I. Introduction

On August 8, 2024, Schvey, Inc. (d/b/a Axoni, “Axoni”) filed with the Securities and Exchange Commission (“Commission”) an application on Form CA-1 seeking an exemption from registration as a clearing agency pursuant to Section 17A of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 17Ab2-1 thereunder.^[1] On November 22, 2024, LSEG Post Trade Services Limited (“LSEG”) amended the application to reflect its acquisition in October 2024 of the Veris platform (“Application”). ^[2] ( printed page 55957) This Application concerns the Veris platform, a post-trade reconciliation and lifecycle management platform for transactions in equity security-based swaps (“SBS”), that provides trade matching services by facilitating SBS contract management.^[3]

The Commission is publishing this notice to solicit comments from interested persons on the Application.^[4] The Commission will consider any comments it receives in making its determination whether to grant LSEG's request for an exemption from registration as a clearing agency.^[5]

II. Background

LSEG, through its predecessor Axoni, has been providing the services described in Part III of this notice pursuant to a temporary, class-based exemption issued by the Commission in 2011 (“2011 Temporary Exemption”).^[6] Specifically, the 2011 Temporary Exemption provided exemptive relief to entities performing (non-central counterparty) post-trade services for SBS that otherwise would have to register as a clearing agency or obtain an exemption from registration.^[7] In adopting Regulation SE in 2023, the Commission terminated the 2011 Temporary Exemption, while extending its exemptive relief to entities that applied for registration or an exemption from registration as a clearing agency.^[8] Pursuant to the terms set forth in the Regulation SE adopting release, LSEG has continued to provide the services described below.^[9]

III. Summary of the Applicant's Organization and Services

A. Organization

LSEG is organized under the laws of England and Wales and is incorporated as a private limited company with the United Kingdom Companies House.^[10] LSEG is governed by a five-person board of directors.^[11] LSEG's ultimate parent is London Stock Exchange Group plc.^[12]

B. Description of Services in Application

The Application explains that, in 2020, Axoni began offering the Veris platform to a select number of customers.^[13] As explained above, in October 2024, LSEG purchased the Veris platform from Axoni.^[14] LSEG explains in its Application that the Veris platform, a post-trade pairing reconciliation and lifecycle management platform for equity SBS, reduces the effort needed to reconcile post-trade data and prevent cash flow breaks by enabling counterparties to share and compare data associated with equity SBS deals, positions, trades, and related cash flows throughout the post-trade lifecycle.^[15] LSEG states that the Veris platform provides “real-time transparency” to both counterparties on reconciliation exceptions and reduces operational risks including settlement delays.^[16] LSEG also states that all equity SBS transactions are executed and settled outside of the Veris platform, and that post-execution, counterparties transmit to the Veris platform their post-execution swap data.^[17]

LSEG states that the Veris platform has onboarded “regulated financial institutions” such as broker-dealers, banks, registered investment companies and private funds.^[18] LSEG indicates that it does not limit the types of persons that may use the Veris platform, provided: (i) the entity is registered, and in good standing, with a regulatory authority; and (ii) the entity has the operational and technological capacity to connect to the Veris platform.^[19] LSEG states that each Veris platform customer entered into a software agreement with Axoni (now assigned to LSEG).^[20] LSEG also states that this software agreement governs each customer's access and use of the Veris platform.^[21] The Application further explains that, in 2026, the contract terms that govern each customer's use of the Veris platform will migrate to a standard uniform rulebook.^[22]

In the Application, LSEG describes the Veris platform's functionality and workflow, as well as three features planned for release in 2026.^[23] As more fully described below, LSEG identifies 15 specific elements of the Veris platform's functionality in the Application.^[24]

1. Data Capture. The Veris platform ingests data through an Application Programming Interface (“API”) or Financial Information Exchange (“FIX”) engine from customers. The software subsequently creates, updates, or cancels the actioning customer's data records representing the equity SBS transactions.^[25]

2. Post-Trade Data Pairing. Using the key terms entered into by both counterparties (party A and party B) comprising a data record (equity SBS), the Veris platform compares to identify which records from party A correspond to party B's version of those records. Once a pair is identified, the Veris platform creates a paired record.^[26]

3. Data Reconciliation. The Veris platform compares pairs records on specific fields/terms relevant to the ( printed page 55958) equity SBS. The platform marks as exceptions counterparty data differences outside any thresholds.^[27]

4. Data Enrichment. The Veris platform defaults/enriches certain data fields from higher hierarchical levels to lower data levels. For example, it will automatically enrich transactional data with higher level data to streamline the user experience ( e.g., “unwind methodology” can be provided at the deal level).^[28]

5. Amendments. The Veris platform enables a party to update or amend its data.^[29]

6. Cancellation. The Veris platform enables customers to cancel data records. Cancelled data may be replaced with a newer version of the record.^[30]

7. User Interface (“UI”). LSEG explains that the Veris platform is connected to a UI to facilitate customer access to their data and provides exporting, audit history, affirmation, and search functions.^[31]

8. Affirmation. The Veris platform allows parties to affirm update/create their side of a paired record with the values of their counterparty.^[32]

9. Account Mapping. The Veris platform allows customers to provide linkage between their transactional data and deal-level data based on account and market preferences.^[33]

10. Trade Ordering. The Veris platform orders trades based on execution date and time, and subsequently, determines the type of trade activity ( e.g., determining if a trade type is a buildup, unwind, or full unwind).^[34]

11. Position Calculation. The Veris platform independently calculates the quantity and number of securities on the position level based on the transactional records received for a given position.^[35]

12. Corporate Action Outturn Position Updates. The Veris platform determines the net effect on a position ( e.g., number of securities on a stock split) from corporate action transactions received from customers.^[36]

13. Single-Sided Flow. The Veris platform reconciles allocation instructions against risk bookings for a single party.^[37]

14. Electronic Master Confirm Agreement. The Veris platform allows creation and storage of an electronic representation of a “Master Confirmation Agreement” (“MCA”).^[38]

15. Authentication and Permissions. The Veris platform manages permissions by allowing customers to authenticate themselves. Upon authentication, the platform grants customers the ability to access, create, and update their data for transactions to which they are a party.^[39]

In its Application, LSEG also described three features to be released during 2026, as follows:

1. Data normalization, which will allow clients to deliver data to the platform in the client's proprietary formats. Veris will then “transform” the data into the data models required by the platform.^[40]

2. Asset cross-referencing, which will allow clients to submit different identifier types on their trade information. To link trades submitted by counterparties with different identifier types, Veris will introduce the capability to cross-reference between identifiers such as RIC, SEDOL, CUSIP, and ISIN.^[41]

3. Cashflow matching, which will offer the capability to match cashflows resulting from SBS transactions. Cashflow matching would be delivered in a phased approach with “increasing granularity,” offering clients the ability to match or affirm cashflows at a net level or per transaction. The Application explains that settlements will continue to occur on a bilateral basis outside of the Veris platform.^[42]

As described further below, LSEG states that the Veris platform does not provide the following functionality: (i) execution; (ii) settlement; or (iii) clearing.^[43]

1. Execution. LSEG states that the Veris platform does not allow customers to execute equity SBS transactions or transactions in the securities underlying the equity SBS.^[44]

2. Settlement. LSEG states that the Veris platform does not settle equity SBS transactions or transactions in the securities underlying the equity SBS.^[45]

3. Clearing. LSEG states that the Veris platform does not clear equity SBS transactions or transactions in the securities underlying the equity SBS.^[46]

Additionally, LSEG explains the Veris platform's workflow in ten steps:

1. As part of the client onboarding process, any customer permissions, reference data, and documentation ( e.g., MCA) are established in the system.^[47]

2. The equity SBS execution occurs outside of the Veris platform.^[48]

3. Workflows managing the processing of the underlying equity asset (execution, clearance, and settlement) occur outside of the Veris platform through normal business channels.^[49]

4. Parties transmit their post allocation swap data records to the Veris platform for Data Capture via API, FIX, or UI Affirmation.^[50]

5. The Veris platform processes the data to pair and reconcile any differences relative to counterparty submissions of their records.^[51]

6. The Veris platform communicates the results of the reconciliation to parties via API and/or UI.^[52]

7. Each customer sends its version of all lifecycle data, including the following: (i) amendments ( e.g., financing re-rates); (ii) position accruals; (iii) cash flows; and (iv) corporate action outturns.^[53]

8. The Veris platform continuously reconciles all lifecycle data throughout the life of the swap, highlighting exceptions to customers, while storing a unified record of paired data.^[54]

9. Customers investigate and remediate exceptions identified by the Veris platform by updating their submissions upstream from the Veris platform to ensure swap data is in alignment with their counterparty's systems.^[55]

10. Parties settle cash flows outside of the Veris platform.^[56]

IV. Statutory Standard

Section 17A(b)(1) of the Exchange Act requires any clearing agency to register with the Commission before performing the functions of a clearing agency with respect to any security (other than an exempted security).^[57] Section 17A(b)(1) of the Exchange Act also provides that, by rule or order, upon its own motion or upon application, the Commission may conditionally or unconditionally exempt a clearing agency from any provisions of Section 17A or the rules ( printed page 55959) or regulations thereunder if the Commission finds that such exemption is consistent with the public interest, the protection of investors, and the purposes of Section 17A, including the prompt and accurate clearance and settlement of securities transactions and the safeguarding of securities and funds.^[58]

In the Matching Release, the Commission stated that an entity that limited its clearing agency functions to providing matching services might not have to be subject to the full range of clearing agency regulation, consistent with the exemptive authority provided in Section 17A(b)(1).^[59] The Commission stated that a conditional exemption would exempt an entity from clearing agency registration under “appropriate conditions.” ^[60] The Commission anticipated that an entity seeking an exemption from clearing agency registration for matching would be required to: (1) provide the Commission with information on its matching services and notice of material changes to its matching services; (2) establish an electronic link to a registered clearing agency that provides for the settlement of its matched trades; (3) allow the Commission to inspect its facilities and records; and (4) make periodic disclosures to the Commission regarding its operations.^[61]

V. Request for Exemption

In its Application, LSEG requests that the Commission grant a conditional exemption to permit it to operate the services described in Part III above without registering as a clearing agency, as explained further below.

A. Application of Statutory Standard

LSEG requests an exemption from clearing agency registration in connection with its Veris post-trade pairing, reconciliation, and lifecycle management service for equity SBS, which it describes as the “Equity SBS Post-Trade Services.” LSEG explains that the Veris platform includes a limited set of services that fall within the Commission's definition of “trade matching,” such as capturing an equity SBS transaction's trade information to perform an independent comparison of such information.^[62] LSEG states that it does not perform comparison of trade data to reduce the number of settlements or to allocate settlement responsibilities, or provide any other execution or settlement services.^[63] Citing its belief that Veris performs only a limited number of services that would require registration as a clearing agency, LSEG states the conditions proposed in its Application, and reproduced in Part V.B below, will provide the appropriate level of protection against risk related to custody, clearance, and settlement.^[64]

In the Application, LSEG also states that exempting the Veris platform from registration, subject to the specified conditions set forth below, will: (i) produce substantial U.S. public benefit; (ii) provide U.S. investors and the U.S. national clearance and settlement system with substantially the same level of protection against risk related to custody, clearance, and settlement that full registration would provide; and (iii) advance the purposes of Section 17A of the Exchange Act.^[65] In identifying a “substantial U.S. public benefit,” LSEG states that the Veris platform will improve the speed, accuracy, and reliability of post-trade equity SBS pairing and reconciliation, including reconciliation of cash flow amounts.^[66] LSEG also states that these improvements should: (i) reduce operational and settlement risk for equity SBS transactions; (ii) decrease overall costs to equity SBS market participants; and (iii) increase the potential for developments of new and enhanced functionality related to equity SBS transactions.^[67]

In addition, LSEG represents that it will not engage in any activity inconsistent with the purposes of Section 17A(a)(2) of the Exchange Act, which directs the Commission to facilitate the establishment of linked or coordinated facilities for clearance and settlement of transactions in securities.^[68] Because equity SBS transactions are not centrally cleared in the U.S., LSEG states that interoperability requirements would be inappropriate at this time.^[69] LSEG represents that, in any event, it will not engage in activities that would prevent other services from operating a matching service independent of LSEG's services.^[70]

B. Conditions to Exemption

In its Application, LSEG states that Regulation Systems Compliance and Integrity (“Regulation SCI”), adopted in 2014, would not apply to the Equity SBS Post-Trade Services and also believes it is not necessary for the Commission to impose compliance with Regulation SCI to fulfill the purposes of the Exchange Act because (i) the Equity SBS Post-Trade Services are limited in nature, and (ii) LSEG agrees to comply with operational risk conditions relating to systems compliance and integrity. The conditions, described in its Application,^[71] are reproduced and renumbered as Parts B.1 and B.2 of this notice. References to the “Applicant” have been replaced with “LSEG.”

B.1. Operational Risk Conditions

LSEG proposes the following operational risk conditions as part of its request for an exemption from registration as a clearing agency:

(1) LSEG shall demonstrate to the Commission or its designee no later than 120 days after the Commission grants an order ^[72] exempting LSEG from registration as a clearing agency (the “Exemption Order”), that LSEG maintains written policies and procedures applicable to those systems that support or are integrally related to the Equity SBS Post-Trade Services (the “Systems”) that, on an ongoing basis, are reasonably designed to:

a. establish a robust operational risk-management framework applicable to the Systems with appropriate systems, policies, procedures, and controls to identify, monitor, and manage operational risks; ^[73]

b. clearly define the roles and responsibilities of LSEG personnel for addressing operational risk; ^[74]

c. review, in accordance with the LSEG Policy Governance Framework, operational policies, procedures, and controls applicable to the Systems;

d. audit the Systems, and test the Systems periodically and at implementation of significant changes; ^[75]

e. clearly define operational reliability objectives for the Systems;

f. ensure that the Systems have scalable capacity adequate to handle increasing stress volumes and achieve the Systems service-level objectives; ^[76]

g. establish comprehensive physical and information security policies that address all known potential vulnerabilities and threats to the Systems; ^[77]

h. establish a business continuity plan for the Systems that addresses events posing a significant risk of disrupting the Systems' operations, including events that could cause a wide-scale or major disruption in the provision of the Equity SBS Post-Trade Services; ^[78]

i. incorporate the use of a secondary site in LSEG's business continuity plan that is designed to ensure that all critical Systems can resume operations within two hours following disruptive events; ^[79]

j. regularly test or otherwise validate LSEG's business continuity plans; ^[80] and

k. identify, monitor, and manage the risks that key participants, other financial market infrastructures and service and utility providers might pose to the Systems' operations in relation to the Equity SBS Post-Trade Services.^[81]

(2) For purposes of condition V.B.1(1), such policies and procedures shall be consistent with current information technology industry standards, which shall be comprised of information technology practices that are widely available to information technology professionals in the financial sector and issued by a widely recognized organization. LSEG shall inform the Commission or its designee of the information technology industry standards that LSEG has chosen to use, affirm that choice on an annual basis, and provide advance notice of the use of different standards as soon as practicable.^[82]

(3) LSEG shall provide the Commission or its designee with an annual update on the status of the items set forth in condition V.B.1(1).^[83]

(4) LSEG shall establish, implement, maintain, and enforce written policies and procedures reasonably designed to ensure that the Systems operate on an ongoing basis in a manner that complies with the conditions applicable to the Systems and with LSEG's rules and governing documents applicable to the Equity SBS Post Trade Services.^[84]

(5) LSEG shall report all material critical systems' outages to the Commission within 24 hours following confirmation of the incident.^[85]

(6) LSEG shall, within 30 calendar days after the end of each quarter, submit to the Commission or its designee a report describing completed, ongoing and planned material changes to the Systems that support or are related to the Equity SBS Post-Trade Services during the prior, current, and subsequent calendar quarters, including the dates or expected dates of commencement and completion. (LSEG shall establish reasonable written criteria for identifying a change to the Systems as material and report such changes in accordance with such criteria.) ^[86]

(7) LSEG shall, on an annual basis, provide the Commission or its designee with the audited control report including internationally recognized certifications, as appropriate.^[87]

(8) LSEG shall make, keep, and preserve at least one copy of all documents relating to its compliance with the operational risk conditions; keep all such documents for a period of not less than five years, the first two years in an easily accessible place; and upon request of the Commission, promptly furnish to the possession of the Commission or its designee copies of any such documents.^[88]

B.2. Additional Conditions

LSEG proposes the following additional conditions as part of its request for an exemption from registration as a clearing agency:

(1) LSEG shall provide to the Commission or its designee its annual audited financial statements prepared by competent independent audit personnel.^[89]

(2) LSEG shall notify the Commission or its designee of any material changes to any service agreement between LSEG and any other entity that is performing any portion of the Equity SBS Post-Trade Services on behalf of LSEG if such changes are reasonably expected to materially affect the Equity SBS Post-Trade Services.^[90]

(3) LSEG shall preserve a copy or record of post-execution pairing and reconciliation data pertaining to the operation of the Equity SBS Post-Trade Services. LSEG shall retain these records for a period of not less than five years, the first two years in an easily accessible place.^[91]

(4) LSEG shall respond to a request from the Commission for additional information relating to the Equity SBS Post-Trade Services and provide the Commission or its designee with access to LSEG's facilities (including automated systems and systems environment), records, and personnel related to the Equity SBS Post-Trade Services. The request for information shall be made and the inspections shall be conducted solely for the purpose of reviewing the Equity SBS Post-Trade Services' operations and compliance with the federal securities laws and the terms and conditions in any Exemption Order.^[92]

(5) LSEG shall file with the Commission amendments to its application for exemption on Form CA-1 if it makes any material change to the Equity SBS Post-Trade Services or any change materially affecting the Equity SBS Post-Trade Services as summarized in any Exemption Order or LSEG's Form CA-1 that would make such previously provided information incomplete or inaccurate.^[93]

(6) The Commission may modify by order the terms, scope or conditions of any Exemption Order if it determines that such modification is necessary or appropriate in the public interest, the protection of investors, or otherwise in furtherance of the purposes of the Exchange Act. Furthermore, the Commission may limit, suspend, or revoke the exemption if it finds that LSEG has violated or is unable to comply with any of the provisions set forth in any Exemption Order if such action is necessary or appropriate in the public interest, for the protection of investors or otherwise in furtherance of the purposes of the Exchange Act.^[94]

VI. Request for Written Comments

Interested persons are invited to provide written data, views, and arguments concerning the Application, including whether the proposed exemption is consistent with the public interest, the protection of investors, and the purposes of Section 17A of the Exchange Act. To the extent possible, commenters are requested to provide ( printed page 55961) empirical data and other factual support for their views. In addition, the Commission seeks comment generally on the following questions relevant to the consideration of the Application:

1. Since the Commission issued the 2011 Temporary Exemption, has LSEG provided matching services and operated consistent with the public interest, the protection of investors, and the purposes of the Exchange Act? Why or why not? To what extent has LSEG's provision of matching services affected the ongoing development of the national system for clearance and settlement?

2. What operational or other risks, if any, do the services described in the Application pose to LSEG's customers or to clearing agencies with which they interact? Do LSEG's proposed conditions sufficiently address any such risks? Please explain.

3. Are LSEG's proposed conditions consistent with the public interest, the protection of investors, and the purposes of Section 17A of the Exchange Act, including the prompt and accurate clearance and settlement of securities transactions and the safeguarding of securities and funds? Would any revisions to the proposed conditions better promote the purposes of Section 17A of the Exchange Act? Why or why not? If so, which conditions should be modified? Should any conditions be added? Why or why not?

4. Are LSEG's proposed conditions designed to promote innovation and to facilitate competition among matching services?

5. Are there any aspects of the services provided by LSEG, or other aspects of its Application, that support modifying or revising the interpretations provided by the Commission in the Matching Release? If so, in what ways or how?

6. Are there any aspects of the services provided by LSEG, or other aspects of its Application, that support applying Commission rules such as Regulation SCI, the rules for central matching service providers under 17 CFR 240.17ad-27, or the recordkeeping requirements for registered clearing agencies under 17 CFR 240.17a-1? If so, which rules and why?

Comments may be submitted by any of the following methods:

Electronic Comments

• Use the Commission's internet comment form (www.sec.gov/​rules-regulations/​how-submit-comment); or
• Send an email torule-comments@sec.gov. Please include File Number 600-40 on the subject line.

Paper Comments

• Send paper comments to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090. All submissions should refer to File Number 600-40.

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 ( www.sec.gov/​rules-regulations/​commission-orders-notices/​other-commission-orders-notices-information). 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 600-40 and should be submitted on or before October 15, 2026.