On March 20, 2026, National Securities Clearing Corporation (“NSCC”) filed with the Securities and Exchange Commission (“Commission”) proposed rule change SR-NSCC-2026-005, pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) ^[1] and Rule 19b-4 thereunder ^[2] (the “Proposed Rule Change”). The Proposed Rule Change would modify the NSCC Rules and Procedures ^[3] (“NSCC Rules”) to offer a new net margin account option for Agent Clearing Members in NSCC's Securities Financing Transaction (“SFT”) Clearing Service. The Proposed Rule Change was published for comment in the Federal Register on March 30, 2026.^[4] The Commission has received no comments on the changes proposed. For the reasons discussed below, the Commission is approving the Proposed Rule Change.

I. Description of the Proposed Rule Change

A. Background

NSCC is a central counterparty (“CCP”) and provider of clearance and settlement services for transactions in broker-to-broker equity, corporate and municipal bond, and unit investment trust transactions in the U.S. markets. As a CCP, NSCC novates transactions between counterparties, effectively becoming the buyer to every seller and the seller to every buyer, and guarantees settlement of the novated transactions. NSCC's CCP services are available to entities that are approved under the NSCC Rules to be direct NSCC Members and to other market participants through NSCC's indirect access models ( e.g., as the Sponsored Member of a Sponsoring Member or as the Customer of an Agent Clearing Member).^[5]

Securities Financing Transactions (commonly referred to as “securities lending transactions”) consist of a pair of transactions between two parties in which one party (“Transferor”) agrees to transfer securities in exchange for the other party's (“Transferee”) transfer of cash, and, when clearing such transactions at NSCC, the parties reverse those transfers on the following Business Day.^[6] NSCC introduced its SFT Clearing Service to provide central clearing for SFTs in 2022.^[7] The SFT Clearing Service is available for SFTs entered into between (1) a Member and another Member, (2) a Sponsoring Member and its Sponsored Member (“Sponsored Member Transaction”), and (3) an Agent Clearing Member acting on behalf of a Customer and either a Member or the same or another Agent Clearing Member acting on behalf of a Customer (“Agent Clearing Member Transaction”).^[8] An Agent Clearing Member's clearing of Agent Clearing Member Transactions for Customers is also referred to in the NSCC Rules as the Customer Clearing Service.^[9]

The Customer Clearing Service allows an Agent Clearing Member to act as agent and credit intermediary for its Customers in clearing SFTs at NSCC. An Agent Clearing Member acts solely as agent of its Customers in connection with the clearing of Agent Clearing Member Transactions; however, the Agent Clearing Member remains fully liable for the performance of all obligations to NSCC arising in connection with Agent Clearing Member Transactions. NSCC primarily designed the Customer Clearing Service to accommodate agent-style trading, in which agent lenders are typically approved to transact in securities lending transactions on behalf of their institutional firm clients. An Agent Clearing Member may establish one or more Agent Clearing Member Customer Omnibus Accounts at NSCC for its Customers' positions in the name of the Agent Clearing Member for the benefit of its Customers.^[10] SFT Accounts are generally margined in accordance with Procedure XV of the NSCC Rules, subject to certain adjustments discussed in Section 12(b) of NSCC Rule 56.^[11] However, each Agent Clearing Member Customer Omnibus Account may contain only activity where the Agent Clearing Member is acting on behalf of its Customers either as Transferor or Transferee, but not both.^[12] As a result, the activity within any Agent Clearing Member Customer Omnibus Account contains only “long” or “short” positions, and there is no offset or netting for margin and Clearing Fund purposes.^[13] The Agent Clearing Member Customer Omnibus Accounts are, therefore, effectively margined on a “gross” basis.^[14]

NSCC states that Members and other market participants have expressed interest in NSCC offering a net margin account option for SFT Members and their Customers that is similar to the Agent Clearing Service offered by NSCC's affiliate clearing agency, Fixed Income Clearing Corporation (“FICC”).^[15]

B. Proposed Changes

1. Establishment and Maintenance of Agent Clearing Member Customer Net Margin Accounts

NSCC proposes to amend the NSCC Rules to adopt a new Agent Clearing Member “net margin” account option for Agent Clearing Members in the SFT Clearing Service (as proposed, the “Agent Clearing Member Customer Net Margin Account”), which would contain activity where the Agent Clearing Member may be acting on behalf of its Customers both as Transferor and Transferee. The proposed Agent Clearing Member Customer Net Margin Accounts would also be margined in accordance with Procedure XV and Section 12(b) of Rule 56 of the NSCC Rules. However, unlike the current Agent Clearing Member Customer Omnibus Accounts, the proposed Agent Clearing Member Customer Net Margin Accounts would allow for the offset and netting of positions for margin and Clearing Fund purposes, resulting in reduced margin requirements that would be more similar to the margin requirements of the SFT Accounts maintained by Members for their own proprietary activity. The Agent Clearing Member would, however, remain fully liable for the performance of all obligations to NSCC arising in connection with Agent Clearing Member Transactions as with the existing Agent Clearing Member Customer Omnibus Accounts.

The proposed Agent Clearing Member Customer Net Margin Accounts would be offered in addition to, but would not replace, NSCC's existing Agent Clearing Member Customer Omnibus Accounts, which do not allow for netting within or across accounts and are margined on a gross basis for margin and Clearing Fund purposes (hereinafter referred to as “Agent Clearing Member Customer Gross Margin Accounts”).^[16] Thus, the Proposed Rule Change would provide an additional way for Agent Clearing Members and their Customers to access NSCC's SFT Clearing Service while providing enhanced margin and capital efficiency for users of the service, similar to the benefits offered by FICC's Agent Clearing Service.^[17] NSCC states ( printed page 28002) that the Proposed Rule Change would further promote the alignment of buyside access models across CCPs and facilitate broader access to clearance and settlement services for Members and their Customers.^[18] The proposed Agent Clearing Member Customer Net Margin Accounts would be governed by NSCC's existing Rules for Agent Clearing Members ^[19] and the SFT Clearing Service ^[20] and would be margined and risk-managed in the same manner as a Member's proprietary SFT Account activity at NSCC.

2. General Clarifications Regarding the Submission of Agent Clearing Member Transactions

The Proposed Rule Change would make several revisions to the NSCC Rules regarding the SFT Clearing Service that are not exclusive to the new Agent Clearing Member Customer Net Margin Accounts. Specifically, the Proposed Rule Change would revise the NSCC Rules to clarify that an Agent Clearing Member (1) acts as agent on behalf of its Customer(s) when the Agent Clearing Member submits Agent Clearing Member Transactions to NSCC for novation, and (2) may elect to maintain one or more Agent Clearing Member Customer Omnibus Accounts. Additionally, the Proposed Rule Change would revise the NSCC Rules to clarify the existing requirement for submitted SFT transaction data to include a designated account in which the SFT shall be recorded, and that any such designation shall constitute a representation that the SFT is of a type that may be recorded in such account. NSCC states that these revisions are designed to provide additional clarity for market participants to better understand the requirements for submitting Agent Clearing Member Transaction data for Agent Clearing Member Customer Omnibus Accounts, including the new Agent Clearing Member Customer Net Margin Accounts and the existing Agent Clearing Member Customer Gross Margin Accounts.^[21]

3. Clarifications Regarding Netting, Close-Out, and Default Management Within the SFT Clearing Service

The Proposed Rule Change would revise certain NSCC Rule provisions regarding netting, close-out, and default management within the SFT Clearing Service. Specifically, the Proposed Rule Change would revise the NSCC Rule provisions regarding the netting and close-out treatment of Agent Clearing Member Customer Omnibus Accounts in the event of an Agent Clearing Member Default. The revised NSCC Rules would provide that when NSCC ceases to act for an Agent Clearing Member, NSCC would terminate the ability of the Agent Clearing Member to submit Agent Clearing Member Transactions; however, NSCC would continue to process any Agent Clearing Member Transactions that NSCC has already novated. The revised NSCC Rules would further provide that in the event of a cease to act, NSCC would have the authority to determine whether to close-out open Agent Clearing Member Transactions or permit them to settle.^[22]

Additionally, the Proposed Rule Change would revise the NSCC Rule provisions regarding NSCC's cease to act procedures for SFT Members with open SFTs established in an Agent Clearing Member Customer Net Margin Account, Agent Clearing Member Customer Gross Margin Account, or Sponsored Member Sub-Account. Specifically, the revised NSCC Rules would clarify the netting treatment for closed-out SFT Positions in each type of account to correspond with the “gross” or “net” nature of the account. The revised NSCC Rules would also provide for NSCC's authority to close-out offsetting SFT Long and Short Positions in the same SFT Security without taking market action to close-out such positions. In such a situation, NSCC would be allowed to determine the loss or profit resulting from the close-out of such SFT Positions through its other market actions or by reference to market data, thereby avoiding the costs or risks of market action.^[23]

4. Other Non-Substantive Clarifications

Finally, the Proposed Rule Change would make non-substantive drafting changes to Section 14 of NSCC Rule 56 to clarify (1) that any Sponsored Member Transactions or Agent Clearing Member Transactions for which the Defaulting SFT Member is the Sponsoring Member or Agent Clearing Member, and which have been novated to NSCC, shall continue to be processed by NSCC, and (2) NSCC's discretion to determine whether to close-out or settle the relevant SFT Positions in a Defaulting SFT Member's account(s).

II. Discussion and Commission Findings

Section 19(b)(2)(C) of the Act ^[24] directs the Commission to approve a proposed rule change of a self-regulatory organization if it finds that such proposed rule change is consistent with the requirements of the Act and rules and regulations thereunder applicable to such organization. After carefully considering the Proposed Rule Change, the Commission finds that the Proposed Rule Change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to NSCC. In particular, the Commission finds that the Proposed Rule Change is consistent with Section 17A(b)(3)(F) of the Act ^[25] and Rules 17ad-22(e)(6),^[26] 17ad-22(e)(13),^[27] 17ad-22(e)(19),^[28] and 17ad-22(e)(21),^[29] each promulgated under the Act.

A. Consistency With Section 17A(b)(3)(F) of the Act

Section 17A(b)(3)(F) of Act ^[30] requires, in part, that the rules of a clearing agency be designed to promote the prompt and accurate clearance and settlement of securities transactions, and to assure the safeguarding of securities and funds which are in the custody or control of the clearing agency or for which it is responsible, and protect investors and the public interest.

As described above in section I.B.1, NSCC proposes to adopt a new account option for Agent Clearing Members in the SFT Clearing Service that would allow for the offset and netting of positions for margin and Clearing Fund purposes. Additionally, NSCC proposes changes to the NSCC Rules concerning the SFT Clearing Service in general, to (1) clarify certain requirements for the submission of Agent Clearing Member Transactions, as described above in section I.B.2, (2) provide updated default management provisions regarding Agent Clearing Member Customer Omnibus Accounts and Sponsored Member Sub-Accounts, as described above in section I.B.3, and (3) make non-substantive drafting changes to Section 14 of NSCC Rule 56, as described above in section I.B.4.

NSCC's proposed changes to establish Agent Clearing Member Customer Net Margin Accounts described above in ( printed page 28003) section I.B.1 are designed to encourage and facilitate the utilization of NSCC's SFT Clearing Service by a greater number of market participants. Specifically, the proposed changes would extend the benefits of central clearing to a broader segment of the SFT market, including firms that would offer or participate through NSCC's SFT Customer Clearing Service using the proposed Agent Clearing Member Customer Net Margin Accounts.

Additionally, the proposed changes described above in section I.B.2 to clarify the NSCC Rules regarding (1) an Agent Clearing Member's agent obligations, (2) the ability of an Agent Clearing Member to maintain one or more Agent Clearing Member Customer Omnibus Accounts, and (3) account designation when submitting SFT transaction data to NSCC, would also encourage participation in central clearing by improving market participants' understanding of their rights and obligations when participating in the SFT Clearing Service. Similarly, the proposed changes described above in section I.B.3 to adopt and clarify the relevant default management provisions in the NSCC Rules would encourage participation in central clearing by improving market participants' understanding of NSCC's default management procedures applicable to the SFT Clearing Service and should help market participants better evaluate whether and how the SFT Clearing Service fits their individual needs.

CCP rules that encourage market participants to centrally clear their securities transactions promote the prompt and accurate clearance and settlement of such transactions, providing benefits to the CCP, its participants, and the broader market. Greater participation in central clearing decreases the overall amount of counterparty credit risk in the securities markets because a CCP guarantees trade settlement in the event of a default and the CCP is able to centrally risk-manage more transactions, pursuant to risk management procedures that the Commission has reviewed and approved.^[31] Additionally, greater participation in central clearing promotes the prompt and accurate clearance and settlement of securities transactions by helping market participants avoid potential disorderly default scenarios. A CCP, which has guaranteed both sides of a trade, is uniquely positioned to coordinate a defaulting participant's transactions. The CCP's non-defaulting participants can rely on the CCP to complete the defaulting participant's transactions and cover any resulting losses using the defaulting participant's resources and/or other default management tools. By contrast, defaults in non-centrally cleared bilaterally settled transactions are likely to be less orderly and subject to variable default management techniques because such transactions are not subject to default management procedures that are required to be in place and publicly disclosed by a CCP.^[32]

CCP rules that are clear and comprehensible encourage greater participation in central clearing by enabling market participants to better understand the rights and obligations of participating in the CCP. Encouraging greater participation in central clearing would extend the risk mitigation benefits of central clearing to more securities transactions. Therefore, clear and comprehensible CCP rules would promote the prompt and accurate clearance and settlement of securities transactions, and protect investors and the public interest. Moreover, CCP rules that are designed to increase the clarity of the CCP's default management procedures promote the prompt and accurate clearance and settlement of securities transactions, and protect investors and the public interest, by ensuring that the CCP and its participants can manage a default smoothly and with less risk to the market.

NSCC's proposals to (1) establish Agent Clearing Member Customer Net Margin Accounts, as described above in section I.B.1, (2) clarify the rights and obligations of Agent Clearing Members, as described above in section I.B.2, and (3) adopt relevant default management provisions in the NSCC Rules, as described above in section I.B.3 would promote the prompt and accurate clearance and settlement of securities transactions, and protect investors and the public interest, by encouraging greater participation in central clearing, thereby ensuring that a greater proportion of securities transactions are subject to the risk mitigation benefits of central clearing described above.^[33] Additionally, NSCC's proposed non-substantive clarifications to the NSCC Rules, as described above in section I.B.4, would also promote the prompt and accurate clearance and settlement of securities transactions, and protect investors and the public interest, by ensuring that the NSCC Rules are clear and comprehensible, which would enable market participants to better understand their rights and obligations in connection with NSCC's clearance and settlement services.^[34]

Finally, NSCC's proposal to adopt default management provisions relevant to the SFT Clearing Service in the NSCC Rules, as described in section I.B.3, would provide clarity to better prepare market participants to deal with a participant default, resulting in a more orderly management of such an event, minimizing default losses and reducing potential risk to NSCC and its non-defaulting participants. Accordingly, the proposed changes would ensure the safeguarding of securities and funds in NSCC's custody or control.^[35]

For the foregoing reasons, the Proposed Rule Change is consistent with promoting the prompt and accurate clearance and settlement of securities transactions, protecting investors and the public interest, and assuring the safeguarding of securities and funds which are in NSCC's custody or control, consistent with Section 17A(b)(3)(F) of the Act.^[36]

B. Consistency With Rule 17ad-22(e)(6)(i)

Rule 17ad-22(e)(6)(i) ^[37] under the Act requires that each covered clearing agency that provides CCP services establish, implement, maintain, and enforce written policies and procedures reasonably designed to cover its credit exposures to its participants by establishing a risk-based margin system that, among other things, considers, and produces margin levels commensurate with, the risks and particular attributes of each relevant product, portfolio, and market.

As described above in section I.B.1, the Agent Clearing Member Transactions submitted within the new Agent Clearing Member Customer Net Margin Accounts would be margined in ( printed page 28004) accordance with Procedure XV and Section 12(b) of Rule 56 of the NSCC Rules, in the same manner as a Member's proprietary SFT Account activity at NSCC. NSCC's margin methodology with respect to the SFT Clearing Service has already been subject to the Commission's review and approval.^[38] Because NSCC applies a risk-based margin methodology, tailored to address SFTs, the Proposed Rule Change is reasonably designed to cover NSCC's credit exposures from SFT participants, consistent with Rule 17ad-22(e)(6)(i).^[39]

C. Consistency With Rule 17ad-22(e)(13)

Rule 17ad-22(e)(13) ^[40] under the Act requires that each covered clearing agency establish, implement, maintain, and enforce written policies and procedures reasonably designed to, among other things, ensure the covered clearing agency has the authority and operational capacity to take timely action to contain losses and liquidity demands and continue to meet its obligations.

As described above in section I.B.3, NSCC proposes to adopt and clarify the default management provisions in the NSCC Rules applicable to the SFT Clearing Service. Adopting and clarifying the relevant default management provisions in the NSCC Rules would improve market participants' understanding of NSCC's default management procedures. NSCC's proposals in this regard would better prepare market participants to deal with default scenarios, resulting in more orderly management of such events, minimizing default losses and reducing potential risk to NSCC and its non-defaulting participants.

Accordingly, the Proposed Rule Change is consistent with Rule 17ad-22(e)(13) because implementing rules that govern default management procedures would help ensure that NSCC has the authority and capacity to take timely action to contain losses and liquidity demands and continue to meet its obligations.^[41]

D. Consistency With Rule 17ad-22(e)(19)

Rule 17ad-22(e)(19) ^[42] under the Act requires that each covered clearing agency establish, implement, maintain, and enforce written policies and procedures reasonably designed to identify, monitor, and manage the material risks to the covered clearing agency arising from arrangements in which firms that are indirect participants in the covered clearing agency rely on the services provided by direct participants to access the covered clearing agency's payment, clearing, or settlement facilities.

As described above in section I.B.3, NSCC proposes to adopt and clarify the default management provisions in the NSCC Rules applicable to the SFT Clearing Service that address default scenarios affecting, among others, NSCC's indirect participants ( i.e., Sponsored Members and Customers). The revised NSCC Rules include targeted risk management provisions regarding NSCC's netting and close-out procedures designed to enhance NSCC's ability to manage its exposures in the event of an Agent Clearing Member or Sponsoring Member Default. The revised NSCC Rules should, therefore, better prepare NSCC to deal with default scenarios, resulting in more orderly management of such events, minimizing default losses and reducing potential risk to NSCC and its non-defaulting participants.

Accordingly, the Proposed Rule Change is consistent with Rule 17ad-22(e)(19) because adopting and clarifying the NSCC Rules regarding the default management provisions affecting NSCC's indirect participants would better enable NSCC to manage the material risks arising from arrangements in which indirect participants rely on direct participants to access NSCC's payment, clearing, and settlement facilities.^[43]

E. Consistency With Rule 17ad-22(e)(21)

Rule 17ad-22(e)(21) ^[44] under the Act requires that each covered clearing agency establish, implement, maintain, and enforce written policies and procedures reasonably designed to, among other things, be efficient and effective in meeting the requirements of its participants and the markets it serves.

As described above in section I.B.1, NSCC states that Members and other market participants have expressed interest in NSCC offering a net margin account option for SFT Members and their Customers. The Proposed Rule Change is consistent with Rule 17ad-22(e)(21) because establishing Agent Clearing Member Customer Net Margin Accounts is responsive to meeting the requirements of NSCC's participants and the SFT market.^[45]

III. Conclusion

On the basis of the foregoing, the Commission finds that the Proposed Rule Change is consistent with the requirements of the Act and the rules and regulations promulgated thereunder.

It is therefore ordered, pursuant to Section 19(b)(2) of the Act ^[46] that proposed rule change SR-NSCC-2026-005 be, and hereby is, approved .^[47]