U.S. Securities and Exchange Commission

Staff Report on the Regulation of Clearing Agencies

by

Division of Trading and Markets

Office of Compliance Inspections and Examinations

October 1, 2020

DISCLAIMER: This report represents the views of the staff of the Division of Trading and Markets and the 

Office of Compliance Inspections and Examinations. It is not a rule, regulation, or statement of the U.S. 

Securities and Exchange Commission (the “Commission”). The Commission, or any other regulatory 

agency referenced in this report, has neither approved nor disapproved its content. This statement, like 

all staff guidance, has no legal force or effect: it does not alter or amend applicable law, and it creates no 

new or additional obligations for any person.
ii

Table of Contents

Executive Summary ........................................................................................................iii

I. Introduction ............................................................................................................ 1

II. Development of the National System for Clearance and Settlement............................. 3

A. Paperwork Crisis and 1975 Amendments............................................................... 3

B. Clearing for Cash Equities, Options, and Government Securities ............................... 4

C. Response to the 1987 Market Break..................................................................... 5

D. Regulation of CCPs for OTC Derivatives................................................................. 5

E. Security-Based Swaps in the National System for Clearance and Settlement............... 6

F. Ongoing Developments and Consolidation among Clearing Agencies......................... 7

III. Regulatory Framework for Clearing Agencies............................................................ 8

A. Exchange Act..................................................................................................... 8

B. Dodd-Frank Act ................................................................................................10

C. Rule 17Ad-22 ...................................................................................................11

D. Regulation SCI ..................................................................................................13

IV. Overview of the SEC’s Examinations Program...........................................................13

A. OCIE-OCS.........................................................................................................13

B. OCIE-TCP.........................................................................................................15

C. Examination Process.........................................................................................16

D. Coordination with FRB.......................................................................................17

E. Examination Priorities for 2020...........................................................................17

V. Trends and Other Developments............................................................................17

A. Heightened Regulatory Coordination and Focus on CCPs across Markets..................17

B. Monitoring of and Response to the COVID-19 Pandemic ........................................18

C. Renewed Focus on the Clearing Infrastructure for U.S. Treasury Securities................19

D. Consolidation among Clearance and Settlement Providers and the Risks Associated with

Single Points of Failure ......................................................................................21

E. Efforts in Support of Resilience and Recovery Planning...........................................24

VI. Conclusion ..........................................................................................................25

Appendix: Staff Summary of Recent Rule Changes and Advance Notices................................26

A. DTC, FICC, and NSCC..........................................................................................26

B. ICC..................................................................................................................30

C. ICEU................................................................................................................31

D. LCH.................................................................................................................32

E. OCC ................................................................................................................33
iii

Executive Summary

Since the 2007–2009 financial crisis, market participants, academics, regulators, and the public 

have paid increasing attention to the market infrastructure that undergirds the global financial system. 

Recent market volatility, arising in response to the COVID-19 pandemic, emphasizes the ongoing

importance of a robust market infrastructure that can respond to unprecedented challenges. In the 

United States, focus on robust market infrastructure intersects with the longstanding and congressionally 

mandated oversight by the U.S. Securities and Exchange Commission (“SEC”) of the national system for 

clearance and settlement of securities transactions. The SEC exercises this oversight in a number of ways, 

most notably by supervising various market intermediaries, including central counterparties (“CCPs”), 

securities depositories, and other service providers that facilitate clearance and settlement, through a 

regulatory framework that includes registration requirements and standards for governance, operations, 

and risk management. Under this regulatory framework, such intermediaries are known as clearing 

agencies.

In 2010, Congress expanded the SEC’s authority over the national system for clearance and 

settlement to include the regulation of clearing agencies for security-based swaps. In addition, Congress 

provided thatthe SEC and the Commodity Futures Trading Commission (“CFTC”), in consultation with the 

Financial Stability Oversight Council (“FSOC”) and the Board of Governors of the Federal Reserve System

(“FRB”), may prescribe regulations for the enhanced oversight of systemically important clearing 

agencies. 1 Currently, the SEC is the supervisory agency for four such clearing agencies: 2 The Depository 

Trust Company (“DTC”); Fixed Income Clearing Corporation (“FICC”); National Securities Clearing 

Corporation (“NSCC”); and The Options Clearing Corporation (“OCC”). 3 The establishment of an enhanced 

oversight framework has strengthened the existing collaborative relationship among SEC staff and the 

staffs of the CFTC and FRB. 

In addition, three clearing agencies supervised by the SEC provide CCP services for security-based 

swaps: ICE Clear Credit (“ICC”), ICE Clear Europe (“ICEU”), and LCH SA (“LCH”). The SEC shares oversight 

responsibility for each of these clearing agencies with multiple regulatory agencies, including the CFTC, 

Bank of England, and Autorité des marchés financiers in France (“French AMF”). Sharing regulatory 

responsibilities with these and other agencies has enabled the SEC to expand its expertise in cross-border 

issues, helping to ensure that each regulator can pursue and achieve its mandates effectively and 

efficiently. 

Consistent with the new congressional directives, the SEC has taken a number of steps to enhance 

the regulatory framework for clearing agencies and to ensure that the national system for clearance and 

settlement remains resilient. Core to these initiatives are new rules establishing heightened standards 

for governance, operations, and risk management, which the SEC recently extended to all CCPs and central 

securities depositories. 4 The rules rely on a flexible, principles-based approach to regulation so that 

1 See 12 U.S.C. 5472; see alsoinfra note 73 and accompanying text.

2 See 12 U.S.C. 5462; see alsoinfra note 69 and accompanying text.

3 Although this report concerns the regulation of registered clearing agencies generally, some parts focus 

specifically on systemically important clearing agencies for which the SEC is the supervisory agency 

because these clearing agencies are subject to enhanced regulation and can have a unique impact on 

broader U.S. financial stability. See, e.g., infra Parts III.B (discussing the regulatory framework for 

systemically important clearing agencies) and V.E (discussing recovery and resolution of systemically 

important clearing agencies).

4 See infra note 9 and accompanying text.
iv

clearing agencies can effectively adapt their policies and procedures to the markets they serve, the 

products they clear, and the risks they face. The SEC has also enhanced its supervisory and examination 

capabilities to monitor effectively clearing agencies as they implement and maintain policies and 

procedures under the heightenedstandards established by these rules.

Clearing agencies have undertaken a number of initiatives—including, importantly, efforts related 

to improving the tools that facilitate financial risk management, such as stress testing and margin 

calculation—to achieve compliance with the new rules and the heightened standardsthey represent. SEC 

staff, in turn, evaluates these initiatives on a dynamic basis, assessing at the time of proposal whether 

such initiatives are consistent with the outcomes contemplated by regulatory standards, and later 

examining whether implementation and execution of such initiatives achieve outcomes compliant with 

those standards. As discussed in detail in this report, SEC staff generally observes that the clearing 

agencies have made positive strides in pursuing initiatives that are consistent with current regulatory 

standards for critical market infrastructure. In the staff’s view, the current and future success of such 

initiatives, largely expressed and implemented in the form of clearing agency rulebooks, policies, and 

procedures, are contingent on a fundamental element: effective governance. Clearing agency governance 

is critical both to establishing the goals and objectives of the clearing agency and to ensuring clear lines 

of responsibility within the clearing agency so that board members, senior management, and front-line 

staff can work effectively to execute their rules, policies, and procedures in a manner that supports the 

resilience of the national system for clearance and settlement. Rule 17Ad-22 includes several 

requirements intended to promote effective governance, as discussed further below. 5

Furthermore, SEC staff observes that the efforts and role of the clearing agencies are not static 

relative to broader trends prevalent in global financial markets. Events of varying size and scope, at times 

outside the direct control or influence of the clearing agencies, can have significant impact on operations, 

priorities, and the availability of resourcesfor these critical market infrastructures. The onset of sudden 

and unexpected instances of market volatility, as recently observed with the arrival of the COVID-19 

pandemic and the various fiscal and monetary responses that ensued, is only the most recent example of 

this reality. In addition, the SEC’s regulatory enhancements and the initiatives undertaken by the clearing 

agencies have occurred in tandem with a number of broad trends that signal emergent risks or that are 

likely to have a significant effect on both the national system for clearance and settlement and the global 

financial markets. As discussed in detail later in this report, in the staff’s view the key trends are: 

• Heightened regulation of clearance and settlement providers and improved coordination across

marketsfollowing the 2007–2009 financial crisis;

• Ongoing monitoring of and response to market dynamics related to the COVID-19 pandemic;

• A renewed focus on the current and potential role of central clearing in the U.S. Treasury market;

• Tensions arising from consolidation among market participants, resulting in the potential for

concentration of clearance and settlement activity among a smaller set of firms, and risks

presented by clearing agencies as single points of failure; and

• Ongoing efforts to ensure that systemically important clearing agencies are resilient in times of

financial stress through recovery and resolution planning.

In the wake of these trends—many of which have been highlighted during the response to the COVID-19 

pandemic—SEC staff continues to work with domestic regulators and authorities from other jurisdictions 

5 See infra Part III.C (discussing the elements of Rule 17Ad-22).
v 

to share information and develop guidance for the resilient functioning of the national system for 

clearance and settlement. In the staff’s view, the resilience of this system and the entities on which it 

depends ultimately will be a function of the ability of clearing agencies to implement and maintain 

effective governance and risk management. Such ability helps ensure that clearing agencies are well 

positioned to understand and engage effectively with the risks and challenges implicated by these trends 

and those unseen, including the COVID-19 pandemic. 

The purpose of this report is to serve as a vehicle for facilitating discussion of these prevailing 

trends and related developments in the national system for clearance and settlement since the 2007–

2009 financial crisis. To provide a framework for such a discussion, this report:

• Includes a brief history of the national system for clearance and settlement;

• Provides an overview of the SEC’s current regulatory framework;

• Describes the SEC’s examinations program for clearing agencies;

• Discusses the staff’s view of trends relevant to the ongoing development of the national system;

and

• Illustrates how the clearing agencies are engaging with these trends by summarizing the recent,

relevantinitiatives that they have undertaken.

In the conclusion to this report, SEC staff emphasizes the importance of strong governance

arrangements and risk management, as well as having robust written rules, policies, and procedures. To 

achieve real-life outcomes that promote resilience and compliance, rules, policies, and procedures must 

be well designed to address all risks faced by a clearing agency, updated regularly and thoughtfully as 

practices or other circumstances change, and subject to sound governance that ensures they will be 

executed promptly and effectively. Only then can a clearing agency support the ongoing development of 

the national system for clearance and settlement.
1 

I. Introduction

The SEC has taken a number of steps over the past several years to enhance the regulatory

framework for clearing agencies registered with the SEC under the Securities Exchange Act of 1934 

(“Exchange Act”). 6 In particular, the SEC has adopted: (i) Rule 17Ad-22 in 2012 to establish a 

comprehensive set of regulatory requirements for governance, operations, and risk management 

practices of registered clearing agencies; 7 (ii) Regulation Systems Compliance and Integrity (“Regulation 

SCI”) in 2014 to enhance the SEC’s oversight and enforcement of the technology and systems 

infrastructure that supports clearing agencies; 8 (iii) Rule 17Ad-22(e) in 2016 to establish an enhanced 

regulatory framework for systemically important clearing agencies and clearing agencies for securitybased swaps; and (iv) amendments to Rule 17Ad-22 that expand the enhanced regulatory framework to 

cover all CCPs and central securities depositories. 9 In the staff’s view, the heightened requirements for 

governance reflect a keen recognition that robust governance is essential to sound risk management and 

that a clearing agency’s decisions necessarily have a widespread impact on market participants, financial 

institutions, global markets, and jurisdictions beyond the United States.

In promulgating these rules, the SEC took a flexible, principles-based approach rather than 

imposing rigid, prescriptive requirements because clearing agencies serve a variety of markets that are 

characterizedby different trading patterns, volumes, liquidity, transparency, and other characteristics.10 

When determining the content of its policies and procedures, each registeredclearing agency must have 

the ability to consider its unique characteristics and circumstances, including ownership and governance 

structures, effect on direct and indirect participants, membership base, markets served, and the risks 

inherent in products cleared. 11 In the staff’s view, these differences also necessitate that clearing agencies 

regularly evaluate, update, and improve their policies and procedures to facilitate prompt and accurate 

clearance and settlementthat is subject to robust risk management. 

As summarized in the Appendix, a number of policies and procedures in furtherance of these 

objectives have been submitted to the SEC for review and approval. 12 These rule changes generally have 

been designed to improve the safety and efficiency of the clearing agency and to better serve the U.S. 

securities markets, market participants, and investors. To improve safety and efficiency, however, such 

policies and procedures must not only be adopted but implemented, maintained, and enforced consistent 

with the requirements of Rule 17Ad-22 and Regulation SCI. 13 In the staff’s view, such an effort requires 

6 15 U.S.C. 78q-1.

7 See Release No. 34-68080 (Oct. 22, 2012), 77 FR 66219 (Nov. 2, 2012) (“CA Standards adopting release”); 

17 CFR 240.17Ad-22.

8 See Release No. 34-73639 (Nov. 19, 2014), 79 FR 72251 (Dec. 5, 2014) (“Regulation SCI adopting release”); 

17 CFR 242.1000 et seq. 

9 See 17 CFR 240.17Ad-22(e); Release Nos. 34-78961 (Sept. 28, 2016), 81 FR 70785 (Oct. 13, 2016) (“CCA 

Standards adopting release”); 34-88616(Apr. 9, 2020) 85 FR 28853 (May 14, 2020) (“CCA Definition 

adopting release”).

10 CA Standards adopting release, supra note 7, at 66231–32.

11 CCA Standards adopting release, supra note 9, at 70800.

12 15 U.S.C. 78s.

13 In this regard, staff notes that paragraphs (b), (d), and (e) of Rule 17Ad-22 each direct a registered clearing 

agency to “establish, implement, maintain and enforce written policies and procedures reasonably 
2 

strong governance at each clearing agency that establishesa clear oversight role for the board of directors, 

maintains effective lines of communication between the board and senior management, promotes 

compliance with regulatory requirements, and fosters the ongoing development of training and expertise 

in clearance and settlement systems and processes.

The adoption of Rule 17Ad-22 and Regulation SCI, and the corresponding changes to the rules, 

policies, procedures, and operations implemented by the respective clearing agencies, have occurred in 

tandem with a number of emerging trends in the global financial markets. In particular, SEC staff has

identified the following as critical to the ongoing development of the national system for clearance and 

settlement:

• Heightened regulatory coordination and focus on CCPs across markets. Immediately following the

2007–2009 financial crisis, regulators across global markets undertook efforts to assess and

enhance the regulation of CCPs, particularly with respect to their risk management practices.

Recent market volatility in response to the COVID-19 pandemic has underscored the importance

of forward-looking risk management practicesfor all clearing agencies. In addition, increased

information sharing and coordination among regulators and across jurisdictions is improving

regulators’ understanding of the role CCPs play in times of market stress. 14

• Monitoring of and response to the COVID-19 pandemic. The COVID-19 pandemic has increased

the potential for market volatility and required clearing agencies to activate business continuity

plans. While clearing agencies responded well to the initial market volatility in the United States,

they will need to continue monitoring events to ensure that they are well prepared to respond to

eventsthat may affect both clearing agency operation and financial risk management.

• Renewed focus on the current and potential role of central clearing in the U.S. Treasury market.

Following uncharacteristic volatility in U.S. Treasury securities in 2014, U.S. regulators have

undertaken several efforts to understand and map the evolving structure of the market, resulting

in renewed focus on the role of central clearing for U.S. Treasury securities.

• Tensions arising from consolidation among market participants and risks presented by clearing

agencies as single points of failure. Some market participants have argued that measures by

clearing agencies to enhance their financial resources have reduced direct access to the clearance 

and settlement infrastructure by medium-sized banks and broker-dealers. In addition,

consolidation among providers of clearance and settlement services concentrates clearing activity 

in fewer providers and has increased the potential for providers to become single points of failure.

This raises for clearing agencies the importance of risk management and business continuity

planning to promote operational resiliency and presenting opportunities to improve operational

resiliency through innovation and new technologies.

• Efforts in support of resiliency and recoveryplanning. Staff continues to engage with the clearing 

agencies and other regulators to ensure that clearing agencies have robust recovery plans and

effective resolution strategies. The increase in market volatility in response to the COVID-19

designed” to meet the requirements of the underlying rules. 17 CFR 240.17Ad-22(b), (d), (e). Similarly, 

Rule 1001 of Regulation SCI states that each SCI entity shall “establish, maintain, and enforce written 

policies and procedures reasonably designed to ensure” that the SCI entity’s systems meet the 

requirements of the rule. 17 CFR 242.1001.

14 See, e.g., infra notes 69–71 (discussing information sharing and coordination under the Dodd-Frank Act).
3

pandemic provides an instructive example of the type of financial stress that CCPs and other 

clearing infrastructure must be prepared to manage.

The SEC has developed a regulatory framework that is flexible and principles-based, which enables 

the framework to address a range of challenges and risks, including any posed by these trends or others. 

Clearing agencies must be similarly flexible and thoughtful in navigating these challenges, and being 

successful in doing so will require strong governance practices and robust risk management, as set forth in

the SEC’s regulatory framework. 

To set the stage for a discussion of the above trends, Part II summarizes the historical 

development of the national system for clearance and settlement. Part III then provides an overview of 

the current regulatory framework, and Part IV provides an overview of the SEC’s examinations program 

for clearing agencies. Part V discusses the trends important to the ongoing development of the national 

system for clearance and settlement, and the Annex illustrates the significant initiatives undertaken by 

the clearing agencies that are reflective of these trends. 

II. Development of the National System for Clearance and Settlement

A. Paperwork Crisis and 1975 Amendments

The statutory framework for the national system for clearance and settlementis a product of the 

“Paperwork Crisis” that occurred in the U.S. securities markets during the late 1960s and early 1970s. This 

crisis resulted from sharply increased trading volumes and a history of inattention to the need for efficient 

processing of securities transactions, including the use of inefficient, duplicative and manual processes, 

poor recordkeeping, and insufficient controls over funds and securities. 15 Together, these problems 

nearly brought the securities industry to a standstill, and directly or indirectly caused the failure of a large 

number of broker-dealers. 16 The breakdown in the handling of paper associated with the clearance and 

settlement of securities transactions threatened to curtail the flow of debt and equity instruments 

available for public investment and jeopardized the continued operation of the securities markets. 17 

With the objectives of both improving the operation of the U.S. clearance and settlement 

infrastructure and protecting investors, 18 Congress held extensive hearings to investigate the Paperwork 

Crisis, 19 and ultimately enacted the Securities Acts Amendments of 1975 (“1975 Amendments”). The 1975 

Amendments directed the SEC to facilitate the establishment of a national system for the prompt and 

 

15 See SEC, Study of Unsafe and Unsound Practices of Brokers and Dealers, H.R. Doc. No. 92-231 (1971) 

(“Unsafe and Unsound Practices Report”); see also Securities Transactions Settlement, Release No. 34-

49405 (Mar. 11, 2004), 69 FR 12922 (Mar. 18, 2004); S. Rep. No. 94-75, at 45 (1975), reprinted in 1975 

U.S.C.C.A.N. 179, 183.

16 See Unsafe and Unsound Practices Report, supra note 15.

17 Id.

18 See 15 U.S.C. 78q-1(a)(1)(A)–(D), which lays out the congressional findings for Section 17A of the 

Exchange Act. In particular, Congress found that inefficient clearance and settlement procedures imposed 

unnecessary costs on investors and those acting on their behalf and that new data processing and 

communications techniques create the opportunity for more efficient, effective, and safe procedures for 

clearance and settlement.

19 See, e.g., Clearance and Settlement of Securities Transactions Hearings on S. 3412, S. 3297, and S. 2551 

Before the Subcom. on Banking, Housing and Urban Affairs, 92d Cong. 2d Sess., 95–96 (1972).
4

accurate clearance and settlement of securities transactions and provided the SEC with the authority to 

regulate those entities critical to the clearance and settlement process. 20

B. Clearing for Cash Equities, Options, and Government Securities

Using its new authority under the 1975 Amendments, the SEC beganefforts in November 1975 to 

establish a national system for clearance and settlement by adopting Rule 17Ab2-1 and Form CA-1 for the 

registration of clearing agencies. Thirteen clearing agencies applied for registration in accordance with 

the rule. 21 The SEC granted temporary registration to these clearing agencies in December 1975 and 

instituted proceedings to determine whether to grantfull registration to each. 22 

The SEC subsequently extended these temporary registrations several times. 23 To provide 

guidance to the clearing agencies in structuring their organizations, systems, capacities, and rules to meet

the Exchange Actstandardfor registration, the SEC published in September 1980 standards to be used by 

SEC staff in reviewing applications and making recommendations to the Commission on whether to grant

full registration. 24 In response to the Standards Release, twelve temporarily registered clearing agencies 

submitted amended applications, and in September 1983 the SEC granted full registration to nine clearing 

agencies. 25

Changes in technology and the concentration of securities trading around New York City led to 

consolidation among clearance and settlement providers in the years since, as discussed further in Part 

II.F. Today, three of the nine clearing agencies registered in 1983 continue to operate: DTC, NSCC, 26 and 

OCC. 27 To further serve the markets for cash equities, options, and government securities, the SEC has 

also granted registration or temporary registration to several other clearing agencies; of those, FICC

continues to operate today. 28

 

20 15 U.S.C. 78q-1(a)(2)(A); see also S. Rep. No. 94-75, supra note 15, at 53. Congress provided the SEC with 

the authority and responsibility to regulate, coordinate, and direct the operations of all persons involved 

in processing securities transactions, toward the goal of a national system for the prompt and accurate 

clearance and settlement of securities transactions. Id. at 55.

21 Release No. 34-11875 (Nov. 26, 1975), 40 FR 55910 (Dec. 2, 1975). 

22 Release No. 34-12759 (Sept. 1, 1976), 41 FR 38841 (Sept. 13, 1976).

23 E.g., Release Nos. 34-13584 (June 1, 1977), 42 FR 30066 (June 10, 1977); 34-13911 (Aug. 31, 1977), 1977 

WL 190688; 34-14531, 43 FR 10288 (Mar. 10, 1978); 34-18584 (Mar. 22, 1982), 47 FR 13266 (Mar. 29, 

1982).

24 Release No. 34-16900 (June 17, 1980) 45 FR 41920 (June 23, 1980) (“Standards Release”).

25 Release No. 34-20221 (Sept. 23, 1983), 48 FR 45167 (Oct. 3, 1983).

26 DTC and NSCC are subsidiaries of the Depository Trust and Clearing Corporation (“DTCC”), a non-public 

holding company that owns a number of financial market infrastructures. This report summarizes recent 

changes submitted by NSCC and DTC and reviewed by the SEC in Part VI.A.

27 See Release No. 34-20221 (Sep. 23, 1983) 48 FR 45167 (Oct. 3, 1983). This report summarizes recent 

changes submitted by OCC and reviewed by the SEC in Part VI.E.

28 See Release No. 34-69838 (June 24, 2013) 78 FR 39027 (June 28, 2013). FICC is a subsidiary of DTCC and 

has two Divisions, the Government Securities Division (“GSD”) and the Mortgage-Backed Securities 

Division (“MBSD”). GSD provides CCP services for the U.S. Government securities market, and MBSD 
5 

C. Response to the 1987 Market Break

In October 1987, the U.S. securities markets experienced an extraordinary surge in volume and

price volatility known as the 1987 market break. 29 On October 19, 1987, or “Black Monday,” the Dow

Jones Industrial Average (“DJIA”) declined an additional 508.32 points. At its low point midday on October 

20, 1987, the DJIA had declined over 1,000 points (37 percent). 

Many commenters questioned the performance of the national system for clearance during the 

1987 market break. A report by SEC staff noted that, while the vast majority of equity trades were cleared 

and settled within the routine five-business-day settlement cycle and clearing agencies handled potential 

member defaults well, the record trading volume and price volatility exposed the need for improvements 

in post-execution trade processing and clearing agency safeguards against member default. 30 

In response to the 1987 market break, the SEC and the clearing agencies undertook many reforms 

designed to address systemic risk and improve the national system for clearance and settlement. One of 

the most significant initiatives was shortening the standard settlement time for broker-dealer trades from 

five business days to three business days (“T+3”). 31 Shortening the settlement cycle was one of several 

measures taken by the securities industry, self-regulatory organizations(“SROs”), and the SEC to improve 

the operation of the national system for clearance and settlement and to reduce risk. The other measures 

included improving the confirmation/affirmation process for institutional trades, expanding crossmargining and guarantee arrangements among clearing agencies, and implementing same-day funds 

settlement. 32 The implementation of a T+3 settlement cycle was widely viewed as a success, and the 

national system for clearance and settlement continued to be one of the safest and most reliable in the 

world. 33

D. Regulation of CCPs for OTC Derivatives

In November 2008, the SEC, in consultation and coordination with the CFTC and FRB, took steps 

to help facilitate the development of CCPs for over-the-counter (“OTC”) derivatives. Specifically, the SEC

authorized the clearing of OTC security-based swaps by permitting five clearing agencies to clear credit 

provides CCP services for the U.S. mortgage-backed securities market. This report summarizesrecent 

changes submitted by FICC and reviewed by the SEC in Parts VI.Aand V.B. 

29 See The October 1987 Market Break, A report by the Division of Market Regulation, U.S. Securities and 

Exchange Commission (Feb. 1988).

30 Id. 

31 See Release No. 34-33023 (Oct. 6, 1993), 58 FR 52891 (Oct. 13, 1993).

32 Release No. 34-49405 (Mar. 11, 2004), 69 FR 12921, 12926 (Mar. 18, 2004).

33 Id.
6

default swaps (“CDS”) on a temporary conditional basis. 34 The temporary exemptive orders granted to 

four of these clearing agencies were subsequently extended until July 16, 2011. 35

E. Security-Based Swapsin the National System for Clearance and Settlement

In 2010, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act 

(“Dodd-Frank Act”), among other reasons, to promote the financial stability of the United States by 

improving accountability and transparency in the financial system. 36 Title VII and Title VIII of the DoddFrank Act established new requirements with respect to the national system for clearance and settlement. 

In the aftermath of the 2007–2009 financial crisis, Title VII provided the SEC and the CFTC with 

authority to regulate certain OTC derivatives. 37 Title VII was designed to increase the likelihood that, 

wherever possible and appropriate, swap and security-based swap contracts formerly traded exclusively

in the OTC market are centrally cleared. 38 

Title VII also deemed registered as a clearing agency for security-based swaps: (i) any depository 

institution that cleared swaps as a multilateral clearing organization prior to the date of enactment of the 

Dodd-Frank Act, and (ii) anyderivatives clearing organization registered with the CFTC that cleared swaps 

pursuant to an exemption from registration as a clearing agency prior to the date of enactment of the 

 

34 The SEC authorized five entities to clear CDS. SeeCDS clearing by ICE Clear Europe Limited, Release Nos. 

34-60372 (July 23, 2009), 74 FR 37748 (July 29, 2009) and 34-61973 (Apr. 23, 2010), 75 FR 22656 (Apr. 29, 

2010); CDS clearing by Eurex Clearing AG, Release Nos. 34-60373 (July 23, 2009), 74 FR 37740 (July 29, 

2009) and 34-61975 (Apr. 23, 2010), 75 FR 22641 (Apr. 29, 2010); CDS clearing by Chicago Mercantile 

Exchange Inc., Release Nos. 34-59578 (Mar. 13, 2009), 74 FR 11781 (Mar. 19, 2009), 34-61164 (Dec. 14, 

2009), 74 FR 67258 (Dec. 18, 2009) and 34-61803 (Mar. 30, 2010), 75 FR 17181 (Apr. 5, 2010); CDS 

clearing by ICE Clear Credit LLC (formerly ICE Trust US LLC), Release Nos. 34-59527 (Mar. 6, 2009), 74 FR 

10791 (Mar. 12, 2009), 34-61119 (Dec. 4, 2009), 74 FR 65554 (Dec. 10, 2009) and 34-61662 (Mar. 5, 2010), 

75 FR 11589 (Mar. 11, 2010); Temporary CDS clearing by LIFFE A&M and LCH.Clearnet Ltd., Release No. 

34-59164 (Dec. 24, 2008), 74 FR 139 (Jan. 2, 2009).

35 See Release Nos. 34-63389 (Nov. 29, 2010), 75 FR 75520 (Dec. 3, 2010) (order extending temporary 

conditional exemptions in connection with request on behalf of ICE Clear Europe, Limited); 34-63390 

(Nov. 29, 2010), 75 FR 75518 (Dec. 3, 2010), (order extending temporary conditional exemptions in 

connection with request on behalf of Eurex Clearing AG); 34-63388 (Nov. 29, 2010), 75 FR 75522 (Dec. 3, 

2010) (order extending temporary conditional exemptions in connection with request on behalf of 

Chicago Mercantile Exchange, Inc.); and 34-63387 (Nov. 29, 2010) 75 FR 75502 (Dec. 3, 2010) (order 

extending and modifying temporary exemptions in connection with request of ICE Trust US LLC). LIFFE 

A&M and LCH.Clearnet Ltd. allowed their order to lapse without seeking renewal.

36 See Pub. L. No. 111-203, H.R. 4173, Preamble.

37 Title VII provides that the CFTC will regulate “swaps,” the SEC will regulate “security-based swaps,” and 

the CFTC and the SEC will jointly regulate “mixed swaps.” SeeRelease No. 34-67286 (June 28, 2012), 77 FR 

41602, 41603 (July 13, 2012).

38 See, e.g., Report of the Senate Committee on Banking, Housing, and Urban Affairs regarding The Restoring 

American Financial Stability Act of 2010, S. Rep. No. 111-176 at 34 (stating that “[s]ome parts of the OTC 

market may not be suitable for clearing and exchange trading due to individual business needs of certain 

users. Those users should retain the ability to engage in customized, uncleared contracts while bringing in 

as much of the OTC market under the centrally cleared and exchange-traded framework as possible.”).
7

Dodd-Frank Act (“Deemed Registered Provision”). 39 The Deemed Registered Provision, along with other 

general provisions under Title VII of the Dodd-Frank Act, became effective on July 16, 2011. 40 As a result, 

three clearing agencies—ICC (formerly ICE Trust US LLC), ICEU, and Chicago Mercantile Exchange Inc. 

(“CME”), 41 which were performing CCP functions with respect to CDS in the United States, were deemed 

registered with the SEC on July 16, 2011. 42

In December 2016, the SEC subsequently granted registration to LCH in response to anapplication 

seeking registration as a clearing agency to provide CCP services for security-based swaps. 43 ICC, ICEU, 

and LCH continue to operate as clearing agencies that provide CCP services for security-based swaps.

F. Ongoing Developments and Consolidation among Clearing Agencies

Since the enactment of the 1975 Amendments, clearing agencies, broker-dealers, and technology 

services providers have significantly improved the reliability and efficiency of the national system for 

clearance and settlement. These improvements have resulted from many incremental changes to 

clearance and settlement processes over the years, as well as ongoing efforts by the clearing agencies and 

market participants to automate many of the operational processes related to the clearance and 

settlement of securities transactions. Such improvements have facilitated, for example, in 2017 further 

shortening the settlement cycle to T+2. 44

The staff observes that improvements in operations and technology, as well as the increased 

concentration of trading activity around New York City, have over time led to the consolidation of 

clearance and settlement providers, particularly for the cash equities markets, into fewer separate 

entities, such that the number of registered clearing agencies has significantly declined. In 1987, the 

Pacific Clearing Corporation transferred substantially all business to NSCC. 45 In 1992, the Pacific Securities 

Depository Trust Company ceased operations and dissolved. 46 In 1995, the Midwest Clearing Corporation 

 

39 See 15 U.S.C. 78q-1(l). Under this Deemed Registered Provision, a clearing agency will be required to 

comply with all requirements of the Exchange Act, and the rules thereunder, applicable to registered 

clearing agencies to the extent it clears security-based swaps after the effective date of the Deemed 

Registered Provision, including, for example, the obligation to file proposed rule changes under Section 

19(b) of the Exchange Act.

40 See Section 774 of the Dodd-Frank Act (stating, “[u]nless otherwise provided, the provisions of this 

subtitle shall take effect on the later of 360 days after the date of the enactment of this subtitle or, to the 

extent a provision of this subtitle requires a rulemaking, not less than 60 days after publication of the final 

rule or regulation implementing such provision of this subtitle.”).

41 CME subsequently withdrew from registration as a clearing agency in 2015. SeeRelease No. 34-76678 

(Dec. 17, 2015), 80 FR 79983 (Dec. 23, 2015).

42 Eurex Clearing AG did not meet the criteria in the Deemed Registered Provision and is not currently 

providing CCP services in the United States with respect to security-based swaps. See, e.g., Release No. 

34-64795 (July 1, 2011), 76 FR 39927, 39935 n.76 (July 7, 2011).

43 See Release No. 34-79707 (Dec. 29, 2016), 82 FR 1398 (Jan. 5, 2017).

44 Release No. 34-80295 (Mar. 22, 2017), 82 FR 15564 (Mar. 29, 2017).

45 Release No. 34-66459 (Feb. 24, 2012), 77 FR 12896 (Mar. 2, 2012).

46 Release No. 34-66460 (Feb. 24, 2012), 77 FR 12897 (Mar. 2, 2012).
8 

transferred its business to NSCC, 47 and the Midwest Securities Trust Company transferred its business to 

DTC. 48 In 1997, the Philadelphia Depository Trust Company transferred its business to DTC. 49 In 1998, the 

Participants Trust Company merged into DTC. 50 In 1999, the International Securities Clearing Corporation 

transferred its business to NSCC. 51 In 2002, the SEC approved the merger of the Government Securities 

Clearing Corporation (“GSCC”) and the Mortgage-Backed Securities Clearing Corporation (“MBSCC”), 

leading to the creation of FICC, which at the time also became a subsidiary of the Depository Trust and 

Clearing Corporation (“DTCC”). 52 Today, DTCC is the holding company for DTC, FICC, and NSCC.

Since that time, staff has observed that registered clearing agencies have made significant strides 

toward reducing risk in the clearance and settlement system by improving their risk management policies 

and procedures. The Appendix provides a summary of recent initiatives. However, as discussed in Part 

V.D, consolidation among providers of clearance and settlement services concentrates clearing activity in 

fewer providers and has increased the potential for providers to become single points of failure.

III. Regulatory Framework for Clearing Agencies

A. Exchange Act

The Exchange Act sets out the goals of and core elements of the regulatory framework for clearing

agencies. In addition to directing the SEC to facilitate the establishment of a national system for the 

prompt and accurate clearance and settlement of securities transactions, it also directs the SEC to 

facilitate linked or coordinated facilities for clearance and settlement. 53 In overseeing the national 

system, it requires that the SEC have due regard for the public interest, the protection of investors, the 

safeguarding of securities and funds, and maintenance of fair competition among brokers and dealers, 

clearing agencies, and transfer agents. 54

Clearing agencies are broadly defined in the Exchange Act, 55 though a large part of the regulatory 

framework for clearing agencies focuses on CCP and depository activity, and the SEC has historically 

applied the requirements in Section 17A of the Exchange Act to entities that perform the functions of a 

47 Release No. 34-66458 (Feb. 24, 2012), 77 FR 12896 (Mar. 2, 2012).

48 Release No. 34-66461 (Feb. 24, 2012), 77 FR 12898 (Mar. 2, 2012).

49 ReleaseNo. 34-47061 (Dec. 20, 2002), 67 FR 79172 (Dec. 27, 2002).

50 Release No. 34-40357 (Aug. 24, 1998), 63 FR 46261 (Aug. 31, 1998).

51 Release No. 34-42274 (Dec. 27, 1999), 65 FR 311 (Jan. 4, 2000).

52 See Release No. 34-47015 (Dec. 17, 2002), 67 FR 78531 (Dec. 24, 2002).

53 15 U.S.C. 78q-1(a)(2); see also Report of the Senate Committee on Banking, Housing & Urban Affairs, S. 

Rep. No. 94-75, at 4 (1975) (urging that “[t]he Committee believes the banking andsecurity industries 

must move quickly toward the establishment of a fully integrated national system for the prompt and 

accurate processing and settlement of securities transactions”).

54 15 U.S.C. 78q-1(a)(2)(A).

55 15 U.S.C. 78c(a)(23)(A). To avoid duplicative regulation, the definition also excludes a number of activities 

typically performed by other market intermediaries, including national securities exchanges and brokerdealers. See15 U.S.C. 78c(a)(23)(B).
9 

clearing agency involving U.S. securities to U.S. persons. 56 Where an entity performs the functions of a 

clearing agency, the Exchange Act requires that a clearing agency’s rules and operations meet certain 

standards. 57 For example, the SEC cannot register a clearing agency unless the clearing agency has the 

capacity to be able to facilitate the prompt and accurate clearance and settlement of securities 

transactions and to safeguard securities or funds in its custody or control. It must also assure fair 

representation of its members and participants in the selection of its directors and the administration of 

its affairs, and its rules must provide for the equitable allocation of reasonable dues and fees. 58

Following the registration process, a clearing agency is subject to supervision by the SEC and 

becomes an SRO subject to the rule filing process in the Exchange Act. Under that process, a clearing 

agency is required to file with the SEC any proposed rule or proposed change in its rules, including 

additions or deletions from its rules. 59 The SEC publishes all proposed rule changes for comment and 

reviews them. Proposed rule changes are generally required to be approved prior to going into effect; 

however, certain types of proposed rule changes take effect upon filing with the SEC. 60 The rule filing 

process provides transparency to market participants and the public about new initiatives and changes to 

governance, operations, and risk management at the clearing agency.

To ensure effective oversight of the clearing agencies, particularly with respect to financial risk 

management, SEC staff deploys a number of supervisory tools in addition to review of proposed rule 

changes for consistency with the Exchange Act. SEC staff maintains regular contact with each of the 

clearing agencies, receives risk reports and other metrics from the clearing agencieswith a high degree of 

frequency, and participates in recurring meetings with each clearing agency focused on a variety of topics 

related to risk monitoring, governance, internal audit, and other issues. In addition, since the SEC shares 

oversight responsibility for some clearing agencies with other regulatory agencies, including the CFTC, 

FRB, Bank of England, and French AMF, SEC staff also coordinates on supervisory matters with other 

regulatory agencies on a regular basis. 

The Exchange Act also provides other tools for supervision. For example, it provides the SEC with 

authority to adopt rules as necessary or appropriate in the public interest, for the protection of investors, 

or otherwise in furtherance of the purposes of the Exchange Act. 61 The primary rules relevant to clearing 

56 See Release No. 34-69872 (Jun. 27, 2013), 78 FR 40220 (Jul. 3, 2013) (“The Commission has required a 

foreign clearing agency to register or obtain an exemption from clearing agency registration if the foreign 

clearing agency provides clearance and settlement services for U.S. securities directly to U.S. persons.”).

57 See 15 U.S.C. 78q-1(b)(3)(A)–(I) (identifying nine determinations that the SEC must make regarding the 

rules and structure of a clearing agency to grant registration). In 1980, the SEC published a statement of 

the views and positions of SEC staff regarding the requirements of Section 17A. SeeRelease No. 34-16900 

(June 17, 1980), 45 FR 41920 (June 23, 1980).

58 15 U.S.C. 78q-1(b)(3)(A), (C), (D), (F).

59 An SRO must submit proposed rule changes to the SEC for review and approval pursuant to Rule 19b-4 

under the Exchange Act. A stated policy, practice, or interpretation of an SRO, such as its written policies 

and procedures, would generally be deemed to be a proposed rule change. See15 U.S.C. 78s(b)(1); 17 

CFR 240.19b-4.

60 See 15 U.S.C. 78s(b)(3)(A) (setting forth the types of proposed rule changes that take effect upon filing 

with the SEC). The SEC may temporarily suspend those rule changes within 60 days of filing and institute 

proceedings to determine whether to approve or disapprove the rule changes. 15 U.S.C. 78s(b)(3)(C).

61 15 U.S.C. 78q-1(d).
10

agencies are discussed in Parts III.C and III.D. SEC staff engage in regular examinations of registered 

clearing agencies to ensure compliance with the Exchange Act and Commission rules thereunder. The SEC

also uses its authority under the Exchange Actto initiate and conduct investigations to determine if there 

have been violations of the federal securities laws, 62 and to institute civil actions seeking injunctive and 

other equitable remedies and/or administrative proceedings arising out of such investigations. 63

B. Dodd-Frank Act

Title VII of the Dodd-Frank Act added provisions to the Exchange Act that require clearing agencies 

for security-based swaps to register with the SEC and that direct the SEC to adopt rules for such securitybased swap clearing agencies. 64 Under these provisions, the Commission has authority over the clearing 

of single-name CDS, which are products that have unique characteristics affecting risk mitigation efforts 

by clearing agencies and market participants. 65 During the 2007–2009 financial crisis, the SEC had 

undertaken several measures in coordination with the CFTC and the FRB to improve transparency in the 

market for OTC credit derivatives, 66 and these efforts resulted in the establishment of CCPs for credit 

derivatives. Since the adoption of Title VII, the staffs from the SEC, CFTC, and FRB continue to work in 

close coordination to oversee clearance and settlement providers for security-based swaps, many of 

which are registered to provider clearing services with multiple regulators.

Title VIII of the Dodd-Frank Act, which enacts the Payment, Clearing, and Settlement Supervision 

Act of 2010 (“Clearing Supervision Act”), separately provides for the enhanced regulation of clearing 

agencies that are systemically important financial market utilities (“SIFMUs”). 67 Pursuant to the Clearing 

 

62 15 U.S.C. 78u(a).

63 15 U.S.C. 78s(h).

64 15 U.S.C. 78q-1(i), (j); Dodd-Frank Act, Sec. 763(b), 124 Stat. at 1768–69 (adding paragraphs (i) and (j) to 

Section 17A of the ExchangeAct).

65 For example, single-name CDS is characterized by jump-to-default risk and nonlinear payoffs. SeeCCA 

Standards adopting release, supra note 9, at 70854–55.

66 See SEC Chairman Cox Statement on MOU With Federal Reserve, CFTC to Address Credit Default Swaps,

https://www.sec.gov/news/press/2008/2008-269.htm

67 The definition of “financial market utility” (FMU) in Section 803(6) of the Clearing Supervision Act contains 

a number of exclusions that include, but are not limited to, certain designated contract markets, 

registered futures associations, swap data repositories, swap execution facilities, national securities 

exchanges, national securities associations, alternative trading systems, security-based swap data 

repositories, security-based swap execution facilities, brokers, dealers, transfer agents, investment 

companies, and futures commission merchants. 12 U.S.C. 5462(6)(B). 

The Clearing Supervision Act provides that the objectives and principles for the risk management 

standards prescribed under the Clearing Supervision Act shall be to (i) promote robust risk management; 

(ii) promote safety and soundness; (iii) reduce systemic risks; and (iv) support the stability of the broader 

financial system. In addition, the Clearing Supervision Act states that the standards may address areas 

such as risk management policies and procedures; margin and collateral requirements; participant or 

counterparty default policies and procedures; the ability to complete timely clearing and settlement of 

financial transactions; capital and financial resources requirements for designated FMUs; and other areas 

that are necessary to achieve the objectives and principles described above. 12 U.S.C. 5464(b), (c). 
11

Supervision Act, the FSOC has designated as systemically important 68 several clearing agenciesfor which 

the SEC is the supervisory agency. 69 Designated SIFMUs are required to file 60-days advance notice of 

changes to rules, procedures, and operations that could materially affect the nature or level of risk 

presented by the SIFMU (“advance notice”). 70 The Clearing Supervision Act authorizes the SEC to object 

to changes proposed in such an advance notice, which would prevent the clearing agency from 

implementing the change. 71 The Clearing Supervision Act also provides for information sharing between 

the SEC and FRB regarding designated SIFMUs, as well as annual on-site examinations of those SIFMUs

conducted by the SEC in which the FRB may also participate. 72 The Clearing Supervision Act further 

provides that the SEC and CFTC shall coordinate with the FRB to jointly develop risk management 

supervision programs for SIFMUs. 73 In addition, the Clearing Supervision Act provides that the SEC and 

CFTC may each prescribe risk management standards governing the operations related to payment, 

clearing, and settlement activities of SIFMUs for which each is the supervisory agency. In prescribing 

such standards, it directs the SEC and CFTC to do so in consultation with the FSOC and FRB and to take

into consideration relevant international standards and existing prudential requirements. 74

C. Rule 17Ad-22

In 2012, the SEC adopted Rule 17Ad-22 to strengthen its regulatory framework for clearing 

agencies with respect to governance, operations, and risk management. 75 The rule includes general 

requirements for clearing agencies as well as specific requirements for CCPs. 76 The SEC expanded Rule 

 

68 See 12 U.S.C. 5463. An FMU is systemically important if the failure of or a disruption to the functioning of 

such FMU could create or increase the risk of significant liquidity or credit problems spreading among 

financial institutions or markets and thereby threaten the stability of the U.S. financial system. See12 

U.S.C. 5462(9). 

69 Section 803(8) of the Clearing Supervision Act defines the term “supervisory agency” in reference to the 

primary regulatory agency for an FMU. For example, it provides that the Commission is the supervisory 

agency for any FMU that is a registered clearing agency. See12 U.S.C. 5462(8). To the extent that an entity 

is both a clearing agency registered with the Commission and registered with another agency, such as a 

designated clearing organization registered with the CFTC, the statute requires the two agencies to agree 

on one agency to act as the supervisory agency, and if the agencies cannot agree on which agency has 

primary jurisdiction, the FSOC shall decide which agency is the supervisory agency for purposes of the 

Clearing Supervision Act. See12 U.S.C. 5462(8).

70 12 U.S.C. 5465(e)(1)(A); 17 CFR 240.19b-4(n). The SEC published a final rule concerning the filing of 

advance notices for designated clearing agencies in 2012. SeeRelease No. 34-67286 (June 28, 2012), 77 

FR 41602 (July 13, 2012); see also 17 CFR 240.17Ad-22(a)(8) (defining “designated clearing agency”).

71 12 U.S.C. 5465(e).

72 12 U.S.C. 5466.

73 See 12 U.S.C. 5472; see alsoRisk Management Supervision of Designated Clearing Entities (July 2011), 

https://www.federalreserve.gov/publications/other-reports/files/risk-management-supervision-report201107.pdf (describing the joint supervisory framework of the SEC, CFTC, and FRB) (“Risk Management 

Supervision Report”).

74 See 12 U.S.C. 5464(a)(2). The SEC notes that, under Rule 17Ad-22(a)(8), a SIFMU for which the SEC is the 

supervisory agency is a “designated clearing agency.” See17 CFR 240.17Ad-22(a)(8).

75 See CA Standards adopting release, supra note7, at 66225–26; see also17 CFR 240.17Ad-22.

76 See 17 CFR 240.17Ad-22(b), (d).
12

17Ad-22 to establish enhanced requirements for SIFMUs and security-based swap clearing agencies in 

2016. 77 Rule 17Ad-22(e) built on the existing framework by establishing new requirements for such 

clearing agencies, which it refers to as “covered clearing agencies.” In April 2020, the Commission 

expanded the scope of covered clearing agencies to include all CCPs and CSDs registered with the 

Commission. 78

Rule 17Ad-22(e) requires a covered clearing agency to establish, implement, maintain, and 

enforce written policies and procedures reasonably designed to address the following topics concerning 

its operation and governance:

• general organization (including legal basis, governance, a framework for the comprehensive

management of risks, and recovery planning);

• financial risk management (including credit risk, collateral, margin, and liquidity risk);

• settlement (including settlement finality, money settlements, and physical deliveries);

• central securities depositories (“CSDs”) and exchange-of-value settlement systems;

• default management (including default rules and procedures and segregation and portability);

• business and operational risk management (including general business risk, custody and

investment risks, and operational risk);

• access (including access and participation requirements, tiered participation arrangements, and

links);

• efficiency (including efficiency and effectiveness and communication procedures and standards);

and

• transparency.

In the staff’s view, the financial risk management requirements represent areas of particular focus under

the SEC’s supervisory framework following the 2007–2009 financial crisis. SEC staff believes it is critical 

for clearing agencies to mitigate counterparty credit risk—the potential that a clearing participant, 

settlement bank, or custodian will default on an obligation to the clearing agency. 79 Equally critical, a CCP

needs to mitigate liquidity risk—the potential that a clearing participant or settlement bank will not be 

able to make a payment when due (even if it may be able to pay at some future time) and the clearing 

agency will therefore face a funding shortfall. In SEC staff’s view, maintaining high standards for the 

collateral that a clearing agency will accept by using tools such as haircuts and concentration limits, in 

conjunction with an effective margin system, are important mechanisms for managing these and other 

risks.

77 See CCA Standards adopting release, supra note 9. 

78 See CCA Definition adopting release, supra note 9. 

79 For a derivatives CCP, counterparty credit risk generally arises from the potential that a participant will 

not meet its margin or settlement obligations or pay any other amounts owed to the CCP.
13

More broadly, the different elements of Rule 17Ad-22—beyond the financial risk management 

requirements in Rule 17Ad-22(e)—help ensure that the SEC can efficiently regulate clearing agencies 

depending on the specific activity and risks that each clearing agency poses to the U.S. markets. 80

D. Regulation SCI

In 2014, the SEC adopted Regulation SCI to strengthen the technology infrastructure behind the

U.S. securities markets by reducing the occurrence of systems issues, improving resiliency when systems 

problems do occur, and enhancing the SEC’s oversight of the technology systems that support market

infrastructure like clearing agencies. 81 Since its adoption, the SEC has established a monitoring and 

examination programto oversee compliance with Regulation SCI, as discussed further in Part IV.B.

Regulation SCI applies to registered clearing agencies, 82 as well as exempt clearing agencies that 

provide matching services. 83 The technology systems that underpin clearing agency operations are critical 

systems that drive the global financial markets, and Regulation SCI promotes a number of objectives 

intending to ensure that these systems are resilient and reliable. Such systems include those that set and 

calculate margin obligations and other charges, perform netting and calculate payment obligations, 

facilitate the movement of funds and securities, or effectuate end-of-day settlement. Critical SCI systems 

like these are held to heightened requirements, 84 including requirements for a two-hour recovery time 

objective following a wide-scale disruption and broader dissemination of major SCI events. 85 In addition, 

under Regulation SCI, for clearance and settlement systems to return to “normal operations” following a 

systems disruption, they must take all steps necessary to effectuate timely and accurate end-of-day 

settlement. 86

IV. Overview of the SEC’s Examinations Program

The Office of Compliance Inspections and Examinations (“OCIE”) is responsible for conducting 

examinations of registered clearing agencies. OCIE’s Office of Clearance and Settlement (OCIE-OCS) and 

its Technology Controls Program (OCIE-TCP) conduct these examinations and work in coordination with 

one another to ensure that the programs perform examinations in an effective, efficient, and consistent 

manner.

A. OCIE-OCS

OCIE-OCS conducts risk-based examinations focused on registered clearing agencies’ compliance 

with the standards set forth in Section 17A of the Exchange Act, the applicable rules thereunder, and the 

 

80 CCA Standards adopting release, supra note 9, at 70793.

81 See Regulation SCI adopting release, supra note 8.

82 See 17 CFR 242.1000 (providing the definition of “SCI SROs”). 

83 See id. The exempt clearing agencies that provide matching services are DTCC ITP, Bloomberg STP LLC 

(“BSTP”), and SS&C Technologies, Inc. (“SS&C”). SeeRelease Nos. 34-44188 (Apr. 17, 2001), 66 FR 20494 

(Apr. 23, 2001) (granting an exemption to provide matching services to Global Joint Venture Matching 

Services US LLC, now known as DTCC ITP); 34-76514 (Nov. 25, 2015), 80 FR 75387 (Dec. 1, 2015) (granting 

an exemption to provide matching services to each of BSTP and SS&C).

84 17 CFR 242.1000 (providing definitions of “SCI systems” and “critical SCI systems”).

85 17 CFR 242.1001(a)(2)(v); 17 CFR 242.1002(c)(3).

86 See id. at 72285 n.395. 
14

clearing agencies’ responsibilities as SROs, as described previously in Part III. It also examines exempt 

clearing agencies, described in Part III.A, to assess whether they are following the conditions of their 

exemptions and any other applicable SEC rules. 87

OCIE-OCS conducts a rigorous biannual risk assessment to develop its examination plan, which 

leverages information from resources across the SEC, other federal agencies, and the clearing agencies. 

Staff applies the results of its risk assessment process to determine which clearing agencies to examine 

and which aspects of those clearing agencies’ operations to focus on during each examination. Programs 

and areas of review often include, but are not limited to, core risk management areas such as margin 

systems, liquidity, default management, operations, and governance. OCIE-OCS may also initiate 

examinations of clearing agencies during the year based on tips, complaints, referrals, and emerging risk 

areas.

OCIE-OCS’s perennial primary objective is satisfying the requirement in Section 807 of the DoddFrank Act that the SEC conduct, at least once annually, examinations of all clearing agencies that are 

designated as SIFMUs and for which the SEC is the supervisory agency. 88 These examinations must assess, 

among other things: 

• the nature of the operations of, and the risks borne by, each SIFMU;

• the financial and operational risks borne and presented by each SIFMU to financial institutions,

critical markets, and the financial system;

• the resources and capabilities of each SIFMU to monitor and control such risks;

• the safety and soundness of each SIFMU; and

• each SIFMU’s compliance with the Exchange Act, the Clearing Supervision Act, and the rules and

regulations promulgated thereunder.

OCIE fulfills this annual exam requirement by completing at least one risk-based exam of each

SIFMU, which covers one or more of its core risk areas and related processes, and whether the SIMFU has 

remediated prior deficiencies. OCIE-OCS assesses each of the five requirements outlined above in its 

exams of such core risks, processes, and prior observations. OCIE-OCS staff must consult with the FRB on 

the scope and methodology of all exams of SIFMUs for which the SEC is the supervisory agency conducted 

pursuant to the Clearing Supervision Act, 89 and invites FRB staff to participate in all of these exams. Areas 

of examinationfocus for OCIE-OCS include:

• Liquidity and Credit Risk Management. Registered clearing agencies serving as CCPs play a critical 

role in reducing systemic risk in the U.S markets given their role as counterparty to all of their

members and in ensuring market stability during normal and stressed market conditions. As a

result, OCIE-OCS examines whether clearing agencies are effectively measuring, monitoring, and

managing liquidity risks arising in and borne by them. Related, and equally important, OCIE-OCS

has examined whether clearing agencies have robust margin systems to manage both the credit

87 In addition to the three exempt clearing agencies that provide matching services and are subject to 

Regulation SCI, OCIE-OCS also examines Euroclear Bank SA/NV pursuant to the Commission’s exemptive 

order. SeeRelease No. 34-79577 (Dec. 16, 2016), 81 FR 93994 (Dec. 22, 2016).

88 12 U.S.C. 5466; see alsosupra Part III.B(discussing the requirements under the Clearing Supervision Act).

89 The SIFMUs for which the SEC is the supervisory agency are DTC, FICC, NSCC, and OCC.
15

exposures to their members and the credit risks arising from their clearance and settlement 

activities. 

• Default Management and Interconnectedness Risk. Beyond collecting sufficient financial

resources to avoid a member default, default management is another critical line of defense for

clearing agencies. As such, OCIE-OCS also examineswhether clearing agencies have the authority 

and operational capacity to contain losses and manage liquidity demands if one or more of their

members were to default and expose the entirety of their membership to material risk of loss.

Areas of focus also include evaluating whether clearing agencies have createdcontingency plans

to complete payment, clearing, and settlement processes if business disruptions were to occur.

Given the interconnectedness of today’s market participants, OCIE-OCS also examines the extent

to which clearing agencies consider in their default scenarios the ripple effect caused by a default

of one or more large interconnected entities.

• Regulatory Risk. With the advent of and significant push towards central clearing, credit, liquidity,

and operational risks continue to concentrate within registered clearing agencies. Registered

clearing agencies mitigate these risks by complying with the standards in Rule 17Ad-22 and other

relevant provisions of the Exchange Act, which set forth a roadmap to identify and mitigate the

primary risks arising in and borne by clearing agencies. In addition to the core risk management

areas, some of which are highlighted above, OCIE-OCS also examines the clearing agencies’

governance structure and reporting, as well as internal audit and legal functions, to assess

compliance with these standards.

B. OCIE-TCP

OCIE-TCP provides examination oversight of SCI entities, which include all registered clearing

agencies as well as certain exempt clearing agencies (together “SCI clearing agencies”). OCIE-TCP has 

conducted examinations for compliance with Regulation SCI since the rule’s November 2015 general 

compliance date. 

In determining the scope for each exam, OCIE-TCP uses a risk-based approach and considers a 

number of factors including, for example, identified examination priorities and risks, prior TCP 

examinations, reported SCI events, and system and staffing changes at the registrant over the prior twelve

months. OCIE-TCP also performs examinations when circumstances warrant immediate attention, such as 

responding to a major SCI event or addressing a referral received from the SEC’s Tips, Complaints, and 

Referrals system. 

In its examinations, TCP evaluates SCI clearing agencies for compliance with the requirements of 

Regulation SCI, including:

• Whether they have established written policies and procedures reasonably designed to ensure

that their systems have levels of capacity, integrity, resiliency, availability, and security to

maintain their operational capability and promote the maintenance of fair and orderly markets

and that they operate in a manner that complies with the Exchange Act;

• Whether they are fulfilling the rule’s notification and dissemination obligations in connection to

the occurrence of SCI events;

• Whether they are fulfilling requirements related to business continuity and disaster recovery

plans testing; and

• Whether they are adhering to the recordkeeping obligations established by rule.
16

Regulation SCI examinations of SIFMUs often also cover one or more of the five areas required 

for the annual examinations discussed above. 

OCIE-TCP routinely selects specific technical areas in which to focus its examinations. For 

example, OCIE-TCP has assessed SCI clearing agencies’ policies and procedures related to security 

operations, including areas of governance and risk management, operational capabilities, and monitoring. 

TCP has also examined SCI clearing agencies to determine whether they are enforcing their vulnerability 

and patch management policies and procedures as well as to assess the reasonableness of these policies 

and procedures. OCIE-TCP has additionally focused on whether the Business Continuity Disaster Recovery 

(“BCDR”) plans of clearing agencies include maintaining backup and recovery capabilities that are 

sufficiently resilient, geographically diverse, and reasonably designed to achieve the recovery time 

objectives established in Regulation SCI. OCIE-TCP has also reviewed whether these entities are fulfilling 

the BCDR plan testing requirements.

In recent years, OCIE-TCP has annually provided clearing agencies and certain other registrants an 

overview of select common examination deficiencies identified during examinations during the prior fiscal 

year. OCIE-TCP does this to raise awareness of issues that it has observed so that all SCI entities can 

consider whether those areas warrant focus within their organizations. The issues are included because 

of their potential impact to SCI entities and the frequency with which they have been observed to 

occur. Among the topics addressed in these letters are systems development and life cyclemanagement, 

third party vendor risk and vendor management, business continuity and disaster recovery planning, IT 

governance, IT asset management, access controls, and vulnerability management. In addition, OCIE-TCP 

has addressed recordkeeping obligations and notifications that are required to be made to the SEC of SCI 

events.

C. Examination Process

As mentioned above, OCIE’s examinations of registered and exempt clearing agencies, as all of 

the examinations it conducts, are risk-based. The scope of an exam is determined by an extensive process 

that takes into account a multitude of factors, including past examination observations and discussions 

with other SEC divisions and offices. In addition, throughout the examination process, OCIE may consult 

and coordinate with other SEC staff, including staff in the Division of Trading and Markets. 

Examinations may be conducted on an announced or unannounced basis. When the examination 

is announced, OCIE sends a letter to the clearing agency notifying it of the examination and containing a 

request list that identifies certain information or documents that OCIE will review as part of the 

examination. During the course of the examination, OCIE typically visits the physical premises of the 

clearing agency to conduct examination work. During this time, OCIE conducts interviews of employees, 

managers, and, in some instances, senior managers and executives. OCIE may also tour the clearing 

agency’s offices to gain an overall understanding of its organization, operations, and control environment. 

During or after the on-site visit, the examination team will notify the clearing agency of issues or 

concerns identified during the examination to that point. During these meetings, the clearing agency will 

be given an opportunity to discuss any of the issues or concerns identified during the examination and to 

provide additional relevant information, remedial or otherwise. 

The examination staff communicates any deficiencies to the clearing agency through an exit 

interview and then by issuing a deficiency letter summarizing potential deficiencies and material 

weaknesses. The examination staff requests that the clearing agencies respond in writing, describing how 

they will remediate the identified issues. Examination staff conducts follow-up examinations to evaluate 

the adequacy and timeliness of the clearing agencies’ corrective actions. Examination staff may also refer 

to the Division of Enforcement deficiencies that it observes during an examination of a clearing agency.
17

D. Coordination with FRB

OCIE consults annually with FRB regarding the scope and methodology of the examinations 

conducted under the Clearing Supervision Act. 90 During these discussions, SEC and FRB staffs share their 

current examination priorities for each SIFMU.

Additionally, FRB may participate in SIFMU examinations that the SEC conducts pursuant to the 

Clearing Supervision Act. 91 Since passage of the Clearing Supervision Act, FRB has participated in nearly 

every examination conducted by OCIE pursuant to the Clearing Supervision Act, during which FRB staff 

received examination documentation, participated in interviews of SIFMU personnel, and shared its 

observations with OCIE.

E. Examination Priorities for 2020

On January 7, 2020, OCIE published its annual examination priorities, including its priorities with 

respect to clearing agencies, marking the eighth year of publication. Although from year to year OCIE 

focuses on different aspects of clearing agency operations, during fiscal years 2019 and 2020, OCIE-OCS 

examinations have covered: (1) compliance with Exchange Act Rule 17Ad-22 and other federal securities 

laws applicable to registered clearing agencies; (2) whether clearing agencies have taken timely corrective 

action in response to prior examinations; and (3) other areas identified in collaboration with the SEC’s

Division of Trading and Markets, as well as with other regulators. 

OCIE-TCP priorities remain consistent in evaluating whether SCI entities have established, 

maintained, and enforced written SCI policies and procedures. Areas of focus in fiscal year 2020 include 

IT inventory management, IT governance, incident response, and third party vendor management, 

including the utilization of cloud services. 

V. Trends and Other Developments

Below is a non-exhaustive description of certain trendsthat, in SEC staff’s view, signal emergent 

risks or are likely to have a significant effect on both the national system for clearance and settlement and 

the global financial markets. SEC staff believes that they warrant continued discussion among the 

regulatory community and the private sector, and SEC staff intends to use this report to facilitate such 

discussion, mindful that the efforts and role of the clearing agencies are not static relative to these and 

other, broader trends prevalent acrossthe global financial markets.

A. HeightenedRegulatory Coordination and Focus on CCPs across Markets

Following the 2007–2009 financial crisis, the Group of Twenty (“G20”) leaders expressed their 

view that all standardized OTC derivative contractsshould be cleared through CCPs. 92 SEC staff is a key 

contributor in this ongoing dialogue and works collaborativelyon a bilateral basis withdomestic regulators

and regulators from other jurisdictions to pursue common policy goals and objectives. Furthermore, the 

Clearing Supervision Act requires that the SEC, when developing rules for SIFMUs, take into account 

international standards and consult with the FRB and CFTC. Such bilateral engagement with other 

domestic regulators can help mitigate the potential for redundant regulation for clearing agencies and 

help ensure that regulations are targeted to appropriate outcomes. Staff also participatesin multilateral 

 

90 See Section 807 of the Dodd-Frank Act.

91 See id. 

92 Leaders’ Statement at the Pittsburgh Summit (Sept. 24–25, 2009), https://www.treasury.gov/resourcecenter/international/g7-g20/Documents/pittsburgh_summit_leaders_statement_250909.pdf.
18

initiatives through the International Organization of Securities Commissions, the Committee on Payments 

and Market Infrastructures, and the Financial Stability Board(“FSB”). 

A number of recent market events, including market volatility experienced in response to the 

COVID-19 pandemic, highlightthe benefits that can result from improved coordination. For example, the 

default in 2018 of a clearing member at Nasdaq Clearing, a European CCP providing clearance and 

settlement services, provided staff with an opportunity to compare margin requirements, default fund 

structures, and auction processes at U.S. clearing agencies against a real-word fact pattern, enabling SEC

staff to consider and evaluate how such an event in the United States might impact an SEC-regulated 

CCP. 93 Coordination on both a bilateral basis and in multilateral forums can facilitate information sharing 

that enables or improves the quality of such internal analyses. 

Similarly, the various Brexit scenarios, the COVID-19 pandemic, and other events characterized by 

the potential for significant pricemovements have provided a similar opportunity for staff to compare risk 

models and risk management procedures used by U.S. clearing agencies with those of CCPs serving other 

markets. In SEC staff’s view, large price movements that occurred in cleared asset classes during the 

COVID-19 pandemic will necessarily become part of a CCP’s historical stress scenarios going forward and, 

in so doing, inform future assessments of the resiliency of a CCP’s financial resources. 94 In addition, SEC

staff is working with FRB and CFTC staff to develop a framework for conducting supervisory stress tests 

that would pool knowledge and data from among the different CCP regulators.

B. Monitoring of and Response to the COVID-19 Pandemic

The COVID-19 pandemic resulted in increased market volatility and required clearing agencies to

activate business continuity plans under which large percentages of employees have been working 

remotely. While clearing agencies seem to have responded well to the initial effects of COVID-19 in the 

United States, 95 they will need to continue monitoring events and market dynamics to ensure that they 

are well prepared in terms of operation and financial risk management.

SEC staff began monitoring the clearing agencies’ pandemic preparations in February 2020, and 

staff increased its touch points with the clearing agencies to include daily reporting and daily 

93 More recently, during the COVID-19 pandemic, FICC ceased to act for one of its clearing members and 

subsequently liquidated the member’s positions. SeeDTCC, Important Notice, Mar. 20, 2020, 

https://www.dtcc.com/-/media/Files/pdf/2020/3/20/GOV857-20.pdf; see alsoCostas Mourselas, ABN 

Winds Down Ronin Books After Vix Losses, Risk.net, Mar. 26, 2020, https://www.risk.net/riskmanagement/7513566/abn-winds-down-ronin-books-after-vix-losses. Although FICC did not allocate 

losses to other members to liquidate the positions, the event provided staff with an opportunity to 

evaluate the effectiveness of margin requirements and closeout procedures under a real-world fact 

pattern.

94 In the staff’s view, such historical scenarios would include the effects of fiscal and monetary policy actions 

(e.g., changes in interest rates, the creation or expansion of available lending programs, asset purchases 

or sales, and stimulus measures) that took place during this time, as these may also impact CCP risk 

management, including margin requirements and requirements for prefunded financial resources. While 

some CCPs already maintained stress scenarios based on historical pandemic events, the market shocks 

associated with those scenarios have been well below the market movements experienced during the 

COVID-19 pandemic.

95 CCP12, CCPs Again Demonstrate Strong Resilience in Times of Crisis (July 1, 2020), https://ccp12.org/wpcontent/uploads/2020/07/CCPs_again_demonstrate_strong_resilience_in_times_of_crisis.pdf. 
19

communication with senior management on issues related to COVID-19. SEC staff observed a rise in CCP 

margin requirements beginning in late February that peaked in mid-March. During peak volatility in 

March, CCP participants generally satisfied intraday margin calls and settlement obligations, and the CCPs 

did not report credit deterioration among their clearing participants. While margin requirements remain 

elevated, as markets stabilized following March peaks those requirements have decreased significantly. 

Nevertheless, this experience has raised concerns regarding the possible pro-cyclical impact of CCP margin 

practices. 96

As noted in Part V.A, one U.S. clearing agency ceased to act for a clearing member in March and 

subsequently liquidated that member’s positions without allocating any losses to other members. 97 Staff 

continues to engage in heightened monitoring of CCP risk management and, as previously noted, SEC staff 

expects that the large price movements in cleared asset classes during the COVID-19 pandemic will 

necessarily become part of a CCP’s historical stress scenarios going forward. 98 In addition, DTC suspended 

all physical securities processing services for approximately six weeks to minimize the risk of transmission 

of COVID-19 among its employees, who would otherwise be on site at DTC’s vault that holds physical 

securities on deposit. 99 While this service disruption did not affect the electronic book-entry settlement 

of securities transactions, DTC instituted alternative methods of handling certain transactions, such as the 

use of letters of possession and an emergency rider in connection with underwriting new securities 

issues. 100

C. Renewed Focus on the Clearing Infrastructure for U.S. Treasury Securities

The secondary market for U.S. Treasury securities has undergone significant structural changes in

recent years as advances in technology, particularly the increased availability of electronic and automated 

trading tools, have increased access to the market for U.S. Treasury securities by a new and growing set 

of market participants. In 2018, the Treasury Market Practices Group (“TMPG”), a group of market 

professionals committed to supporting the integrity and efficiency of the Treasury, agency debt, and 

agency mortgage-backed securities markets, published a white paper on clearance and settlement in the 

secondary market for U.S. Treasury securities. 101 The TMPG white paper follows a 2015 joint staff report 

by the staffs of the Treasury Department, FRB, SEC, CFTC, and Federal Reserve Bank of New York, which 

96 See, e.g., Bank for International Settlements, BIS Bulletin No. 13: The CCP-Bank Nexus in the Time of Covid19 (May 11, 2020), https://www.bis.org/publ/bisbull13.pdf. 

97 See supra note 93 and accompanying text. 

98 See supra note 94 and accompanying text. 

99 See, e.g., DTCC, Important Notice, May 14, 2020, https://www.dtcc.com/-

/media/Files/pdf/2020/5/14/13402-20.pdf; DTCC, Important Notice, Apr. 8, 2020, 

https://www.dtcc.com/-/media/Files/pdf/2020/4/8/13276-20.pdf. 

100 See, e.g., DTCC, Important Notice, Mar. 12, 2020, https://www.dtcc.com/-

/media/Files/pdf/2020/3/13/13099-20.pdf. 

101 White Paper on Clearing and Settlement in the Secondary Market for U.S. Treasury Securities, TMPG 

Consultative Paper (July 2018), https://www.newyorkfed.org/medialibrary/Microsites/tmpg/files/CSDraftPaper-071218.pdf (“TMPG white paper”). 
20

analyzedthe uncharacteristic volatility that occurred in the U.S. Treasury market on October 15, 2014.102 

The joint staff report found that principaltrading firms account for the majority of trading in U.S. Treasury 

securities, providing the vast majority of market depth, and questioned whether trades cleared by such 

firms outside of a CCP are subject to the same level of risk mitigation. 103 

Building on the joint staff report, the TMPG white paper maps the current structure of clearance 

and settlement for U.S. Treasury securities and highlights the lack of common understanding among 

market participants regarding the risk management implications of these structural changes, particularly 

the difference in counterparty risk that exists when a transaction is cleared centrally versus bilaterally.104 

The TMPG white paper explains how principal trading firms—those that typically use high speed and other 

algorithmic trading strategies—primarily clear their transactions bilaterally. 105 The TMPG white paper 

notes that “a majority of trades in the secondary Treasury market now clear bilaterally, a trend that is 

contrary to the direction of recent regulatory requirements in other markets.” 106 In recognition of the 

potential risk management implications of the different mechanisms for clearance and settlement in the 

market for U.S. Treasury securities, the TMPG followed the white paper in 2019 with a summary of best 

practices for clearance and settlement, emphasizing for market participants the importance of 

understanding the level of counterparty risk each faces during clearance and settlement. 107

Following the TMPG white paper, DTCC also published a white paper exploring the risk and 

resiliency issues raised by bilateral clearing for U.S. Treasury securities and describing recent initiatives by 

FICC to promote growth in central clearing. 108 In its white paper, DTCC describes the different types of 

risks that apply to bilateral clearing of U.S. Treasury securities, including: intraday and overnight 

counterparty credit risk; the potential for variation in risk mitigation techniques among bilateral 

counterparties, including with respect to margin collection, loss sharing arrangements, and balance 

requirements; the use of uncommitted arrangements to fund balances; and the reduced ability to net 

down or offset transactions. 109 DTCC also describes two programs at FICC intended to promote access to 

central clearing: (i) the Sponsored Membership Program, and (ii) the Centrally Cleared Institutional 

Triparty (“CCIT”) service. 110 Following SEC review and approval of the Sponsored Membership Program, 

FICC expanded the range of firms that could participate in and the types of trades eligible for the program 

102 Joint Staff Report: The U.S. Treasury Market on October 15, 2014 (July 2015), 

https://www.treasury.gov/press-center/press-releases/Documents/Joint_Staff_Report_Treasury_10-15-

2015.pdf(“joint staff report”).

103 Joint staff report, supra note 102, at 6.

104 TMPG white paper, supra note 101, at 1.

105 Id. at 1, 10.

106 Id. at 2. 

107 Best Practices for Treasury, Agency Debt, and Agency Mortgage-Backed Securities Markets (July 2019), 

https://www.newyorkfed.org/medialibrary/Microsites/tmpg/files/TMPG_BestPractices_071119.pdf. 

108 Central Clearing in the U.S. Treasury Cash Market: Risk Mitigation Benefits and Initiatives for Promoting 

Further Adoption (May 2019), http://www.dtcc.com/~/media/Files/Downloads/WhitePapers/FICCCentral-Clearing-WP-Treasury-Market(“DTCC white paper”).

109 DTCC white paper, supra note 108, at 2.

110 Id. at 5–6; see alsoinfra notes 142–144and accompanying text.
21

in 2017 and 2019, providing institutional investors with increased access to central clearing. 111 In 2017, 

FICC also expanded its GCF Repo Service to create the CCIT, which provides CCP services to transactions 

between its netting members and eligible institutional moneylenders. 112

The Commission has previously noted that central clearing generally benefits the markets in which 

it is available, but clearing agencies can pose risk to the financial system as a whole, due in part to the fact 

that central clearing concentrates risk among the participants in the clearing agency. 113 Consequently, 

increased central clearing—or, for example, a move from voluntary clearing to mandatory clearing, 

holding the volume of transactions constant—would increase economic exposures against the clearing 

agency, and increased exposures raise the possibility that clearing agencies may serve as a transmission 

mechanism for systemic events. In SEC staff’s view, proper risk management can help to mitigate these 

effects, and expanding access to central clearing to more market participants using existing CCPs can be 

a tool for promoting financial stability. The staff notes that it is important to balance the potential benefits 

of central clearing against the potential resulting changes in market structure and concentration of risk 

that may result as more market participants gain access to the CCP. In SEC staff’s view, further 

coordination might be useful among domestic regulators to consider what tools might be appropriate 

mechanisms for improving risk mitigation in the bilateral market for U.S. Treasury securities.

D. Consolidation among Clearance and Settlement Providers and the Risks Associated with

Single Points of Failure

Consolidation among market participants has continued in recent years, resulting in the increased 

concentration of clearance and settlement activity among a smaller set of firms. For example, in the 

secondary market for U.S. Treasury securities, one U.S. commercial bank offers settlement services to 

broker-dealers, down from half a dozen providers in recent decades. 114 Similarly, over ninety percent of 

the total notional amount of the U.S. market in credit derivatives is concentrated in four U.S. commercial 

banks. 115 In response to this trend, some market participants have stated that measures by CCPs to 

enhance their financial resources and meet the requirements of Rule 17Ad-22 have reduced direct access 

to the clearance and settlement infrastructure by small and medium-sized banks and broker-dealers. 116 

The CCPs for security-based swaps have undertaken initiatives to expand access to central 

clearing. For example, prior to its registration as a clearing agency, LCH designed and began offering a 

new membership tier to institutions that met existing membership criteria but chose not to be direct 

clearing members because of the price contribution and auction-bidding obligations required of all such 

111 DTCC white paper, supra note 108, at 5; see also infra note143and accompanying text.

112 DTCC white paper, supra note 108, at 6; see also infra note 144and accompanying text.

113 CCA Standards adopting release, supra note 9, at 70849.

114 Katy Burne, BNY Government Securities Unit Formed to Settle Treasury Trades, Wall Street Journal, May 

31 2017, https://www.wsj.com/articles/bny-government-securities-unit-formed-to-settle-treasury-trades1496234700. 

115 See Office of the Comptrollerof the Currency, Quarterly Report on Bank Trading and Derivatives 

Activities, Third Quarter 2019, graph 4 (Dec. 2019), https://www.occ.gov/publications-andresources/publications/quarterly-report-on-bank-trading-and-derivatives-activities/files/pub-derivativesquarterly-qtr3-2019.pdf. 

116 See, e.g., CCLF Order, infra note 141, at 55432–33 & n.102.
22

members. 117 Similarly, in the market for U.S. Treasury securities, FICC has introduced initiatives designed 

to improve access to central clearing, as discussed in Part V.B. 118

In the staff’s view, concerns about consolidation among clearing members and concerns about 

reduced access to central clearing highlight the complex balancing of benefits and costs that come with 

the provision of central clearing. As the Commission has previously explained, CCPs can promote lower 

transaction costs relative to bilateral clearing because CCPs provide a centralized risk management 

function that promotes a more efficient allocation of risk among market participants. 119 The Commission 

has also noted, however, that incentives for sound risk management at the CCP may be tempered by 

pressures to reduce the CCP’s costs and maximize profits. 120 In this regard, the Commission has explained 

that CCPs necessarily make decisions that result in tradeoffs between the costs and benefits of risk 

management, and that those decisions are not always socially efficient because the decision-making 

process may not fully reflect the costs and benefits that accrue to other financial market participants.121 

The Commission has further explained that, even if the clearing agency does internalize the costs that it 

imposes on its own participants, it may still fail to internalize the consequences of its risk management 

decisions on other financial market participants who have relationships with clearing members. 122 

Thus, as a clearing agency considers ways to improve its risk management framework, it may have 

to weigh the benefits of such risk management against the costs of providing it, including the effect of 

those increased costs on incentives to clear and accessto the clearing agency, while remaining mindful of 

the requirements in Rule 17Ad-22. In the staff’s view, because access to clearing and sound risk 

management are both critical to a well-functioning CCP and to overall financial stability, 123 clearing 

agencies must endeavor to consider the full range of costs and benefits to market participants when 

undertaking new initiatives.

As described in Part II.F, consolidation has also occurred among clearing agencies themselves. 

Consolidation across the market for clearance and settlement, when considered alongside efforts to 

increase access to and reliance on CCPs, createsthe potential for clearing agencies to become single points

of failure within the broader market infrastructure. As a result, clearing agencies that experience 

operational disruptions or outages can pose a danger to the functioning of the broader financial system, 

similar to the danger posed by their potential to transmit systemic risk. Single points of failure in market 

infrastructure highlight the importance of and necessitate operational resilience and robust operational 

 

117 Letter from Francois Faure, Chief Compliance Officer, LCH to Parisa Abadi, CFTC, July 8, 2016, 

https://www.lch.com/sites/default/files/media/files/LCH_Select%20Membership_Self%20Certif_8%20Jul

y%202016.pdf.

118 See supra Part V.B; notes 108–112 and accompanying text.

119 CCA Standards adopting release, supra note 9, at 70866.

120 Id. at 70849.

121 Id.

122 Id. at 70849–50.

123 See, e.g., Mark Paddrik& Simpson Zhang, Central Counterparty Default Waterfalls and Systemic Loss, 4 

(June 2020), https://www.financialresearch.gov/working-papers/files/OFRwp-20-04_centralcounterparty-default-waterfalls-and-systemic-loss.pdf(“We estimate the resilience of the default 

waterfall if participation in central clearing is also reduced. We find that the changes in central clearing 

participation can have a large impact on the resilience provided by requiring more waterfall resources.”).
23

risk management. Operational risk can arise from an array of sources, including, among others, 

deficiencies in information systems or internal controls, human errors or misconduct, management 

failures, unauthorized intrusions into corporate or production systems, or disruptions from external 

events such as natural disasters. 124 Rule 17Ad-22 and Regulation SCI contemplate the development by 

clearing agencies of a comprehensive framework for managing operational risks and ensuring systems 

integrity. Indeed, the rising importance of and attention to systems disruptions, business continuity

planning, 125 and cybersecurity issues only further emphasize the need for a comprehensive framework 

that promotes systems availability and integrity. In this regard, OCIE recently published staff observations 

on cybersecurity and resiliency highlighting the important role that governance, risk management, 

incident response, vendor management, and training play in mitigating operational risk. 126

To the extent that consolidation and heightened regulation of clearing agencies may serve as 

barriers to entry in the market for clearance and settlement—further raising the potential for a clearing 

agency to be the sole provider of a given service—newtechnologies maypresent opportunities to mitigate 

the risk of resulting single points of failure. For example, distributed ledger technology potentially could 

help reduce risks arising from a single point of failure. 127 With respect to clearance and settlement for 

securities, a clearance and settlement provider using distributed ledger technology could authorize 

participants in its network to propose, validate, and record updates to a synchronized ledger of 

transactions distributed across the network. If the ledger of a participant in the system became 

inoperable or compromised, the other participants potentially could continue to facilitate the processing 

of transactions. That said, while distributed ledger technology may have the potential to reduce certain 

risks, it introduces new questions regarding scalability, information security, interoperability, and 

governance. SEC staff continues to monitor and engage with market participants pursuing the use of

distributed ledger technology in the market for clearance and settlement. 128

In addition, SEC staff believes that new technologies could also be useful in assessing whether and 

how linkages and other redundancies could be added to existing market infrastructure to promote 

resiliency. For example, such technologies could facilitate the creation of backup clearing agencies or 

backup services, which could be used to reduce the prevalence of single points of failure in the current 

market infrastructure. In 2015, the Commission noted its belief that, on balance, the redundancy created 

by more interfaces and linkages within the clearance and settlement infrastructure increases resiliency 

and makes it more likely that market participants can continue to clear and settle trades in the event of a 

124 CCA Standards adopting release, supra note 9, at 70837.

125 For example, business continuity planning at the clearing agencies has included pandemic scenarios that 

contemplated the need for employees to work remotely at scale and the possibility of encountering 

differing circumstances across geographic locations.

126 OCIE, Cybersecurity and Resiliency Observations (2020), 

https://www.sec.gov/files/OCIE%20Cybersecurity%20and%20Resiliency%20Observations.pdf 

127 Committee on Payments and Market Infrastructures, Distributed Ledger Technology in Payment, Clearing, 

and Settlement: An Analytical Framework (Feb. 2017), https://www.bis.org/cpmi/publ/d157.pdf. 

128 See, e.g., Paxos Trust Company, LLC, SEC No-Action Letter (Oct. 28, 2019), 

https://www.sec.gov/divisions/marketreg/mr-noaction/2019/paxos-trust-company-102819-17a.pdf; 

DTCC, Project ION Case Study (May 2020), https://www.dtcc.com/~/media/Files/Downloads/settlementasset-services/user-documentation/Project-ION-Paper-2020.pdf. 
24

disruption. 129 Regardless of the ultimate technology or mechanism employed, SEC staff believes that 

existing rules for clearing agencies, including Rule 17Ad-22 and Regulation SCI, provide for a technologyagnostic regulatory framework designed to ensure that clearing agencies consider risks that may result 

from being a single point of failure and to accommodate a range of different solutions. 

E. Efforts in Support of Resilience and Recovery Planning

In SEC staff’s view, the disorderly failure of a systemically important clearing agency would pose 

a significant threat to the functioning of the U.S. securities markets and the broader financial system. 

Strong governance, operations, and risk management are important to ensuring that clearing agencies 

remain resilient during extreme but plausible stress scenarios. Systemically important clearing agencies 

must also anticipate and prepare for circumstances under which its business-as-usual operations may be 

insufficient to enable it to continue to provide critical services. Indeed, the clearing agency needs a 

concrete, actionable plan to continue to provide critical services in the face of extreme financial stress. 

To prepare for such a scenario, the clearing agencies have submitted, and the SEC has reviewed and 

approved, key aspects of their recovery plans. 130 

To be viable, a recovery plan should consider, in SEC staff’s view, the need to close out multiple 

participants in default, balance positions to restore a matched book, address uncovered losses, liquidity 

shortfalls, or capital inadequacies, and replenish prefunded financial resources deployed prior to or during 

recovery. Because the markets they serve and the products they clear have unique characteristics, each 

of the clearing agencies may employ different tools as part of its recovery plan to achieve these objectives. 

In addition, because markets are dynamic and ever evolving—they may, for instance, see the introduction 

of new products, new types of market participants, new trading venues or practices, and new clearing 

mandates—so too must recovery plans adapt to ever-changing market circumstances. This will 

necessarily require that the clearing agencies evaluate, on an ongoing basis, the viability of their recovery 

plans and the effectiveness of any recovery tools. SEC staff expects that recovery planning will continue 

to be an area requiring heightened focus in the coming years.

Separate but distinct from recovery is the concept of resolution. Resolution describes the process 

by which resolution authorities would resolve a clearing agency that can no longer continue as a going 

concern. Resolution planning considers the strategies that the resolution authority would deploy to 

ensure the continuity of systemically important functions through sale or transfer and to achieve the 

orderly wind-down of the failed clearing agency. Given the close conceptual link between recovery and 

resolution, the role of the supervisory agency in overseeing recovery and the role of the resolution 

authority in carrying out a resolution, cross-jurisdictional cooperation among regulators is critical to 

ensuring effective planning on both fronts. SEC staff believes that the supervisor and the resolution 

authority should be working as a close team, such that, for example, the supervisor is thinking about when 

to involve the resolution authority in the recovery process asrecovery begins. SEC staff also believes that 

such coordination should occur as soon as practicable in the recovery process.

With respect to resolution strategies more generally, the FSB published in 2017 Guidance on CCP 

Resolution and Resolution Planning, a report addressing, among other topics: the objectives of CCP 

resolution and resolution planning, the timing of entry into resolution, allocation of losses to equity 

 

129 See Release No. 34-76514 (Nov. 24, 2015), 80 FR 75387, 75401 (Dec. 1, 2015).

130 The proposed rule changes implementing recovery and wind-down plans for the clearing agencies are 

summarized in the Appendix. Seeinfra notes 138, 165, 174, and 188.
25

holders in resolution, and crisis management groups (“CMGs”) to coordinate resolution planning. 131 The 

guidance also addressed financial resources for CCP resolution and the treatment of equity in CCP 

resolution, two areas of continued work to determine whether additional guidance is appropriate. 132 Staff 

continues to participate in the development of this work, and to coordinate with its fellow regulators

charged with a role in the resolution of CCPs. SEC staff also has begun to consider whether CMGs may be 

appropriate for systemically important clearing agencies that provide CCP services in multiple 

jurisdictions. 

VI. Conclusion

The national system for clearance and settlement continues to develop in tandem with evolutions

in market and trading practices, new technologies, and the risks and elements implicated by trends 

discussed in this report and those yet to come. Staff believes it is critical for clearing agencies to be 

dynamic in thinking about and reacting to trends in the market place, as such trends can illuminate new 

risks and new thinking about issues in clearance and settlement. 

Critically, strong governance arrangements and robust risk management can help ensure that 

clearing agencies remain positioned to be dynamic amidst emerging trends and changes in the global 

financial system. As SEC staff has emphasized throughout this report, robust written rules, policies, and 

procedures are important to clearing agency functioning, but represent only the first step in achieving 

resilience and compliance. To achieve real-life outcomes that promote resilience and compliance, rules, 

policies, and procedures must be well designed to address all risks faced by a clearing agency, updated 

regularly and thoughtfully as practices or other circumstances change, and subject to sound governance 

that ensures they will be executed promptly and effectively. Only then can a clearing agency support in a 

positive way the continued development of the national system for clearance and settlement.

131 FSB, Guidance on Central Counterparty Resolution and Resolution Planning (July 5, 2017), 

https://www.fsb.org/wp-content/uploads/P050717-1.pdf. 

132 Recently, the FSB published further guidance on this topic for public consultation. SeeFSB, Guidance on 

Financial Resources to Support CCP Resolution and the Treatment of CCP Equity in Resolution 

(Consultative Document) (May 4, 2020), https://www.fsb.org/wp-content/uploads/P020520.pdf. 
26

Appendix: Staff Summary of Recent Rule Changes and Advance Notices

A. DTC, FICC, and NSCC

The SEC is the supervisory agency for DTC, FICC, and NSCC, each a SIFMU since 2012. Because

they are subsidiaries of DTCC, they often submit parallel changes to the SEC for review, so for clarity and 

brevity this section discusses the three clearing agencies together.

DTC provides CSD services for U.S. securities transactions in various types of eligible securities 

including, among others, equities, warrants, rights, corporate debt and notes, municipal bonds, 

government securities, asset-backed securities, depositary receipts, and money market instruments. FICC 

consists of two divisions, the Government Securities Division (“GSD”) and the Mortgage-Backed Securities 

Division (“MBSD”). GSD provides CCP services for its customers with respect to the U.S. government 

securities market, and MBSD provides CCP services to the U.S. mortgage-backed securities market. NSCC 

serves as a CCP for virtually all broker-to-broker trades involving equities, corporate and municipal debt, 

American depositary receipts, exchange-traded funds, and unit investment trusts. NSCC nets and trades 

payments among its participants, reducing the value of payments that need to be exchanged by an 

average of 98 percent each day, and in 2018, cleared trades with an average daily value of $1,269.7 billion 

and an average daily volume of 106.2 million. 133

Since the adoption of Rule 17Ad-22, the SEC has considered and approved a variety of rule 

changes proposed by DTC, FICC, and NSCC to enhance risk management. 134 Set forth below is a summary 

of significant changes, beginning with proposals addressing frameworks submitted with respect to each 

registered clearing agency, and then describing those that are specific to a particular clearing agency’s 

individual initiatives.

• Market Risk. DTC, FICC, and NSCC adopted the Clearing Agency Stress Testing Framework setting

forth the procedures for identifying, measuring, monitory, and managing each respective clearing 

agency’s credit exposure to its members. Specifically, the framework describes: (i) the sources of 

each clearing agency’s total prefunded-financial resources; (ii) their respective stress-testing 

methodologies; (iii) their respective stress-testing governance and execution processes; and (iv) 

their respective model validation practices. 135

• Credit Risk. DTC, FICC, and NSCC adopted enhancements to the shared credit risk rating matrix 

(“CRRM”)to help the clearing agencies evaluate the credit risks posed by certain members of each 

of the respective clearing agencies, as a result of providing services to such members. The 

enhancements enabled the CRRM to: (i) evaluate the credit risks of foreign banks and foreign trust 

 

133 DTCC, 2018 Annual Report, http://www.dtcc.com/annuals/2018/.

134 Depending on the form of the particular proposed rule change discussed in this and the following 

sections, the SEC’s consideration of these changes has either been in the form of approving a proposed 

rule change, issuing a notice of no objection to an advance notice, or both. For ease of review, this 

discussion simply discusses the respective registered clearing agency’s proposals, all of which have either 

been approved or not objected to by the SEC unless noted otherwise.

135 Release No. 34-82368 (Dec. 19, 2017), 82 FR 61082 (Dec. 26, 2017) (SR-DTC-2017-005; SR-FICC-2017-009; 

SR-NSCC-2017-006), https://www.sec.gov/rules/sro/dtc/2017/34-82368.pdf.
27

companies, (ii) evaluate qualitative risks, and (iii) eliminate any potential distortion of a member’s 

rating due to changes in the member’s peer group. 136

• Liquidity Risk. DTC, FICCC, and NSCC adopted the Clearing Agency Liquidity Risk Management

Framework setting forth each respective clearing agency’sliquidity resources and liquidity risk

management practices, including the measurement and monitoring of respective liquidity risks.137

• Recovery and Wind-Down. DTC, FICC, and NSCC adoptedrecovery and wind-down plans (“RWPs”)

and related rules. The clearing agencies developed each of their respective RWPs in the event

that they encounter scenarios that could potentially prevent them from being able to provide

their critical services as an ongoing concern. The related rules are designed to: (i) facilitate the

implementation of the RWPs when necessary and, in particular, allow each respective clearing

agency to effectuate a strategy for winding down and transferring its respective business; (ii)

provide members and participants with transparency around critical provisions of the RWPs that

relate to their rights, responsibilities, and obligations; and (3) provide each respective clearing

agency with the legal basis to implement provisions of the RWPs when necessary. 138

• Loss Allocation. DTC, FICC, and NSCC adopted enhanced loss allocation rules designed to (i)

modify each respective clearing agency’s loss allocation processes, (ii) harmonize the loss

allocation processes among the clearing agencies, (iii) reduce the time within which NSCC is

required to return a former member’s Clearing Fund deposit, (iv) amend FICC’s MBSD rules

regarding the use of MBSD’s Clearing Fund, and (v) modify the application of DTC’s Participants

Fund and the voluntary retirement process and reduce the time within which DTC is required to

return a former participant’s actual Participants Fund deposit. 139

136 Release Nos. 34-80731 (May 19, 2017), 82 FR 24174 (May 25, 2017) (SR-DTC-2017-801; SR-FICC-2017-804; 

SR-NSCC-2017-801), https://www.sec.gov/rules/sro/dtc-an/2017/34-80731.pdf; 34-80734 (May 19, 

2017), 82 FR 24177 (May 25, 2017) (SR-DTC-2017-002; SR-FICC-2017-006; SR-NSCC-2017-002), 

https://www.sec.gov/rules/sro/dtc/2017/34-80734.pdf. 

137 Release No. 34-82377 (Dec. 21, 2017), 82 FR 61617 (Dec. 28, 2017) (SR-DTC-2017-004; SR-FICC-2017-008; 

SR-NSCC-2017-005), https://www.sec.gov/rules/sro/dtc/2017/34-82377.pdf. 

138 Release Nos. 34-83953 (Aug. 27, 2018), 83 FR 44381 (Aug. 30, 2018) (SR-DTC-2017-803), 

https://www.sec.gov/rules/sro/dtc-an/2018/34-83953.pdf; 34-83954 (Aug. 27, 2018), 83 FR 44361 (Aug. 

30, 2018) (SR-FICC-2017-805), https://www.sec.gov/rules/sro/ficc-an/2018/34-83954.pdf; 34-83955 (Aug. 

27, 2018), 83 FR 44340 (Aug. 30, 2018) (SR-NSCC-2017-805), https://www.sec.gov/rules/sro/nsccan/2018/34-83955.pdf; 34-83972 (Aug. 28, 2018), 83 FR 44964 (Sept. 4, 2018) (SR-DTC-2017-021), 

https://www.sec.gov/rules/sro/dtc/2018/34-83972.pdf; 34-83973 (Aug. 28, 2018), 83 FR 44942 (Sept. 4, 

2018) (SR-FICC-2017-021), https://www.sec.gov/rules/sro/ficc/2018/34-83973.pdf; 34-83974 (Aug. 28, 

2018), 83 FR 44988 (Sept. 4, 2018) (SR-NSCC-2017-017), https://www.sec.gov/rules/sro/nscc/2018/34-

83974.pdf. 

139 Release Nos. 34-83950 (Aug. 27, 2018), 83 FR 44393 (Aug. 30, 2018) (SR-DTC-2017-804), 

https://www.sec.gov/rules/sro/dtc-an/2018/34-83950.pdf; 34-83951 (Aug. 27, 2018), 83 FR 44331 (Aug. 

30, 2018) (SR-FICC-2018-806), https://www.sec.gov/rules/sro/ficc-an/2018/34-83951.pdf; 34-83952 (Aug. 

27, 2018), 83 FR 44354 (Aug. 30, 2018) (SR-NSCC-2017-806), https://www.sec.gov/rules/sro/nsccan/2018/34-83952.pdf; 34-83969 (Aug. 28, 2018), 83 FR 44955 (Sept. 4, 2018) (SR-DTC-2017-022), 

https://www.sec.gov/rules/sro/dtc/2018/34-83969.pdf; 34-83970 (Aug. 28, 2018), 83 FR 44929 (Sept. 4, 

2018) (SR-FICC-2017-022), https://www.sec.gov/rules/sro/ficc/2018/34-83970.pdf; 34-83971 (Aug. 28, 
28

FICC-specific initiatives included:

• Market Risk. FICC adopted rules to: (i) change the calculation of GSD’s value-at-risk charge; (ii) 

add a new component referred to as the “Blackout Period Exposure Adjustment;” (iii) eliminate 

the existing Blackout Period Exposure Charge and the Coverage Charge components; (iv) adjust 

the existing backtesting charge component; and (v) adjust the calculation for determining the 

existing Excess Capital Premium for certain members. 140

• Liquidity Risk. FICC established a rules-based committed liquidity resource, the Capped 

Contingency Liquidity Facility (“CCLF”), to be funded by FICC’s members on a contingent basis. 

CCLF is designed to provide FICC with a committed liquidity resource to meet its cash settlement 

obligations in the event of a member’s (or affiliated family of a member’s) default in extreme but 

plausible market conditions. 141

• GSD Fees. FICC modified the GSD fee structure to reduce complexity and to better align pricing 

with the costs of GSD services. 142

• GSD Sponsored Member Program. FICC adopted rule changes to expand the types of entities that 

are eligible to participate in GSD as sponsoring members and sponsored members. 143

• Centrally Cleared Institutional Tri-Party Service (“CCIT”). FICC established the CCIT at GSD, 

allowing the submission of tri-party repo transactions in GCF Repo Securities between GSD 

Netting Members that participate in the GCF Repo Service and institutional counterparties (other 

than registered investment companies), where the institutional counterparties are the cash 

lenders in the transactions. 144

NSCC-specific initiatives included:

• Market Risk. NSCC adopted enhancements to its method for calculating the daily margin 

requirement for each NSCC member. Specifically, NSCC (i) added three new ways to calculate the 

 

2018), 83 FR 44977 (Sept. 4, 2018) (SR-NSCC-2017-018), https://www.sec.gov/rules/sro/nscc/2018/34-

83971.pdf.

140 Release Nos. 34-83223 (May 11, 2018), 83 FR 23020 (May 17, 2018) (SR-FICC-2018-801), 

https://www.sec.gov/rules/sro/ficc-an/2018/34-83223.pdf; 34-83362 (June 1, 2018), 83 FR 26514 (June7, 

2018) (SR-FICC-2018-001), https://www.sec.gov/rules/sro/ficc/2018/34-83362.pdf. 

141 Release No. 34-82090 (Nov. 15, 2017), 82 FR 55427 (Nov. 21, 2017) (SR-FICC-2017-002), 

https://www.sec.gov/rules/sro/ficc/2017/34-82090.pdf (“CCLF Order”).

142 Release No. 34-83401 (June 8, 2018), 83 FR 27812 (June 14, 2018) (SR-FICC-2018-003), 

https://www.sec.gov/rules/sro/ficc/2018/34-83401.pdf.

143 Release Nos. 34-80563 (May 1, 2017), 82 FR 21284 (May 5, 2017) (SR-FICC-2017-003), 

https://www.sec.gov/rules/sro/ficc/2017/34-80563.pdf; 34-85470 (Mar. 29, 2019), 84 FR 13328 (Apr. 4, 

2019) (SR-FICC-2018-013), https://www.sec.gov/rules/sro/ficc/2019/34-85470.pdf; SR-FICC-2018-802 

(Mar. 5, 2019), https://www.sec.gov/rules/sro/ficc-an/2019/ficc-2018-802-memo-deemed-approved.pdf. 

For further discussion, see Part V.B.

144 Release No. 34-80574 (May 2, 2017), 82 FR 21439 (May 8, 2017) (SR-FICC-2017-005), 

https://www.sec.gov/rules/sro/ficc/2017/34-80574.pdf. For further discussion, see Part V.B.
29

volatility component of its members’ margin requirements and (ii) eliminated an outdated 

component of the margin calculation. 145 

• Liquidity Risk. In 2015, NSCC established a “Prefunded Liquidity Program” through the private

placement of unsecured debt. The Prefunded Liquidity Program served to diversify NSCC’s

existing liquidity risk management resources, including NSCC’s multibillion dollar clearing fund

and credit facility, upon which NSCC can draw to meet its liquidity needs in the event of a default

by an NSCC member. 146 The amount of the program was initially capped at $5 billion and was

later expanded to $10 billion. 147

• Margin. NSCC has made several changes to account for specific wrong-way risk in its margin

model, which is present when NSCC acts as CCP to a transaction where the underlying securities

are issued by the member (or an affiliate of that member) that is a counterparty to the

transaction. In 2015, NSCC adopted changes to exclude from its volatility margining model a

member’s positions in securities that are issued by such member or its affiliate when the member

is on NSCC’s Watch List. 148 In 2017, NSCC expanded the application of this charge to all NSCC

members while still maintaining a higher charge for members that present a greater credit risk to 

NSCC, such as those on the Watch List. 149 In 2018, NSCC enhanced its method for calculating the 

daily margin requirement for each member by adding three new ways to calculate the volatility

component of its members’ margin requirements and eliminating an outdated component of the

margin calculation. 150

• Business Risk. In 2017, NSCC instituted its Policy on Capital Requirements and Capital

Replenishment Plan. The policy is designed to provide a framework for holding sufficient liquid

net assets (“LNA”) to cover potential business losses, and the plan is designed to provide a viable

mechanism for raising additional LNA funded by equity, if needed. 151

145 Release Nos. 34-82780 (Feb. 26, 2018), 83 FR 9035 (Mar. 2, 2018) (SR-NSCC-2017-808), 

https://www.sec.gov/rules/sro/nscc-an/2018/34-82780.pdf; 34-82781 (Feb. 26, 2018), 83 FR 9042 (Mar. 

2, 2018) (SR-NSCC-2017-020), https://www.sec.gov/rules/sro/nscc/2018/34-82781.pdf. 

146 Release No. 34-75730 (Aug. 19, 2015), 80 FR 51638 (Aug. 25, 2015) (SR-NSCC-2015-802), 

http://www.sec.gov/rules/sro/nscc-an/2015/34-75730.pdf. 

147 Release No. 34-82676 (Feb. 9, 2018) 83 FR 6912 (Feb. 15, 2018) (SR-NSCC-2017-807), 

https://www.sec.gov/rules/sro/nscc-an/2018/34-82676.pdf. 

148 Release Nos. 34-76075 (Oct. 5, 2015), 80 FR 61244 (Oct. 9, 2015) (SR-NSCC-2015-803), 

http://www.sec.gov/rules/sro/nscc-an/2015/34-75899.pdf; 34-76077 (Oct. 5, 2015), 80 FR 61256 (Oct. 9, 

2015) (SR-NSCC-2015-003), http://www.sec.gov/rules/sro/nscc/2015/34-76077.pdf. 

149 Release Nos. 34-81545 (Sept. 7, 2017), 82 FR 43054 (Sept. 13, 2017) (SR-NSCC-2017-804), 

https://www.sec.gov/rules/sro/nscc-an/2017/34-81545.pdf; 34-81550 (Sept. 7, 2017), 82 FR 43061 (Sept. 

13, 2017) (SR-NSCC-2017-010), https://www.sec.gov/rules/sro/nscc/2017/34-81550.pdf. 

150 Release Nos. 34-82780 (Feb. 26, 2018), 83 FR 9035 (Mar. 2, 2018) (SR-NSCC-2017-808), 

https://www.sec.gov/rules/sro/nscc-an/2018/34-82780.pdf; 34-82781 (Feb. 26, 2018), 83 FR 9042 (Mar. 

2, 2018) (SR-NSCC-2017-020), https://www.sec.gov/rules/sro/nscc/2018/34-82781.pdf. 

151 Release No. 34-81105 (July 7, 2017), 82 FR 32399 (July 13, 2017) (SR-NSCC-2017-004), 

https://www.sec.gov/rules/sro/dtc/2017/34-81105.pdf. 
30

• Other Risk Management Initiatives. NSCC adopted rule changes to: (i) accelerate its trade 

guaranty from midnight of one day after trade date (“T+1”) to the point of trade comparison and 

validation for bilateral submissions or to the point of trade validation for locked-in submissions; 

(ii) add three new components to NSCC’s Clearing Fund formula, in the form of a Margin 

Requirement Differential (“MRD”), a Coverage Component, and an Intraday Backtesting Charge; 

(iii) enhance NSCC’s current intraday mark-to-market margin process; (iv) introduce a new loss 

allocation provision for any trades that fall within the proposed definition of “Off-the-Market 

Transactions;” and (v) make other related and technical changes. 152

B. ICC

ICC provides CCP services for security-based swaps. 153 ICC isregistered with the SEC as a clearing 

agency and the CFTC as a derivatives clearing organization. ICC has been designated systemically 

important, and the CFTC is its supervisory agencyunder the Clearing Supervision Act. 154 

Since the adoption of Rule 17Ad-22, the SEC has considered and approved a variety of rule 

changes proposed by ICC to enhance its risk management. For example, the SEC has approved several 

frameworks intended to manage risk broadly across ICC, including ICC’s Risk Management Framework,155

Back-Testing Framework, 156 Stress-Testing Framework, 157 and Model Validation Framework. 158 The SEC

has also approved improvements to ICC’s Risk Management Model Description Document, which 

describes ICC’s methodology for calculating margin on cleared security-based swap transactions, 159 and 

 

152 Release No. 34-79598 (Dec. 19, 2016), 81 FR 94462 (Dec. 23, 2016) (SR-NSCC-2016-005), 

https://www.sec.gov/rules/sro/nscc/2016/34-79598.pdf.

153 ICC was deemed registered as a clearing agency pursuant to the Dodd-Frank Act. Seesupra note 39.

154 12 U.S.C. 5301 etseq.

155 Release Nos. 34-84457 (Oct. 19, 2018), 83 FR 53917 (Oct. 25, 2018) (ICC-2018-008), 

https://www.sec.gov/rules/sro/icc/2018/34-84457.pdf; 34-76733 (Dec. 22, 2015), 80 FR 81384 (Dec. 29, 

2015) (ICC-2015-017), https://www.sec.gov/rules/sro/icc/2015/34-76733.pdf.

156 Release No. 34-85357 (Mar. 19, 2019), 84 FR 11146 (Mar. 25, 2019) (ICC-2019-001), 

https://www.sec.gov/rules/sro/icc/2019/34-85357.pdf.

157 Release Nos. 34-86378 (July 15, 2019), 84 FR 34990 (July 19, 2017) (ICC-2019-005), 

https://www.sec.gov/rules/sro/icc/2019/34-86378.pdf; 34-77982 (June 2, 2016), 81 FR 36979 (June 8,

2016) (ICC-2016-005), https://www.sec.gov/rules/sro/icc/2016/34-77982.pdf.

158 Release Nos. 34-86039 (June 5, 2019), 84 FR 27167 (June 11, 2019) (ICC-2019-004), 

https://www.sec.gov/rules/sro/icc/2019/34-86039.pdf; 34-83690 (July 24, 2018), 83 FR 36655 (July, 30 

2018) (ICC-2018-004), https://www.sec.gov/rules/sro/icc/2018/34-83690.pdf.

159 Release Nos. 34-86838 (Aug. 30, 2019), 84 FR 47019 (Sept. 6, 2019) (ICC-2019-008), 

https://www.sec.gov/rules/sro/icc/2019/34-86838.pdf; 34-84457 (Oct. 19, 2018), 83 FR 53917 (Oct. 25, 

2018) (ICC-2018-008), https://www.sec.gov/rules/sro/icc/2018/34-84457.pdf; 34-76733 (Dec. 22, 2015), 

80 FR 81384 (Dec. 29, 2015) (ICC-2015-017), https://www.sec.gov/rules/sro/icc/2015/34-76733.pdf.
31

ICC’s Liquidity Risk Management Framework, by which ICC assures that it has enough cash available to 

meet expected and unexpected financial obligations. 160 

The rule changes have also addressed particular aspects of risk management and operations, as 

highlighted in the categories below. 

• Operational Risk. In 2014, ICC adopted an Operational Risk Management Framework, which 

details ICC’s program of operational risk assessment and oversight. 161 Also in 2018, ICC adopted 

a New Initiatives Approval Policy, which sets forth ICC’s policies and procedures for the review 

and approval of certain new initiatives to be offered or implemented by ICC. 162

• Credit Risk. In 2017, ICC revised its auction procedures and tools for returning to a matched book 

after a Clearing Participant default or series of such defaults, amended its rules to collect 

additional initial margin to ensure that ICC maintains minimum pre-funded financial resources in 

compliance with applicable regulatory requirements, and clarified the governance requirements 

relating to the use of ICC’s default management tools. 163

C. ICEU

ICEU provides CCP services for interest rate, equity index, agricultural and energy derivatives, as 

well as European single-name CDS. ICEU's CDS clearing operations launched in July 2009. 164 

The SEC has considered and approved a variety of rule changes proposed by ICEU to enhance its 

risk management under Rule 17Ad-22(e). For example, the SEC approved several frameworks to manage 

risk broadly, including a proposed rule change regarding ICEU’s Recovery Plan and Wind-Down Plan as 

well as updates to the Recovery Plan. 165 The SEC also approved revisions to ICEU’s CDS Default 

Management Framework to be consistent with amendments to the ICEU recovery rules to address default 

management, recovery and wind-down for the CDS Contract Category. The proposed changes to this 

Framework related primarily to auction procedures, reduced gains distribution, partial tear-up, clearing 

member withdrawal and termination, clearing service termination, and governance during a default.166 

 

160 Release Nos. 34-81347 (Aug. 8, 2017), 82 FR 37917 (Aug. 14, 2017) (ICC-2017-011), 

https://www.sec.gov/rules/sro/icc/2017/34-81347.pdf; 34-81797 (Oct. 2, 2017), 82 FR 46844 (Oct. 6, 

2017) (ICC-2017-012), https://www.sec.gov/rules/sro/icc/2017/34-81797.pdf.

161 Release Nos. 34-83071 (Apr. 19, 2018), 83 FR 18108 (Apr. 25, 2018) (ICC-2018-003), 

https://www.sec.gov/rules/sro/icc/2018/34-83071.pdf; 34-77769 (May 5, 2016), 81 FR 29312 (May 11, 

2016) (ICC-2016-003), https://www.sec.gov/rules/sro/icc/2016/34-77769.pdf; 34-74399 (Mar. 2, 2015), 

80 FR 12224 (Mar. 6, 2015) (ICC-2014-19), https://www.sec.gov/rules/sro/icc/2015/34-74399.pdf.

162 Release No. 34-85105 (Feb. 11, 2019), 84 FR 4570 (Feb. 15, 2019) (ICC-2018-011),

https://www.sec.gov/rules/sro/icc/2019/34-85105.pdf.

163 Release No. 34-79750 (Jan. 6, 2017), 82 FR 3831 (Jan. 12, 2017) (ICC-2016-013), 

https://www.sec.gov/rules/sro/icc/2017/34-79750.pdf.

164 ICEU was deemed registered as a clearing agency pursuant to the Dodd-Frank Act. Seesupra note 39.

165 Release Nos. 34-83651 (July 17, 2018), 83 FR 34891 (July 23, 2018) (SR-ICEEU-2017-017), 

https://www.sec.gov/rules/sro/iceeu/2018/34-83651.pdf; 34-86364 (July 12, 2019), 84 FR 34455 (July 18, 

2019) (SR-ICEEU-2019-013), https://www.sec.gov/rules/sro/iceeu/2019/34-86364.pdf.

166 Release No. 34-86783 (Aug. 28, 2019), 84 FR 46575 (Sept. 4, 2019) (SR-ICEEU-2019-014), 

https://www.sec.gov/rules/sro/iceeu/2019/34-86783.pdf.
32

The SEC has also approved a proposed rule change to adopt a new policy framework for establishing the 

risk appetite, monitoring and assessment, and management of pro-cyclicality in the risk models used by 

ICEU to manage default risk. 167

The rule changes have also addressed particular aspects of risk management and operations, as 

highlighted in the categories below. 

• Operational Risk. ICEUadopted a Model Risk Governance Framework, which would

establish overall standards and principles for managing and mitigating model risk for all

product categories that ICEU clears. 168 ICEU also formalized its Operational Risk

Management Policy, which consolidates, clarifies, and codifies ICEU’s current policies and

practices with respect to management of operational risk, the stakeholders responsible for

executing those processes, the frequency of review of the policy, and the governance and

reporting lines for the policy. 169

• Credit Risk. ICEU revised its CDS Clearing Stress-Testing Policy to re-categorize its CDS stress 

testing scenarios, add provisions addressing specific wrong-way risk, and implement new

forward-looking credit event scenarios. 170 ICEU also adopted changes relating to default

management tools, including CDS Default Auction Procedures and clarifying the governance

regarding the use of default management tools. 171

• Margin. ICEU modified its Collateral and Haircut Policy to incorporate certain changes to the 

calculation of absolute collateral limits for bonds provided as permitted cover by clearing

members so as to more accurately capture the trading liquidity of each bond and would also

revise the haircut calculation. 172

D. LCH

LCH is regulated as a bank and as a CCP under French law, and LCH is authorized to offer clearing

services in the European Union pursuant to the European Market Infrastructure Regulation. In the United 

States, LCH is registered with the SEC as a clearing agency for clearing security-based swaps and with the 

CFTC as a derivatives clearing organization. 173 

167 Release No. 34-82313 (Dec. 13, 2017), 82 FR 60254 (Dec. 19, 2017) (SR-ICEEU-2017-013), 

https://www.sec.gov/rules/sro/iceeu/2017/34-82313.pdf. 

168 Release No. 34-85128 (Feb. 13, 2019), 84 FR 5137 (Feb. 20, 2019) (SR-ICEEU-2018-024), 

https://www.sec.gov/rules/sro/iceeu/2019/34-85128.pdf. 

169 Release No. 34-86184 (June 24, 2019), 84 FR 31132 (June 28, 2019) (SR-ICEEU-2019-009), 

https://www.sec.gov/rules/sro/iceeu/2019/34-86184.pdf. 

170 Release No. 34-83243 (May 15, 2018), 83 FR 23506 (May 21, 2018) (SR-ICEEU-2018-001), 

https://www.sec.gov/rules/sro/iceeu/2018/34-83243.pdf. 

171 Release No. 34-86259 (Jul. 1, 2019), 84 FR 32483 (Jul. 8, 2019) (SR-ICEEU-2019-003), 

https://www.sec.gov/rules/sro/iceeu/2019/34-86259.pdf. 

172 Release No. 34-82659 (Feb. 8, 2018), 83 FR 6660 (Feb. 14, 2018) (SR-ICEEU-2017-011), 

https://www.sec.gov/rules/sro/iceeu/2018/34-82659.pdf. 

173 Release No. 34-79707 (Dec. 29, 2016), 82 FR 1398 (Jan. 5, 2017). 
33

Since approving LCH’s registration in 2017, the SEC has considered and approved a variety of rule 

changes by LCH to improve its risk management. For example, the SEC approved LCH’s adoption of plans 

for its recovery and wind-down and has approved updates to those plans. 174 The SEC has also approved 

improvements to LCH’s margin framework, which describes LCH’s methodology for calculating margin on 

cleared security-based swap transactions. 175 The SEC has also approved LCH’s liquidity risk modelling 

framework, by which LCH assures that it has enough cash available to meet expected and unexpected 

financial obligations. 176 

The rule changes have also addressed particular aspects of risk management and operations, as 

highlighted in the categories below. 

• Operational Risk. In 2018, LCH implemented a new electronic exercise platform for the exercise 

of options on index CDS. 177 This rule change improved the efficiency of the exercise of such 

options and eliminated the possible delays, errors, and miscommunications that can result from 

manual notification via email.

• Onboarding of Clearing Members. In 2019, LCH implemented improvements to its process for 

approving applicants for clearing membership. 178

E. OCC

OCC serves as the only CCP for standardized U.S. securities options listed on SEC-registered 

national securities exchanges (“listed options”). OCC clears and settles listed options trades executed by 

it clearing members on a proprietary basis as well as for clients. In addition, OCC serves other financial 

markets, including the commodity futures, commodity options, security futures, securities lending, and 

the OTC options markets. OCC’s role as the sole CCP for all listed options contracts in the U.S. makes it an 

integral part of the national system for clearance and settlement. In 2018, OCC cleared 5.24 billion total 

 

174 Release Nos. 34-83451 (June 15, 2018), 83 FR 28886 (June 21, 2018) (SR-LCH SA-2017-012, -013), 

https://www.sec.gov/rules/sro/lchsa/2018/34-83451.pdf; 34-87720 (Dec. 11, 2019), 84 FR 68989 (Dec. 

17, 2019) (SR-LCH SA-2019-008), https://www.sec.gov/rules/sro/lchsa/2019/34-87720.pdf.

175 Release Nos. 34-80848 (June 2, 2017), 82 FR 26728 (June 8, 2017) (SR-LCH SA-2017-003), 

https://www.sec.gov/rules/sro/lchsa/2017/34-80848.pdf; 34-80849 (June 2, 2017), 82 FR 26721 (June 8, 

2017) (SR-LCH SA-2017-004), https://www.sec.gov/rules/sro/lchsa/2017/34-80849.pdf; 34-82345 (Dec. 

18, 2017), 82 FR 60781 (Dec. 22, 2017) (SR-LCH SA-2017-009), 

https://www.sec.gov/rules/sro/lchsa/2017/34-82345.pdf; 34-87485 (Nov. 7, 2019), 84 FR 61947 (Nov. 14, 

2019) (SR-LCH SA-2019-005), https://www.sec.gov/rules/sro/lchsa/2019/34-87485.pdf.

176 Release No. 34-83691 (July 24, 2018), 83 FR 36635 (July 30, 2018) (SR-LCH SA-2018-003), 

https://www.sec.gov/rules/sro/lchsa/2018/34-83691.pdfhttps://www.sec.gov/rules/sro/lchsa/2019/34-

87485.pdf.

177 Release No. 34-84410 (Oct. 11, 2018), 83 FR 52581 (Oct. 17, 2018) (SR-LCH SA-2018-004), 

https://www.sec.gov/rules/sro/lchsa/2018/34-84410.pdf.

178 Release No. 34-86376 (July 15, 2019), 84 FR 34955 (July 19, 2019) (SR-LCH SA-2019-003), 

https://www.sec.gov/rules/sro/lchsa/2019/34-86376.pdf.
34

contracts with an average daily volume of 20.5 million contracts. 179 The FSOC designated OCC as a SIFMU

in 2012. 

Since the adoption of Rule 17Ad-22, the SEC has considered and approved a variety of rule 

changes proposed by OCC to enhance its governance andrisk management. At a high level, these changes 

have included adoption of several policies, frameworks, and Board governance documents designed to 

address particular overarching issues across OCC. For example, OCC’s Board of Directors and Board 

Committee Charters provide that, in carrying out their responsibilities, OCC’s Board and the committees 

would, among other things, generally support the stability of the broader financial system. 180 In 2017, 

OCC adopted a Risk Management Framework to describe OCC's framework to identify, measure, monitor, 

and manage all risks faced by OCC in the provision of clearing, settlement, and risk management 

services. 181 Additionally, OCC adopted a set of other policies related to risk management, including a 

margin policy, 182 collateral risk management policy, 183 counterparty credit risk management policy,184

default management policy, 185 and model risk management policy. 186 Further, OCC enhanced its existing 

tools to address the risks of liquidity shortfalls and credit losses and to establish new tools by which OCC 

could re-establish a matched book and, if necessary, allocate uncovered losses following a default as well 

as provide for additional financial resources. 187 Concurrently, OCC formalized and updated its Recovery 

and Orderly Wind-Down Plan. 188 

OCC’s changes have also addressed particular aspects of risk management as highlighted in the 

categories below. 

 

179 OCC, 2018 Annual Report, https://www.theocc.com/components/docs/about/annual-reports/occ-2018-

annual-report.pdf. 

180 Release No. 34-84473 (Oct. 23, 2018), 83 FR 54395 (Oct. 29, 2018) (SR-OCC-2018-012), 

https://www.sec.gov/rules/sro/occ/2018/34-84473.pdf. 

181 Release No. 34-8232 (Dec. 7, 2017), 82 FR 58662 (Dec. 13, 2017) (SR-OCC-2017-005), 

https://www.sec.gov/rules/sro/occ/2017/34-82232.pdf. 

182 Release No. 34-82658 (Feb. 7, 2018), 83 FR 6646 (Feb. 14, 2018) (SR-OCC-2017-007), 

https://www.sec.gov/rules/sro/occ/2018/34-82658.pdf.

183 Release No. 34-82311 (Dec. 13, 2017), 82 FR 60252 (Dec. 19, 2017) (SR-OCC-2017-008), 

https://www.sec.gov/rules/sro/occ/2017/34-82311.pdf.

184 Release No. 34-82312 (Dec. 13, 2017), 83 FR 60242 (Dec. 19, 2017) (SR-OCC-2017-009), 

https://www.sec.gov/rules/sro/occ/2017/34-82312.pdf.

185 Release No. 34-82310 (Dec. 13, 2017), 82 FR 60265 (Dec. 19, 2017) (SR-OCC-2017-010), 

https://www.sec.gov/rules/sro/occ/2017/34-82310.pdf.

186 Release No. 34-82785 (Feb. 27. 2018), 83 FR 9345 (Mar. 5, 2018) (SR-OCC-2017-011), 

https://www.sec.gov/rules/sro/occ/2018/34-82785.pdf.

187 Release No. 34-83916 (Aug. 23, 2018), 83 FR 44076 (Aug. 29, 2018) (SR-OCC-2017-020), 

https://www.sec.gov/rules/sro/occ/2018/34-83916.pdf.

188 Release No. 34-83918 (Aug. 23, 2018), 83 FR 44091 (Aug. 29, 2018) (SR-OCC-2017-021), 

https://www.sec.gov/rules/sro/occ/2018/34-83918.pdf.
35

• Credit Risk. In 2018, OCC adopted a new stress testing framework and revised its Clearing Fund 

methodology. 189 In 2019, OCC built its stress testing framework and Clearing Fund methodology

by adopting additional changes related to new stress tests, modification of existing stress tests,

and revised allocation of Clearing Fund requirements. 190

• Liquidity Risk. In 2018, OCC adopted a new minimum cash contribution requirement for its

Clearing Fund and revised its rules to provide for the pass-through of interest income earned on

such cash contributions. 191 OCC also expanded its authority to borrow against the Clearing Fund

in limited circumstances implicating same-day settlement. 192

• Margin. Over the course of 2018 and 2019, OCC made numerous changes to its margin

methodology, including: (1) obtaining daily price data, updating statistical parameters to reflect

daily data, enhance risk factor correlation sensitivity and stability, and enhance value estimates

for defaulted securities; 193 (2) introducing a new model to estimate the liquidation cost for all

options and futures, as well as the securities in margin collateral; 194 and (3) adopting an add-on

charge designed to cover exposures related to specific wrong-way risk. 195 OCC also updated its

options pricing models in 2019. 196

• Capital Replenishment. In 2020, OCC adopted a policy for capital management, which includes 

OCC’s plan to replenish its capital in the event it falls close to or below target capital levels. 197

189 Release No. 34-83735 (Jul. 27, 2018), 83 FR 37855 (Aug. 2, 2018) (SR-OCC-2018-008), 

https://www.sec.gov/rules/sro/occ/2018/34-83735.pdf. 

190 Release No. 34-87717 (Dec. 11, 2019), 84 FR 68985 (Dec. 17, 2019) (SR-OCC-2019-009), 

https://www.sec.gov/rules/sro/occ/2019/34-87717.pdf. 

191 Release No. 34-82502 (Jan. 12, 2018), 83 FR 2825 (Jan. 19, 2018) (SR-OCC-2017-019), 

https://www.sec.gov/rules/sro/occ/2018/34-82502.pdf. 

192 Release No. 34-82309 (Dec. 13, 2017), 82 FR 60262 (Dec. 19, 2017) (SR-OCC-2017-017), 

https://www.sec.gov/rules/sro/occ/2017/34-82309.pdf. 

193 Release No. 34-83326 (May 24, 2018), 83 FR 25081 (May 31, 2018) (SR-OCC-2017-022), 

https://www.sec.gov/rules/sro/occ/2018/34-83326.pdf. 

194 Release No. 34-86119 (Jun. 17, 2019), 84 FR 29267 (Jun. 21, 2019) (SR-OCC-2019-004), 

https://www.sec.gov/rules/sro/occ/2019/34-86119.pdf. 

195 Release No. 34-87718 (Dec. 11, 2019), 84 FR 68992 (Dec. 17, 2019) (SR-OCC-2019-010), 

https://www.sec.gov/rules/sro/occ/2019/34-87718.pdf . 

196 Release No. 34-86731 (Aug. 22, 2019), 84 FR 45188 (Aug. 28, 2019) (SR-OCC-2019-005), 

https://www.sec.gov/rules/sro/occ/2019/34-86731.pdf. 

197 Release No. 34-88029 (Jan. 24, 2020), 85 FR 5500 (Jan. 30, 2020) (SR-OCC-2019-007), 

https://www.sec.gov/rules/sro/occ/2020/34-88029.pdf.