CME Securities Clearing, Inc.; Notice of Filing of an Application for Registration as a Clearing Agency Under Section 17A of the Securities Exchange Act of 1934, 7713-7714 [2025-01410]
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Federal Register / Vol. 90, No. 13 / Wednesday, January 22, 2025 / Notices
Materials Under Seal; Filing Acceptance
Date: January 15, 2025; Filing Authority:
39 U.S.C. 3642, 39 CFR 3035.105, and
39 CFR 3041.310; Public Representative:
Jennaca Upperman; Comments Due:
January 24, 2025.
4. Docket No(s).: MC2025–1136 and
K2025–1136; Filing Title: USPS Request
to Add Priority Mail Express, Priority
Mail & USPS Ground Advantage
Contract 1311 to the Competitive
Product List and Notice of Filing
Materials Under Seal; Filing Acceptance
Date: January 15, 2025; Filing Authority:
39 U.S.C. 3642, 39 CFR 3035.105, and
39 CFR 3041.310; Public Representative:
Kenneth Moeller; Comments Due:
January 24, 2025.
5. Docket No(s).: MC2025–1137 and
K2025–1137; Filing Title: USPS Request
to Add Priority Mail & USPS Ground
Advantage Contract 597 to the
Competitive Product List and Notice of
Filing Materials Under Seal; Filing
Acceptance Date: January 15, 2025;
Filing Authority: 39 U.S.C. 3642, 39 CFR
3035.105, and 39 CFR 3041.310; Public
Representative: Kenneth Moeller;
Comments Due: January 24, 2025.
6. Docket No(s).: MC2025–1138 and
K2025–1138; Filing Title: USPS Request
to Add Priority Mail Express, Priority
Mail & USPS Ground Advantage
Contract 1312 to the Competitive
Product List and Notice of Filing
Materials Under Seal; Filing Acceptance
Date: January 15, 2025; Filing Authority:
39 U.S.C. 3642, 39 CFR 3035.105, and
39 CFR 3041.310; Public Representative:
Kenneth Moeller; Comments Due:
January 24, 2025.
7. Docket No(s).: MC2025–1139 and
K2025–1139; Filing Title: USPS Request
to Add Priority Mail Express, Priority
Mail & USPS Ground Advantage
Contract 1313 to the Competitive
Product List and Notice of Filing
Materials Under Seal; Filing Acceptance
Date: January 15, 2025; Filing Authority:
39 U.S.C. 3642, 39 CFR 3035.105, and
39 CFR 3041.310; Public Representative:
Almaroof Agoro; Comments Due:
January 24, 2025.
8. Docket No(s).: MC2025–1140 and
K2025–1140; Filing Title: USPS Request
to Add Priority Mail Express, Priority
Mail & USPS Ground Advantage
Contract 1314 to the Competitive
Product List and Notice of Filing
Materials Under Seal; Filing Acceptance
Date: January 15, 2025; Filing Authority:
39 U.S.C. 3642, 39 CFR 3035.105, and
39 CFR 3041.310; Public Representative:
Almaroof Agoro; Comments Due:
January 24, 2025.
9. Docket No(s).: MC2025–1141 and
K2025–1141; Filing Title: USPS Request
to Add Priority Mail Express, Priority
Mail & USPS Ground Advantage
VerDate Sep<11>2014
18:16 Jan 21, 2025
Jkt 265001
Contract 1315 to the Competitive
Product List and Notice of Filing
Materials Under Seal; Filing Acceptance
Date: January 15, 2025; Filing Authority:
39 U.S.C. 3642, 39 CFR 3035.105, and
39 CFR 3041.310; Public Representative:
Elsie Lee-Robbins; Comments Due:
January 24, 2025.
10. Docket No(s).: MC2025–1142 and
K2025–1142; Filing Title: USPS Request
to Add Priority Mail Express, Priority
Mail & USPS Ground Advantage
Contract 1316 to the Competitive
Product List and Notice of Filing
Materials Under Seal; Filing Acceptance
Date: January 15, 2025; Filing Authority:
39 U.S.C. 3642, 39 CFR 3035.105, and
39 CFR 3041.310; Public Representative:
Elsie Lee-Robbins; Comments Due:
January 24, 2025.
III. Summary Proceeding(s)
None. See Section II for public
proceedings.
This Notice will be published in the
Federal Register.
Jennie L. Jbara,
Primary Certifying Official.
[FR Doc. 2025–01500 Filed 1–21–25; 8:45 am]
BILLING CODE 7710–FW–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–102200; File No. 600–44]
CME Securities Clearing, Inc.; Notice
of Filing of an Application for
Registration as a Clearing Agency
Under Section 17A of the Securities
Exchange Act of 1934
January 15, 2025.
On December 13, 2024, CME
Securities Clearing, Inc. (‘‘CMESC’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’) an
application on Form CA–1
(‘‘Application’’) under section 17A of
the Securities Exchange Act of 1934
(‘‘Exchange Act’’) seeking to register as
a clearing agency.1 Specifically, the
Application states that CMESC is
applying to register as a clearing agency
to provide central counterparty clearing
services to market participants for their
secondary cash market transactions in
U.S. Treasury securities and
transactions in repurchase and reverse
repurchase agreements involving U.S.
Treasury securities.2 The Application
provides detailed information regarding
how CMESC proposes to satisfy the
requirements of the Exchange Act. The
proposed Rules of CMESC are included
1 15
U.S.C. 78q–1.
Exhibit J.
2 See
PO 00000
Frm 00060
Fmt 4703
Sfmt 4703
7713
as Exhibit E–3 to CMESC’s Form CA–1
application.
The Commission is publishing this
notice to solicit comments on the
Application. To grant CMESC’s request
to register as a clearing agency, the
Commission must find that it satisfies
the requirements of the Exchange Act
and the rules and regulations
thereunder, including the
determinations required under
Exchange Act section 17A(b)(3)(A)
through (I).3 Pursuant to section 17A of
the Exchange Act, the Commission is
directed, having due regard for the
public interest, the protection of
investors, the safeguarding of securities
and funds, and maintenance of fair
competition among brokers and dealers,
clearing agencies, and transfer agents, to
use its authority to: (i) facilitate the
establishment of a national system for
the prompt and accurate clearance and
settlement of transactions in securities
(other than exempt securities); and (ii)
facilitate the establishment of linked or
coordinated facilities for clearance and
settlement of transactions in securities
in accordance with the findings and to
carry out the objectives set forth in
section 17A.4 The Commission will
consider any comments it receives in
making its determination about whether
to grant CMESC’s request to be
registered as a clearing agency.
The Application states that CMESC
would be wholly owned by its parent
company, CME Group, Inc.5 CMESC is
a corporation registered in the state of
Delaware.6 CMESC would have its own
Board of Directors, made up of at least
five independent directors, one member
representative, and one user
representative.7 CMESC would also
have several Board committees,
including a Nominating Committee,
Audit Committee, Regulatory Oversight
Committee, and Risk Management
Committee.8
CMESC’s proposed Rules describe
two types of participants: first,
Members, which would be able to clear
proprietary Eligible Securities
Transactions through CMESC and to
authorize Users with respect to clearing
Eligible Securities Transactions through
CMESC; and second, Users, which
3 15
U.S.C. 78s(a); 15 U.S.C. 78q–1(b)(3).
U.S.C. 78q–1(a)(2)(A).
5 See Exhibit C and C–1 (narrative description of
ownership and diagrams of overall CME Group
structure).
6 See Exhibit E–1 (certificate of incorporation).
7 See Exhibit C–2 (diagram of CMESC’s structure);
Exhibit E–2B (Board of Directors Charter).
8 See Exhibit E–2C (Risk Management Committee
Charter); E–2D (Nominating Committee Charter); E–
2E (Audit Committee Charter), and Exhibit E–2F
(Regulatory Oversight Committee Charter).
4 15
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22JAN1
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7714
Federal Register / Vol. 90, No. 13 / Wednesday, January 22, 2025 / Notices
would be authorized by a Member and
would be further classified as
Independent Users or Supported Users.
CMESC states that the primary
difference between these User Types is
that an Independent User is obligated to
post margin and make variation
payments to CMESC for its Independent
User Account, whereas that obligation
falls to a Supported User’s authorizing
Member in relation to the Supported
User’s Supported User Account at the
Corporation. For both types of Users, the
User is directly liable to the Corporation
for settlement of their cleared
transactions.9
A Member that authorizes a User is
responsible for guaranteeing the
financial performance of that User
beyond the margin posted to the User’s
Account at the Applicant, and in this
respect Members, but not Users, are
required to make contributions to the
Applicant’s Guaranty Fund. A person
will be admitted as a User only with the
authorization of a Member and may
utilize the Clearing Services as a User
only for so long as it has a Member’s
authorization in place. In contrast to
Members, CMESC does not impose
direct financial responsibility
requirements on User applicants and
instead relies upon Members that
authorize Users to determine the
appropriate financial responsibility
standards to impose, based on their
assessment of a User’s financial
circumstances and their obligations to
conduct due diligence of their
authorized Users.10
In Exhibit J, the Application provides
information regarding CMESC’s risk
management framework, which CMESC
describes as being intended to: (i)
reduce the potential impact of a
participant default via credit risk
management standards and ongoing
monitoring, and (ii) ensure that CMESC
has sufficient financial and liquidity
resources to manage the default of a
certain number of participants. CMESC
states that it would use onboarding
requirements for each of its Members to
mitigate counterparty risk and would
apply financial responsibility
requirements to its Members. CMESC
may take action against a Member for its
failure to remain in compliance with
such requirements. Additionally,
CMESC states that it would seek to
mitigate counterparty and liquidity risk
through various mechanisms, including
its credit rating process for Members,
credit limits, daily risk monitoring,
margin collection, settlement variation
9 See
Exhibit J.
id.
10 See
VerDate Sep<11>2014
18:16 Jan 21, 2025
Jkt 265001
exchange, backtesting, and stress
testing.11
With respect to risk management, the
Application states that CMESC would
maintain and structure a Guaranty Fund
using its stress test methodology that is
designed to ensure that the size of the
Guaranty Fund is at least equal to the
largest theoretical loss to the Registrant
resulting from the Default of two
Member Families, covering, if
applicable, a predefined number of User
accounts, in extreme but plausible
market conditions.12 The Application
also states that CMESC would establish
credit and liquidity ‘‘waterfalls’’ that
would apply in the event of a default,
to prevent losses to its Participants and
minimize the potential for market
disruption.13
With respect to systems, the
Application states that CMESC’s
systems will be hosted in a virtual
private cloud environment and in
physical datacenters.14 Among other
things, the Application describes
CMESC’s approach to operational
resilience, availability and disaster
recovery, and data backup.15
With respect to fees, the Application
states that CMESC continues to engage
the marketplace on its ultimate fee
structure, which it plans to finalize as
it approaches the launch date for
operating its clearing agency. The
Application also states that cleared repo
and cleared U.S. Treasuries services that
it offers will operate in a competitive
environment, which in turn is expected
to impact fees, and that fees for
Members and Users will be published
on CMESC’s website when its clearing
services are launched after filing a
proposed rule change with the
Commission pursuant to section
19(b)(3)(A) of the Exchange Act.16
CMESC’s application on Form CA–1,
including each exhibit thereto
referenced above, is available online at
www.sec.gov/rules/other/shtml as well
as in the Commission’s Public Reference
Room. Interested persons are invited to
submit written data, views, and
arguments concerning the Application,
including whether the application is
consistent with the Exchange Act and
the rules and regulations thereunder
applicable to clearing agencies (e.g.,
Exchange Act Rules 17Ad–22, 17Ad–25,
17Ad–26, and Regulation SCI, among
others).17
Comments may be submitted by any
of the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/proposed.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number
600–44 on the subject line.
Paper Comments
• Send paper comments to Vanessa
A. Countryman, Secretary, Securities
and Exchange Commission, 100 F Street
NE, Washington, DC 20549–1090. All
submissions should refer to File
Number 600–44.
To help the Commission process and
review your comments more efficiently,
please use only one method of
submission. The Commission will post
all comments on the Commission’s
internet website (https://www.sec.gov/
rules/other.shtml).
Copies of the Form CA–1, all
subsequent amendments, all written
statements with respect to the Form
CA–1 that are filed with the
Commission, and all written
communications relating to the Form
CA–1 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 Section, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m.
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 600–44 and should be
submitted on or before March 10, 2025.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025–01410 Filed 1–21–25; 8:45 am]
11 See
id.
12 See id.
13 See id.
14 See Exhibit K; Exhibit M.
15 See Exhibit M.
16 See Exhibit E–5.
17 See 17 CFR 240.17Ad–22, 240.17Ad–25, and
240.17Ad–26; 17 CFR 242.1000 through 242.1007.
PO 00000
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BILLING CODE 8011–01–P
18 17
E:\FR\FM\22JAN1.SGM
CFR 200.30–3(a)(16).
22JAN1
Agencies
[Federal Register Volume 90, Number 13 (Wednesday, January 22, 2025)]
[Notices]
[Pages 7713-7714]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-01410]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-102200; File No. 600-44]
CME Securities Clearing, Inc.; Notice of Filing of an Application
for Registration as a Clearing Agency Under Section 17A of the
Securities Exchange Act of 1934
January 15, 2025.
On December 13, 2024, CME Securities Clearing, Inc. (``CMESC'')
filed with the Securities and Exchange Commission (``Commission'') an
application on Form CA-1 (``Application'') under section 17A of the
Securities Exchange Act of 1934 (``Exchange Act'') seeking to register
as a clearing agency.\1\ Specifically, the Application states that
CMESC is applying to register as a clearing agency to provide central
counterparty clearing services to market participants for their
secondary cash market transactions in U.S. Treasury securities and
transactions in repurchase and reverse repurchase agreements involving
U.S. Treasury securities.\2\ The Application provides detailed
information regarding how CMESC proposes to satisfy the requirements of
the Exchange Act. The proposed Rules of CMESC are included as Exhibit
E-3 to CMESC's Form CA-1 application.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78q-1.
\2\ See Exhibit J.
---------------------------------------------------------------------------
The Commission is publishing this notice to solicit comments on the
Application. To grant CMESC's request to register as a clearing agency,
the Commission must find that it satisfies the requirements of the
Exchange Act and the rules and regulations thereunder, including the
determinations required under Exchange Act section 17A(b)(3)(A) through
(I).\3\ Pursuant to section 17A of the Exchange Act, the Commission is
directed, having due regard for the public interest, the protection of
investors, the safeguarding of securities and funds, and maintenance of
fair competition among brokers and dealers, clearing agencies, and
transfer agents, to use its authority to: (i) facilitate the
establishment of a national system for the prompt and accurate
clearance and settlement of transactions in securities (other than
exempt securities); and (ii) facilitate the establishment of linked or
coordinated facilities for clearance and settlement of transactions in
securities in accordance with the findings and to carry out the
objectives set forth in section 17A.\4\ The Commission will consider
any comments it receives in making its determination about whether to
grant CMESC's request to be registered as a clearing agency.
---------------------------------------------------------------------------
\3\ 15 U.S.C. 78s(a); 15 U.S.C. 78q-1(b)(3).
\4\ 15 U.S.C. 78q-1(a)(2)(A).
---------------------------------------------------------------------------
The Application states that CMESC would be wholly owned by its
parent company, CME Group, Inc.\5\ CMESC is a corporation registered in
the state of Delaware.\6\ CMESC would have its own Board of Directors,
made up of at least five independent directors, one member
representative, and one user representative.\7\ CMESC would also have
several Board committees, including a Nominating Committee, Audit
Committee, Regulatory Oversight Committee, and Risk Management
Committee.\8\
---------------------------------------------------------------------------
\5\ See Exhibit C and C-1 (narrative description of ownership
and diagrams of overall CME Group structure).
\6\ See Exhibit E-1 (certificate of incorporation).
\7\ See Exhibit C-2 (diagram of CMESC's structure); Exhibit E-2B
(Board of Directors Charter).
\8\ See Exhibit E-2C (Risk Management Committee Charter); E-2D
(Nominating Committee Charter); E-2E (Audit Committee Charter), and
Exhibit E-2F (Regulatory Oversight Committee Charter).
---------------------------------------------------------------------------
CMESC's proposed Rules describe two types of participants: first,
Members, which would be able to clear proprietary Eligible Securities
Transactions through CMESC and to authorize Users with respect to
clearing Eligible Securities Transactions through CMESC; and second,
Users, which
[[Page 7714]]
would be authorized by a Member and would be further classified as
Independent Users or Supported Users. CMESC states that the primary
difference between these User Types is that an Independent User is
obligated to post margin and make variation payments to CMESC for its
Independent User Account, whereas that obligation falls to a Supported
User's authorizing Member in relation to the Supported User's Supported
User Account at the Corporation. For both types of Users, the User is
directly liable to the Corporation for settlement of their cleared
transactions.\9\
---------------------------------------------------------------------------
\9\ See Exhibit J.
---------------------------------------------------------------------------
A Member that authorizes a User is responsible for guaranteeing the
financial performance of that User beyond the margin posted to the
User's Account at the Applicant, and in this respect Members, but not
Users, are required to make contributions to the Applicant's Guaranty
Fund. A person will be admitted as a User only with the authorization
of a Member and may utilize the Clearing Services as a User only for so
long as it has a Member's authorization in place. In contrast to
Members, CMESC does not impose direct financial responsibility
requirements on User applicants and instead relies upon Members that
authorize Users to determine the appropriate financial responsibility
standards to impose, based on their assessment of a User's financial
circumstances and their obligations to conduct due diligence of their
authorized Users.\10\
---------------------------------------------------------------------------
\10\ See id.
---------------------------------------------------------------------------
In Exhibit J, the Application provides information regarding
CMESC's risk management framework, which CMESC describes as being
intended to: (i) reduce the potential impact of a participant default
via credit risk management standards and ongoing monitoring, and (ii)
ensure that CMESC has sufficient financial and liquidity resources to
manage the default of a certain number of participants. CMESC states
that it would use onboarding requirements for each of its Members to
mitigate counterparty risk and would apply financial responsibility
requirements to its Members. CMESC may take action against a Member for
its failure to remain in compliance with such requirements.
Additionally, CMESC states that it would seek to mitigate counterparty
and liquidity risk through various mechanisms, including its credit
rating process for Members, credit limits, daily risk monitoring,
margin collection, settlement variation exchange, backtesting, and
stress testing.\11\
---------------------------------------------------------------------------
\11\ See id.
---------------------------------------------------------------------------
With respect to risk management, the Application states that CMESC
would maintain and structure a Guaranty Fund using its stress test
methodology that is designed to ensure that the size of the Guaranty
Fund is at least equal to the largest theoretical loss to the
Registrant resulting from the Default of two Member Families, covering,
if applicable, a predefined number of User accounts, in extreme but
plausible market conditions.\12\ The Application also states that CMESC
would establish credit and liquidity ``waterfalls'' that would apply in
the event of a default, to prevent losses to its Participants and
minimize the potential for market disruption.\13\
---------------------------------------------------------------------------
\12\ See id.
\13\ See id.
---------------------------------------------------------------------------
With respect to systems, the Application states that CMESC's
systems will be hosted in a virtual private cloud environment and in
physical datacenters.\14\ Among other things, the Application describes
CMESC's approach to operational resilience, availability and disaster
recovery, and data backup.\15\
---------------------------------------------------------------------------
\14\ See Exhibit K; Exhibit M.
\15\ See Exhibit M.
---------------------------------------------------------------------------
With respect to fees, the Application states that CMESC continues
to engage the marketplace on its ultimate fee structure, which it plans
to finalize as it approaches the launch date for operating its clearing
agency. The Application also states that cleared repo and cleared U.S.
Treasuries services that it offers will operate in a competitive
environment, which in turn is expected to impact fees, and that fees
for Members and Users will be published on CMESC's website when its
clearing services are launched after filing a proposed rule change with
the Commission pursuant to section 19(b)(3)(A) of the Exchange Act.\16\
---------------------------------------------------------------------------
\16\ See Exhibit E-5.
---------------------------------------------------------------------------
CMESC's application on Form CA-1, including each exhibit thereto
referenced above, is available online at www.sec.gov/rules/other/shtml
as well as in the Commission's Public Reference Room. Interested
persons are invited to submit written data, views, and arguments
concerning the Application, including whether the application is
consistent with the Exchange Act and the rules and regulations
thereunder applicable to clearing agencies (e.g., Exchange Act Rules
17Ad-22, 17Ad-25, 17Ad-26, and Regulation SCI, among others).\17\
---------------------------------------------------------------------------
\17\ See 17 CFR 240.17Ad-22, 240.17Ad-25, and 240.17Ad-26; 17
CFR 242.1000 through 242.1007.
---------------------------------------------------------------------------
Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/proposed.shtml); or
Send an email to [email protected]. Please include
File Number 600-44 on the subject line.
Paper Comments
Send paper comments to Vanessa A. Countryman, Secretary,
Securities and Exchange Commission, 100 F Street NE, Washington, DC
20549-1090. All submissions should refer to File Number 600-44.
To help the Commission process and review your comments more
efficiently, please use only one method of submission. The Commission
will post all comments on the Commission's internet website (https://www.sec.gov/rules/other.shtml).
Copies of the Form CA-1, all subsequent amendments, all written
statements with respect to the Form CA-1 that are filed with the
Commission, and all written communications relating to the Form CA-1
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 Section, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m.
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 600-44 and should be
submitted on or before March 10, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
---------------------------------------------------------------------------
\18\ 17 CFR 200.30-3(a)(16).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-01410 Filed 1-21-25; 8:45 am]
BILLING CODE 8011-01-P