83 FR 6912 - Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of No Objection to an Advance Notice To Increase the Authorized Amount Under the Prefunded Liquidity Program
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 32 (February 15, 2018)
Federal Register Volume 83, Issue 32 (February 15, 2018)
| Page Range | 6912-6914 | |
| FR Document | 2018-03094 |
[Federal Register Volume 83, Number 32 (Thursday, February 15, 2018)] [Notices] [Pages 6912-6914] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-03094] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-82676; File No. SR-NSCC-2017-807] Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of No Objection to an Advance Notice To Increase the Authorized Amount Under the Prefunded Liquidity Program February 9, 2018. On December 12, 2017, National Securities Clearing Corporation (``NSCC'') filed with the Securities and Exchange Commission (``Commission'') advance notice SR-NSCC-2017-807 (``Advance Notice'') pursuant to Section 806(e)(1) of Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act entitled the Payment, Clearing, and Settlement Supervision Act of 2010 (``Clearing Supervision Act'') \1\ and Rule 19b-4(n)(1)(i) \2\ under the Securities Exchange Act of 1934 (``Exchange Act'').\3\ The Advance Notice was published for comment in the Federal Register on January 2, 2018.\4\ The Commission received one comment on the Advance Notice. The comment letter was supportive, but brief, and without specific reasons for the view.\5\ This publication serves as notice that the Commission does not object to the changes set forth in the Advance Notice. --------------------------------------------------------------------------- \1\ 12 U.S.C. 5465(e)(1). The Financial Stability Oversight Council designated NSCC a systemically important financial market utility on July 18, 2012. See Financial Stability Oversight Council 2012 Annual Report, Appendix A, http://www.treasury.gov/initiatives/fsoc/Documents/2012%20Annual%20Report.pdf. Therefore, NSCC is required to comply with the Clearing Supervision Act and file advance notices with the Commission. See 12 U.S.C. 5465(e). \2\ 17 CFR 240.19b-4(n)(1)(i). \3\ 15 U.S.C. 78s(b)(1). \4\ Securities Exchange Act Release No. 82403 (December 26, 2017), 83 FR 176 (January 2, 2017) (File No. SR-NSCC-2017-807) (``Notice''). \5\ See letter from Alexandre Blais, dated January 1, 2018 (``[I] am all for this.''). --------------------------------------------------------------------------- I. Description of the Advance Notice The Advance Notice is a proposal by NSCC to address liquidity risk that is present when NSCC acts as central counterparty (``CCP'') to a transaction with an NSCC member. Liquidity risk can arise for NSCC where there is a member default and NSCC must continue to complete end- of-day settlement on an ongoing basis. In such circumstances, NSCC will need to complete settlement of guaranteed transactions by delivering to its other members cash or securities on the failing member's behalf from the date of default through the remainder of the settlement cycle. [[Page 6913]] One of the resources NSCC uses to manage liquidity risk arising from a member default is its Prefunded Liquidity Program, which NSCC established through a previous advance notice to which the Commission did not object.\6\ Currently, the Prefunded Liquidity Program provides NSCC with the authority to raise up to $5 billion through the private placement of unsecured debt (commercial paper and extendible notes, collectively ``Notes'').\7\ NSCC holds the cash proceeds from the issuance of the Notes in a cash deposit account at the Federal Reserve Bank of New York or a bank counterparty that has been approved pursuant to the Clearing Agency Investment Policy.\8\ In the event of a default by an NSCC member, NSCC can use the cash to manage the resultant liquidity need and complete settlement.\9\ NSCC may not access or use the cash for any other purpose.\10\ --------------------------------------------------------------------------- \6\ Securities Exchange Act Release No. 75730 (August 19, 2015), 80 FR 51638 (August 25, 2015) (SR-NSCC-2015-802). \7\ Notice, 83 FR at 177. \8\ Id. \9\ Id. at 178. \10\ Id. --------------------------------------------------------------------------- NSCC filed the Advance Notice to increase the authorized amount under its Prefunded Liquidity Program. Under the Advance Notice, NSCC seeks to increase the amount available to it under the Prefunded Liquidity Program from $5 billion to $10 billion.\11\ According to NSCC, the proposed expanded authorized amount under NSCC's Prefunded Liquidity Program would enable NSCC to continue to maintain a sufficient amount of liquid resources in compliance with its regulatory requirements through the issuance of additional Notes in the event its liquidity needs increase.\12\ Specifically, NSCC stated that it would provide NSCC with the flexibility to reduce its reliance on its credit facility, as necessary.\13\ NSCC has observed varying levels of interest by the credit markets in recent years and stated that it cannot be certain that it will be able to continue to renew the credit facility at levels that would meet its projected liquidity needs in future years.\14\ --------------------------------------------------------------------------- \11\ Id. at 177. \12\ Id. \13\ Id.; see Securities Exchange Act Release No. 80605 (May 5, 2017), 82 FR 21850 (May 10, 2017) (SR-DTC-2017-802; SR-NSCC-2017- 802) (authorizing NSCC to enter into a 364-day credit facility with a consortium of banks). \14\ Notice, 83 FR at 177. --------------------------------------------------------------------------- II. Discussion and Commission Findings Although the Clearing Supervision Act does not specify a standard of review for an advance notice, the stated purpose of the Clearing Supervision Act is instructive: To mitigate systemic risk in the financial system and promote financial stability by, among other things, promoting uniform risk management standards for systemically important financial market utilities and strengthening the liquidity of systemically important financial market utilities.\15\ --------------------------------------------------------------------------- \15\ See 12 U.S.C. 5461(b). --------------------------------------------------------------------------- Section 805(a)(2) of the Clearing Supervision Act \16\ authorizes the Commission to prescribe regulations containing risk-management standards for the payment, clearing, and settlement activities of designated clearing entities engaged in designated activities for which the Commission is the supervisory agency. Section 805(b) of the Clearing Supervision Act \17\ provides the following objectives and principles for the Commission's risk management standards prescribed under Section 805(a): --------------------------------------------------------------------------- \16\ 12 U.S.C. 5464(a)(2). \17\ 12 U.S.C. 5464(b). ---------------------------------------------------------------------------Promote robust risk management; promote safety and soundness; reduce systemic risks; and support the stability of the broader financial system. Section 805(c) provides, in addition, that the Commission's risk- management standards may address such areas as risk-management and default policies and procedures, among others areas.\18\ --------------------------------------------------------------------------- \18\ 12 U.S.C. 5464(c). --------------------------------------------------------------------------- The Commission has adopted risk-management standards under Section 805(a)(2) of the Clearing Supervision Act \19\ and the Exchange Act (``Rule 17Ad-22'').\20\ Rule 17Ad-22 requires each covered clearing agency, among other things, to establish, implement, maintain, and enforce written policies and procedures that are reasonably designed to meet certain minimum requirements for operations and risk-management practices on an ongoing basis.\21\ As such, it is appropriate for the Commission to review advance notices for consistency with the objectives and principles for risk-management standards described in Section 805(b) of the Clearing Supervision Act \22\ and Rule 17Ad- 22.\23\ --------------------------------------------------------------------------- \19\ 12 U.S.C. 5464(a)(2). \20\ 15 U.S.C. 78q-1. \21\ 17 CFR 240.17Ad-22. \22\ 12 U.S.C. 5464(b). \23\ 17 CFR 240.17Ad-22. --------------------------------------------------------------------------- The Commission believes the proposal in the Advance Notice is consistent with the objectives and principles described in Section 805(b) of the Clearing Supervision Act,\24\ and Rule 17Ad-22, in particular Rule 17Ad-22(e)(7)(i) and (ii),\25\ as described in detail below. --------------------------------------------------------------------------- \24\ 12 U.S.C. 5464(b). \25\ 17 CFR 240.17Ad-22(e)(7)(i) and (ii). --------------------------------------------------------------------------- A. Consistency With Section 805(b) of the Clearing Supervision Act The Commission believes the Advance Notice proposal is consistent with the stated objectives and principles of Section 805(b) of the Clearing Supervision Act.\26\ Specifically, the Commission believes that the changes proposed in the Advance Notice are consistent with promoting robust risk management in the area of liquidity risk and promoting safety and soundness. --------------------------------------------------------------------------- \26\ 12 U.S.C. 5464(b). --------------------------------------------------------------------------- The Commission believes that the proposed expanded authorized amount under NSCC's Prefunded Liquidity Program would enhance NSCC's ability to access liquid resources that, in turn, would allow NSCC to continue to meet its settlement obligations to its clearing members in a timely fashion, thereby promoting robust liquidity risk management at NSCC. While the Commission notes that the proposed expansion permits NSCC to increase its reliance upon the Prefunded Liquidity Program, and hence the financial risks that accompany such reliance (e.g., maturity risk, rollover risk, and interest rate risk), NSCC has a variety of liquidity risk management tools at its disposal \27\ and the Commission believes that the ability of NSCC to increase the Prefunded Liquidity Program, in lieu of or in combination with NSCC's other liquidity tools, promotes NSCC's ability to manage liquidity risk through an overall diversified range of risk management tools. --------------------------------------------------------------------------- \27\ NSCC's other liquidity tools include: (1) NSCC's Clearing Fund (consisting of cash and U.S. treasury securities); (2) NSCC's committed 364-day credit facility with a consortium of banks (``Line of Credit''); and (3) Supplemental Liquidity Deposits, which are cash deposits designed to cover the heightened liquidity exposure arising around monthly option expiry periods by members whose activity would pose the largest liquidity exposure to NSCC during such periods. --------------------------------------------------------------------------- The Commission also believes that expanding the authorized amount under NSCC's Prefunded Liquidity Program from $5 billion to $10 billion, as proposed, would promote safety and soundness by enabling NSCC to obtain additional liquid resources to cover a liquidity gap that could arise in the event of a member default. By covering such a gap, the proposal bolsters NSCC's ability to meet its settlement obligations in the event of a member default, thereby reducing the risk of loss contagion (i.e., the risk of losses arising at other NSCC members if NSCC is unable to deliver cash or securities on [[Page 6914]] the defaulting member's behalf). Reducing the risk of loss contagion during a member default, in turn, enhances the ability of NSCC and its clearing members to continue to provide stability and safety to the financial markets that they serve. Therefore, by enhancing NSCC's ability to address losses and liquidity pressures that otherwise might cause financial distress to NSCC or its clearing members, the Advance Notice promotes safety and soundness. Consistent with the conclusions discussed above, the Commission also believes that NSCC's proposal is consistent with reducing systemic risks and supporting the stability of the broader financial system. Reducing the risk of loss contagion would attenuate the transmission of financial shocks from defaulting members to non-defaulting members. Accordingly, the proposed changes would support the stability of the broader financial system. Thus, the Commission believes that the proposal contained in the Advance Notice is consistent with the stated objectives and principles of Section 805(b) of the Clearing Supervision Act. B. Consistency With Rules 17Ad-22(e)(7)(i) and (ii) The Commission believes that the changes proposed in the Advance Notice are consistent with the requirements of Rules 17Ad-22(e)(7) under the Exchange Act. Rule 17Ad-22(e)(7) requires NSCC to establish, implement, maintain and enforce written policies and procedures reasonably designed to effectively measure, monitor, and manage liquidity risk that arises in or is borne by NSCC, including measuring, monitoring, and managing its settlement and funding flows on an ongoing and timely basis, and its use of intraday liquidity, as specified in the rule. In particular, Rule 17Ad-22(e)(7)(i) under the Exchange Act requires that each covered clearing agency establish, implement, maintain and enforce written policies and procedures reasonably designed to ``effectively measure, monitor, and manage the liquidity risk that arises in or is borne by [it], including measuring, monitoring, and managing its settlement and funding flows on an ongoing and timely basis, and its use of intraday liquidity by . . . [m]aintaining sufficient liquid resources at the minimum in all relevant currencies to effect same-day . . . settlement of payment obligations with a high degree of confidence under a wide range of foreseeable stress scenarios that includes, but is not limited to, the default of the participant family that would generate the largest aggregate payment of obligation for the covered clearing agency in extreme but plausible conditions.'' As described above, the proposed expansion of the authorized amount under NSCC's Prefunded Liquidity Program would increase the readily- available liquidity resources available to NSCC to continue to meet its liquidity obligations in a timely fashion in the event of a member default. The increased funds could thereby help maintain sufficient liquidity resources to effect same-day settlement of payment obligations with a high degree of confidence under a wide range of foreseeable stress scenarios. Additionally, the increased size of the Prefunded Liquidity Program is designed to help ensure that NSCC has sufficient, readily-available qualifying liquid resources to meet the cash settlement obligations of its largest family of affiliated members. Therefore, the Commission finds that the proposal is consistent with Rule 17Ad-22(e)(7)(i). Rule 17Ad-22(e)(7)(ii) under the Exchange Act requires each covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to ``effectively measure, monitor, and manage the liquidity risk that arises in or is borne by [it], including measuring, monitoring, and managing its settlement and funding flows on an ongoing and timely basis, and its use of intraday liquidity by . . . holding qualifying liquid resources sufficient'' to satisfy payment obligations owed to clearing members. Rule 17Ad- 22(a)(14) under the Exchange Act defines ``qualifying liquid resources'' to include, among other things, cash held either at the central bank of issue or at creditworthy commercial banks. As described above, the proposed expansion of the authorized amount under NSCC's Prefunded Liquidity Program would enable NSCC to hold additional cash proceeds from the issuance of the Notes in a cash deposit account at the Federal Reserve Bank of New York or a bank counterparty that has been approved pursuant to the Clearing Agency Investment Policy. Because the funds would be held at the Federal Reserve Bank of New York or a bank counterparty, they would qualify as qualifying liquid resource. Therefore, the Commission believes that the proposal is consistent with Rule 17Ad-22(e)(7)(ii). III. Conclusion It is therefore noticed, pursuant to Section 806(e)(1)(I) of the Clearing Supervision Act,\28\ that the Commission does not object to the Advance Notice (SR-NSCC-2017-807) and that NSCC is authorized to implement the proposed change as of the date of this notice. --------------------------------------------------------------------------- \28\ 12 U.S.C. 5465(e)(1)(I). By the Commission. Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-03094 Filed 2-14-18; 8:45 am] BILLING CODE 8011-01-P
![6912 Federal Register / Vol. 83, No. 32 / Thursday, February 15, 2018 / Notices
impact, or impose any burden, on • Send an email to rule-comments@ SECURITIES AND EXCHANGE
competition not necessary or sec.gov. Please include File Number SR– COMMISSION
appropriate in furtherance of the ICEEU–2018–002 on the subject line.
[Release No. 34–82676; File No. SR–NSCC–
purpose of the Act. Contracts 2017–807]
referencing the Standard European Paper Comments
Senior Non-Preferred Financial • Send paper comments in triplicate Self-Regulatory Organizations;
Corporate transaction type will be to Secretary, Securities and Exchange National Securities Clearing
available to all ICE Clear Europe Corporation; Notice of No Objection to
Commission, 100 F Street NE,
participants for clearing. The clearing of an Advance Notice To Increase the
Washington, DC 20549–1090.
these contracts by ICE Clear Europe Authorized Amount Under the
does not preclude the offering of the All submissions should refer to File Prefunded Liquidity Program
contracts for clearing by other market Number SR–ICEEU–2018–002. This file
participants. Additionally, the LGD number should be included on the February 9, 2018.
enhancements apply uniformly across subject line if email is used. To help the On December 12, 2017, National
all Clearing Members. Therefore, ICE Commission process and review your Securities Clearing Corporation
Clear Europe does not believe the (‘‘NSCC’’) filed with the Securities and
comments more efficiently, please use
proposed rule changes impose any Exchange Commission (‘‘Commission’’)
only one method. The Commission will advance notice SR–NSCC–2017–807
burden on competition that is post all comments on the Commission’s
inappropriate in furtherance of the (‘‘Advance Notice’’) pursuant to Section
internet website (http://www.sec.gov/ 806(e)(1) of Title VIII of the Dodd-Frank
purposes of the Act. rules/sro.shtml). Copies of the Wall Street Reform and Consumer
(C) Clearing Agency’s Statement on submission, all subsequent Protection Act entitled the Payment,
Comments on the Proposed Rule amendments, all written statements Clearing, and Settlement Supervision
Change Received From Members, with respect to the proposed rule Act of 2010 (‘‘Clearing Supervision
Participants or Others change, security-based swap submission Act’’) 1 and Rule 19b–4(n)(1)(i) 2 under
Written comments relating to the or advance notice that are filed with the the Securities Exchange Act of 1934
proposed amendments have not been Commission, and all written (‘‘Exchange Act’’).3 The Advance Notice
solicited or received by ICE Clear communications relating to the was published for comment in the
Europe. ICE Clear Europe will notify the proposed rule change, security-based Federal Register on January 2, 2018.4
Commission of any comments received swap submission or advance notice The Commission received one comment
with respect to the proposed rule between the Commission and any on the Advance Notice. The comment
change. person, other than those that may be letter was supportive, but brief, and
withheld from the public in accordance without specific reasons for the view.5
III. Date of Effectiveness of the with the provisions of 5 U.S.C. 552, will This publication serves as notice that
Proposed Rule Change the Commission does not object to the
be available for website viewing and
changes set forth in the Advance Notice.
Within 45 days of the date of printing in the Commission’s Public
publication of this notice in the Federal Reference Room, 100 F Street NE, I. Description of the Advance Notice
Register or within such longer period Washington, DC 20549, on official The Advance Notice is a proposal by
up to 90 days (i) as the Commission may business days between the hours of NSCC to address liquidity risk that is
designate if it finds such longer period 10:00 a.m. and 3:00 p.m. Copies of such present when NSCC acts as central
to be appropriate and publishes its filings will also be available for counterparty (‘‘CCP’’) to a transaction
reasons for so finding or (ii) as to which inspection and copying at the principal with an NSCC member. Liquidity risk
the self-regulatory organization office of ICE Clear Europe and on ICE can arise for NSCC where there is a
consents, the Commission will: Clear Europe’s website at https:// member default and NSCC must
(A) By order approve or disapprove www.theice.com/clear-europe/ continue to complete end-of-day
the proposed rule change or regulation#rule-filing. settlement on an ongoing basis. In such
(B) institute proceedings to determine circumstances, NSCC will need to
whether the proposed rule change All comments received will be posted
complete settlement of guaranteed
should be disapproved. without change. Persons submitting
transactions by delivering to its other
The proposal shall not take effect comments are cautioned that we do not members cash or securities on the
until all regulatory actions required redact or edit personal identifying failing member’s behalf from the date of
with respect to the proposal are information from comment submissions. default through the remainder of the
completed. You should submit only information settlement cycle.
that you wish to make available
IV. Solicitation of Comments publicly. All submissions should refer 1 12 U.S.C. 5465(e)(1). The Financial Stability
Interested persons are invited to to File Number SR–ICEEU–2018–002 Oversight Council designated NSCC a systemically
important financial market utility on July 18, 2012.
submit written data, views, and and should be submitted on or before See Financial Stability Oversight Council 2012
arguments concerning the foregoing, March 8, 2018. Annual Report, Appendix A, http://
including whether the proposed rule www.treasury.gov/initiatives/fsoc/Documents/2012
For the Commission, by the Division of %20Annual%20Report.pdf. Therefore, NSCC is
change, security-based swap submission Trading and Markets, pursuant to delegated required to comply with the Clearing Supervision
or advance notice is consistent with the
sradovich on DSK3GMQ082PROD with NOTICES
authority.15 Act and file advance notices with the Commission.
Act. Comments may be submitted by Eduardo A. Aleman, See 12 U.S.C. 5465(e).
any of the following methods: 2 17 CFR 240.19b–4(n)(1)(i).
Assistant Secretary. 3 15 U.S.C. 78s(b)(1).
Electronic Comments [FR Doc. 2018–03112 Filed 2–14–18; 8:45 am] 4 Securities Exchange Act Release No. 82403
(December 26, 2017), 83 FR 176 (January 2, 2017)
• Use the Commission’s internet BILLING CODE 8011–01–P
(File No. SR–NSCC–2017–807) (‘‘Notice’’).
comment form (http://www.sec.gov/ 5 See letter from Alexandre Blais, dated January
rules/sro.shtml) or 15 17 CFR 200.30–3(a)(12). 1, 2018 (‘‘[I] am all for this.’’).
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![6914 Federal Register / Vol. 83, No. 32 / Thursday, February 15, 2018 / Notices
the defaulting member’s behalf). default of the participant family that Supervision Act,28 that the Commission
Reducing the risk of loss contagion would generate the largest aggregate does not object to the Advance Notice
during a member default, in turn, payment of obligation for the covered (SR–NSCC–2017–807) and that NSCC is
enhances the ability of NSCC and its clearing agency in extreme but plausible authorized to implement the proposed
clearing members to continue to provide conditions.’’ change as of the date of this notice.
stability and safety to the financial As described above, the proposed By the Commission.
markets that they serve. Therefore, by expansion of the authorized amount
Eduardo A. Aleman,
enhancing NSCC’s ability to address under NSCC’s Prefunded Liquidity
Assistant Secretary.
losses and liquidity pressures that Program would increase the readily-
available liquidity resources available to [FR Doc. 2018–03094 Filed 2–14–18; 8:45 am]
otherwise might cause financial distress
NSCC to continue to meet its liquidity BILLING CODE 8011–01–P
to NSCC or its clearing members, the
Advance Notice promotes safety and obligations in a timely fashion in the
soundness. event of a member default. The
Consistent with the conclusions increased funds could thereby help SECURITIES AND EXCHANGE
discussed above, the Commission also maintain sufficient liquidity resources COMMISSION
believes that NSCC’s proposal is to effect same-day settlement of [Release No. 34–82684; File No. SR–
consistent with reducing systemic risks payment obligations with a high degree NYSEArca–2017–69]
and supporting the stability of the of confidence under a wide range of
broader financial system. Reducing the foreseeable stress scenarios. Self-Regulatory Organizations; NYSE
risk of loss contagion would attenuate Additionally, the increased size of the Arca, Inc.; Notice of Designation of
the transmission of financial shocks Prefunded Liquidity Program is Longer Period for Commission Action
from defaulting members to non- designed to help ensure that NSCC has on Proceedings To Determine Whether
defaulting members. Accordingly, the sufficient, readily-available qualifying To Approve or Disapprove a Proposed
proposed changes would support the liquid resources to meet the cash Rule Change, as Modified by
stability of the broader financial system. settlement obligations of its largest Amendment No. 2, To List and Trade
Thus, the Commission believes that the family of affiliated members. Therefore, Shares of ProShares QuadPro Funds
proposal contained in the Advance the Commission finds that the proposal Under NYSE Arca Rule 8.200–E
Notice is consistent with the stated is consistent with Rule 17Ad–22(e)(7)(i). February 9, 2018.
objectives and principles of Section Rule 17Ad–22(e)(7)(ii) under the On July 31, 2017, NYSE Arca, Inc.
805(b) of the Clearing Supervision Act. Exchange Act requires each covered (‘‘Exchange’’ or ‘‘NYSE Arca’’) filed
clearing agency to establish, implement, with the Securities and Exchange
B. Consistency With Rules 17Ad– maintain and enforce written policies
22(e)(7)(i) and (ii) Commission (‘‘Commission’’), pursuant
and procedures reasonably designed to to Section 19(b)(1) of the Securities
The Commission believes that the ‘‘effectively measure, monitor, and Exchange Act of 1934 (‘‘Act’’) 1 and Rule
changes proposed in the Advance manage the liquidity risk that arises in 19b–4 thereunder,2 a proposed rule
Notice are consistent with the or is borne by [it], including measuring,
requirements of Rules 17Ad–22(e)(7) change to list and trade shares of
monitoring, and managing its settlement
under the Exchange Act. Rule 17Ad– ProShares QuadPro U.S. Large Cap,
and funding flows on an ongoing and
22(e)(7) requires NSCC to establish, ProShares QuadPro Short U.S. Large
timely basis, and its use of intraday
implement, maintain and enforce Cap, ProShares QuadPro U.S. Small
liquidity by . . . holding qualifying
written policies and procedures Cap, and ProShares QuadPro Short U.S.
liquid resources sufficient’’ to satisfy
reasonably designed to effectively Small Cap under NYSE Arca Rule
payment obligations owed to clearing
measure, monitor, and manage liquidity 8.200–E. The proposed rule change was
members. Rule 17Ad–22(a)(14) under
risk that arises in or is borne by NSCC, published for comment in the Federal
the Exchange Act defines ‘‘qualifying
including measuring, monitoring, and Register on August 18, 2017.3 On
liquid resources’’ to include, among
managing its settlement and funding September 28, 2017, pursuant to Section
other things, cash held either at the
flows on an ongoing and timely basis, 19(b)(2) of the Act,4 the Commission
central bank of issue or at creditworthy
and its use of intraday liquidity, as designated a longer period within which
commercial banks.
specified in the rule. As described above, the proposed to approve the proposed rule change,
In particular, Rule 17Ad–22(e)(7)(i) expansion of the authorized amount disapprove the proposed rule change, or
under the Exchange Act requires that under NSCC’s Prefunded Liquidity institute proceedings to determine
each covered clearing agency establish, Program would enable NSCC to hold whether to disapprove the proposed
implement, maintain and enforce additional cash proceeds from the rule change.5 On September 29, 2017,
written policies and procedures issuance of the Notes in a cash deposit the Exchange filed Amendment No. 1 to
reasonably designed to ‘‘effectively account at the Federal Reserve Bank of the proposed rule change, which
measure, monitor, and manage the New York or a bank counterparty that amended and superseded the proposed
liquidity risk that arises in or is borne has been approved pursuant to the rule change as originally filed. On
by [it], including measuring, Clearing Agency Investment Policy. November 14, 2017, the Exchange filed
monitoring, and managing its settlement Because the funds would be held at the 28 12 U.S.C. 5465(e)(1)(I).
and funding flows on an ongoing and Federal Reserve Bank of New York or a 1 15 U.S.C. 78s(b)(1).
timely basis, and its use of intraday bank counterparty, they would qualify 2 17 CFR 240.19b–4.
liquidity by . . . [m]aintaining
sradovich on DSK3GMQ082PROD with NOTICES
as qualifying liquid resource. Therefore, 3 See Securities Exchange Act Release No. 81388
sufficient liquid resources at the the Commission believes that the (August 14, 2017), 82 FR 39477.
minimum in all relevant currencies to proposal is consistent with Rule 17Ad– 4 15 U.S.C. 78s(b)(2).
effect same-day . . . settlement of 22(e)(7)(ii). 5 See Securities Exchange Act Release No. 81746,
payment obligations with a high degree 82 FR 46315 (October 4, 2017). The Commission
of confidence under a wide range of III. Conclusion designated November 16, 2017, as the date by
which the Commission shall either approve or
foreseeable stress scenarios that It is therefore noticed, pursuant to disapprove, or institute proceedings to determine
includes, but is not limited to, the Section 806(e)(1)(I) of the Clearing whether to disapprove, the proposed rule change.
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Document Created: 2018-02-15 00:21:03
Document Modified: 2018-02-15 00:21:03
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| FR Citation | 83 FR 6912 |
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