81 FR 7616 - Submission for OMB Review; Comment Request

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 29 (February 12, 2016)

[Federal Register Volume 81, Number 29 (Friday, February 12, 2016)]
[Notices]
[Pages 7616-7618]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-02832]


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SECURITIES AND EXCHANGE COMMISSION


Submission for OMB Review; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of FOIA Services, 100 F Street NE., Washington, DC 
20549-2736.

Extension:
    Rules 17Ad-22--Clearing Agency Standards and Governance. SEC 
File No. 270-646, OMB Control No. 3235-0695.

    Notice is hereby given that pursuant to the Paperwork Reduction Act 
of 1995 (``PRA'') (44 U.S.C. 3501 et seq.), the Securities and Exchange 
Commission (``Commission'') is soliciting comments on the existing 
collection of information provided for in Rules 17Ad-22 under the 
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.). The Commission 
plans to submit this existing collection of information to the Office 
of Management and Budget (``OMB'') for extension and approval.

Standards for Clearing Agencies

a. Measurement and Management of Credit Exposures

    Rule 17Ad-22(b)(1) would require a clearing agency that provides 
CCP services to establish, implement, maintain and enforce written 
policies and procedures reasonably designed to measure its credit 
exposures to its participants at least once each day, and limit its 
exposures to potential losses from defaults by its participants in 
normal market conditions so that the operations of the clearing agency 
would not be disrupted and non-defaulting participants would not be 
exposed to losses that they cannot anticipate or control. The purpose 
of the collection of information is to enable the clearing agency to 
monitor and limit its exposures to its participants.

b. Margin Requirements

    Rule 17Ad-22(b)(2) would require a clearing agency that provides 
CCP services to establish, implement, maintain and enforce written 
policies and procedures reasonably designed to: (i) Use margin 
requirements to limit its credit exposures to participants in normal 
market conditions; (ii) use risk-based models and parameters to set 
margin requirements; and (iii) review the models and parameters at 
least monthly. The purpose of the collection of information is to 
enable the clearing agency to maintain sufficient collateral or margin.

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c. Financial Resources

    Rule 17Ad-22(b)(3) would require a clearing agency that provides 
CCP services to establish, implement, maintain and enforce written 
policies and procedures reasonably designed to maintain sufficient 
financial resources to withstand, at a minimum, a default by the 
participant family to which it has the largest exposure in extreme but 
plausible market conditions, provided that a registered clearing agency 
acting as a central counterparty for security-based swaps shall 
maintain additional financial resources sufficient to withstand, at a 
minimum, a default by the two participant families to which it has the 
largest exposures in extreme but plausible market conditions, in its 
capacity as a central counterparty for security-based swaps. The 
purpose of the collection of information is to enable the clearing 
agency to satisfy all of its settlement obligations in the event of a 
participant default.

d. Model Validation

    Rule 17Ad-22(b)(4) would require a clearing agency that provides 
CCP services to establish, implement, maintain and enforce written 
policies and procedures reasonably designed to provide for an annual 
model validation consisting of evaluating the performance of the 
clearing agency's margin models and the related parameters and 
assumptions associated with such models by a qualified person who is 
free from influence from the persons responsible for the development or 
operation of the models being validated. The purpose of the collection 
of information is to enable the clearing agency to obtain an assessment 
of its margin model by a qualified, independent person.

e. Non-Dealer Access

    Rule 17Ad-22(b)(5) would require a clearing agency that provides 
CCP services to establish, implement, maintain and enforce written 
policies and procedures reasonably designed to provide the opportunity 
for a person that does not perform any dealer or security-based swap 
dealer services to obtain membership at the clearing agency to clear 
securities for itself or on behalf of other persons. The purpose of the 
collection of information is to enable more market participants to 
obtain indirect access to clearing agencies.

f. Portfolio Size and Transaction Volume Restrictions

    Rule 17Ad-22(b)(6) would require a clearing agency that provides 
CCP services to establish, implement, maintain and enforce written 
policies and procedures reasonably designed to have membership 
standards that do not require that participants maintain a portfolio of 
any minimum size or that participants maintain a minimum transaction 
volume. The purpose of the collection of information is to remove 
unnecessary barriers to participation in clearing agencies that provide 
CCP services.

g. Net Capital Restrictions

    Rule 17Ad-22(b)(7) would require a clearing agency that provides 
CCP services to establish, implement, maintain and enforce written 
policies and procedures reasonably designed to provide a person that 
maintains net capital equal to or greater than $50 million with the 
ability to obtain membership at the clearing agency, provided that such 
persons are able to comply with other reasonable membership standards, 
with any net capital requirements being scalable so that they are 
proportional to the risks posed by the participant's activities to the 
clearing agency. The rule also permits a clearing agency to provide for 
a higher net capital requirement (i.e., higher than $50 million) as a 
condition for membership at the clearing agency if the clearing agency 
demonstrates to the Commission that such a requirement is necessary to 
mitigate risks that could not otherwise be effectively managed by other 
measures, such as scalable limitations on the transactions that the 
participants may clear through the clearing agency, and the Commission 
approves the higher net capital requirement as part of a rule filing or 
clearing agency registration application. The purpose of the collection 
of information is to remove unnecessary barriers to clearing access by 
market participants with a net capital level above $50 million, while 
at the same time facilitating sound risk management practices by 
clearing agencies by encouraging them to examine and articulate the 
benefits that higher net capital requirements would create through 
having clearing agencies develop scalable membership standards that 
links the activities any participants could potentially engage in with 
the potential risks posed by the participant.

h. Record of Financial Resources

    Rule 17Ad-22(c)(1) would require that each fiscal quarter (based on 
calculations made as of the last business day of the clearing agency's 
fiscal quarter), or at any time upon Commission request, a clearing 
agency that performs CCP services shall calculate and maintain a record 
of the financial resources necessary to meet the requirement in Rule 
17Ad-22(b)(3) and sufficient documentation to explain the methodology 
it uses to compute such financial resource requirement. The purpose of 
the collection of information is to enable the Commission to monitor 
the financial resources of clearing agencies that provide CCP services.

i. Annual Audited Financial Statements

    Rule 17Ad-22(c)(2) would require a clearing agency to post on its 
Web site an annual audited financial statement that must (i) be a 
complete set of financial statements of the clearing agency for the 
most recent two fiscal years of the clearing agency and be prepared in 
accordance with U.S. generally accepted accounting principles (``U.S. 
GAAP''), except that for a clearing agency that is a corporation or 
other organization incorporated or organized under the laws of any 
foreign country, the financial statements may be prepared according to 
U.S. GAAP or International Financial Reporting Standards as issued by 
the International Accounting Standards Board (``IFRS''); (ii) be 
audited in accordance with standards of the Public Company Accounting 
Oversight Board by a registered public accounting firm that is 
qualified and independent in accordance with Rule 2-01 of Regulation S-
X (17 CFR 210.2-01); and (iii) include a report of the registered 
public accounting firm that complies with paragraphs (a) through (d) of 
Rule 2-02 of Regulation S-X (17 CFR 210.2-02). The purpose of the 
collection of information is to enable the Commission to monitor the 
financial resources of clearing agencies that provide CCP services.

j. Transparent and Enforceable Rules and Procedures

    Rule 17Ad-22(d)(1) would require clearing agencies to establish, 
implement, maintain and enforce written policies and procedures 
reasonably designed to provide for a well-founded, transparent, and 
enforceable legal framework for each aspect of their activities in all 
relevant jurisdictions. The purpose of the collection of information is 
to help ensure that clearing agencies' policies and procedures do not 
cause confusion or legal uncertainty among their participants because 
they are unclear, incomplete or conflict with other applicable laws or 
judicial precedent.
    The Commission believes that 10 registered clearing agencies will 
incur a total burden of approximately 8,029 hours annually.

[[Page 7618]]

    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information under the PRA unless it 
displays a currently valid OMB control number.
    The public may view background documentation for this information 
collection at the following Web site: www.reginfo.gov. Comments should 
be directed to: (i) Desk Officer for the Securities and Exchange 
Commission, Office of Information and Regulatory Affairs, Office of 
Management and Budget, Room 10102, New Executive Office Building, 
Washington, DC 20503 or by sending an email to: 
[email protected]; and (ii) Pamela Dyson, Director/Chief 
Information Officer, Securities and Exchange Commission, c/o Remi 
Pavlik-Simon, 100 F Street, NE Washington, DC 20549, or by sending an 
email to [email protected]. Comments must be submitted to OMB within 
30 days of this notice.

    Dated: February 8, 2015.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-02832 Filed 2-11-16; 8:45 am]
 BILLING CODE 8011-01-P