)(3)(F) of the Act requires, in part,
that the rules of a registered clearing agency be designed to promote
the prompt and accurate clearance and settlement of securities
transactions, safeguard the securities and funds which are in the
custody or control of the clearing agency or for which it is
responsible, and foster cooperation and coordination with persons
engaged in the clearance and settlement of securities transactions.\14\
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78q-1(b)(3)(F).
\14\ Id.
---------------------------------------------------------------------------
The proposed rule changes would address potential conflicts of
interest, as described more fully in Item II(A)1(ii) above. The
proposed rule changes would help ensure that the Clearing Agencies are
able to identify potential conflicts of interest at the senior
management and Board level and subject such conflicts to a uniform
process of review, mitigation or elimination, and documentation. In
addition, the proposed changes would address the situation where the
Clearing Agencies may not have access to information necessary to
identify a potential conflict of interest by requiring that a director
be required to document and inform the Clearing Agencies promptly of
the existence of any relationship or interest that reasonably could
affect the independent judgment or decision-making of the director. The
Clearing Agencies believe that including the foregoing requirements in
the Framework would help ensure the integrity of the governance
processes of
[[Page 71649]]
the Clearing Agencies and thereby promote the prompt and accurate
clearance and settlement of securities transactions and safeguard the
securities and funds which are in the custody or control of the
Clearing Agencies or for which they are responsible, consistent with
Section 17A(b)(3)(F) of the Act.\15\
---------------------------------------------------------------------------
\15\ Id.
---------------------------------------------------------------------------
The proposed rule changes would also address risks presented by
service providers for core services, as described more fully in Item
II(A)1(iii) above. The proposed rule changes in this regard would
require senior management of the Clearing Agencies to manage the risks
presented by evaluating and documenting such risks, including under
changes to circumstances and potential disruptions, among other things.
The proposed rule changes would also provide for Board oversight of
senior management regarding the management of risks presented by
service providers for core services. These requirements for both senior
management and the Boards would help prevent situations where a service
provider for core services does not perform its obligations and
therefore help prevent undermining the Clearing Agencies' sound risk
management and operational resiliency. The Clearing Agencies believe
that by helping to maintain their sound risk management and operational
resiliency, the proposed rule changes would promote the prompt and
accurate clearance and settlement of securities transactions and
safeguard the securities and funds which are in the custody or control
of the Clearing Agencies or for which they are responsible, consistent
with Section 17A(b)(3)(F) of the Act.\16\
---------------------------------------------------------------------------
\16\ Id.
---------------------------------------------------------------------------
The proposed changes would also address the obligation of the
Boards to solicit and consider viewpoints of participants and other
relevant stakeholders, as described more fully in Item II(A)1(iv)
above. The proposed rule changes in this regard would require the
Boards to solicit, consider and document their consideration of
participant and relevant stakeholder viewpoints regarding material
developments in their risk management and operations on a recurring
basis. Obtaining viewpoints from participants and relevant stakeholders
on material developments in the Clearing Agencies' risk management and
operations would help optimize the Clearing Agencies' decisions, rules
and procedures because it could provide the Clearing Agencies with a
wider breadth of useful information as they make developments in these
key areas. The Clearing Agencies believe that because the proposed rule
changes could lead to better decisions, rules and procedures in these
key areas, the proposed rule changes would promote the prompt and
accurate clearance and settlement of securities transactions and foster
cooperation and coordination with persons engaged in the clearance and
settlement of securities transactions, consistent with the requirements
of Section 17A(b)(3)(F) of the Act.\17\
---------------------------------------------------------------------------
\17\ Id.
---------------------------------------------------------------------------
(B) Clearing Agency's Statement on Burden on Competition
The Clearing Agencies believe that the proposed rule changes could
promote competition. Specifically, the Clearing Agencies believe, as
the Commission noted in its adopting release regarding the adoption of
Rule 17ad-25(g) and Rule 17ad-25(h),\18\ that the changes on conflicts
of interest described in Item II(A)1(ii) above would help promote the
integrity of the Clearing Agencies' governance arrangements by helping
to ensure the Clearing Agencies are capable of both identifying
potential conflicts and subjecting such conflicts to a uniform process
of review, mitigation or elimination and documentation. In addition,
the proposed changes would address the situation where the Clearing
Agencies may not have access to information necessary to identify a
potential conflict of interest by requiring that a director be required
to document and inform the Clearing Agencies promptly of the existence
of any relationship or interest that reasonably could affect the
independent judgment or decision-making of the director. The Clearing
Agencies believe that these changes taken as a whole serve to ensure
the equitable treatment of clearing members or other market
participants by the Clearing Agencies and therefore could promote
competition.
---------------------------------------------------------------------------
\18\ See Securities Exchange Act Release No. 98959 (Nov. 16,
2023), 88 FR 84454 (Dec. 5, 2023), at 84474.
---------------------------------------------------------------------------
The Clearing Agencies also believe that the proposed rule changes
on the management of risks presented by service providers for core
services described in Item II(A)1(iii) above could also promote
competition. The proposed rule changes in this regard would require
senior management of the Clearing Agencies to manage the risks
presented by evaluating and documenting such risks, including under
changes to circumstances and potential disruptions, among other things.
The proposed rule changes would also provide for Board oversight of
senior management regarding the management of risks presented by
service providers for core services. These requirements for both senior
management and the Boards would help prevent situations where a service
provider for core services does not perform its obligations, and
therefore help prevent undermining the Clearing Agencies' sound risk
management and operational resiliency, which could also be costly for
members of the Clearing Agencies. The Clearing Agencies believe that by
implementing the proposed changes described in Item II(A)1(iii) above
and thereby helping to avoid costs that members may incur if a service
provider for core services does not meet its obligations, the proposed
rule changes could promote competition.
The Clearing Agencies also believe that the proposed changes on the
obligation of the Boards to solicit and consider viewpoints of
participants and other relevant stakeholders described in Item
II(A)1(iv) above could also promote competition. The proposed rule
changes in this regard would require the Boards to solicit, consider
and document their consideration of participant and relevant
stakeholder viewpoints regarding material developments in their risk
management and operations on a recurring basis. The Clearing Agencies
believe that the proposed rule changes could promote competition
because they would formalize a process by which multiple interested
parties (that is, participants and relevant stakeholders) would have
their viewpoints on material developments in risk management and
operations considered by the Boards, and the Boards could have useful
information on how emerging topics in these areas might impact
participants and stakeholders.
(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants, or Others
The Clearing Agencies have not received or solicited any written
comments relating to this proposal. If any written comments are
received, they will be publicly filed as an Exhibit 2 to this filing,
as required by Form 19b-4 and the General Instructions thereto.
Persons submitting comments are cautioned that, according to
Section IV (Solicitation of Comments) of the Exhibit 1A in the General
Instructions to Form 19b-4, the Commission does not edit personal
identifying information from comment submissions. Commenters should
submit only information that they wish to make
[[Page 71650]]
available publicly, including their name, email address, and any other
identifying information.
All prospective commenters should follow the Commission's
instructions on how to submit comments, available at https://www.sec.gov/regulatory-actions/how-to-submitcomments. General questions
regarding the rule filing process or logistical questions regarding
this filing should be directed to the Main Office of the Commission's
Division of Trading and Markets at [email protected] or 202-
551-5777.
The Clearing Agencies reserve the right not to respond to any
comments received.
III. Date of Effectiveness of the Proposed Rule Change, and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) by order approve or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. 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 Number SR-NSCC-2024-006 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549.
All submissions should refer to File Number SR-NSCC-2024-006. 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
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of NSCC and on
DTCC's website (https://dtcc.com/legal/sec-rule-filings.aspx). 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-NSCC-2024-006 and should be
submitted on or before September 24, 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)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-19656 Filed 8-30-24; 8:45 am]
BILLING CODE 8011-01-P
