76630 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Notices 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Exchange Rule 1901 for the definition of 

Equity Member. 

is ‘‘willing’’ to work if willing to accept 

and perform for hire such work as is 

reasonably appropriate to his or her 

employment circumstances. A claimant 

is ‘‘ready’’ for work if he or she (1) is 

in a position to receive notice of work 

and is willing to accept and perform 

such work, and (2) is prepared to be 

present with the customary equipment 

at the location of such work within the 

time usually allotted. 

Under RRB regulation 20 CFR 327.15, 

a claimant may be requested at any time 

to show, as evidence of willingness to 

work, that reasonable efforts are being 

made to obtain work. In order to 

determine whether a claimant is; (a) 

available for work, and (b) willing to 

work, the RRB utilizes Forms UI–38, UI 

Claimant’s Report of Efforts to Find 

Work, and UI–38s, School Attendance 

and Availability Questionnaire, to 

obtain information from the claimant 

and Form ID–8k, Questionnaire— 

Reinstatement of Discharged or 

Suspended Employee, from the union 

representative. One response is 

completed by each respondent. The RRB 

proposes the following changes to the 

Forms UI–38 and UI–38s. The RRB 

proposes no changes to Forms UI–38, 

UI–38s, and ID–8k. 

ESTIMATE OF ANNUAL RESPONDENT BURDEN

Form No. Annual 

responses 

Time 

(minutes) 

Burden 

(hours) 

UI–38s (in person) * ..................................................................................................................... 59 6 6 

UI–38s (by mail) * ........................................................................................................................ 119 10 20 

UI–38 ........................................................................................................................................... 3,485 11.5 668 

ID–8k ............................................................................................................................................ 6,461 5 538 

Total ...................................................................................................................................... 10,124 ........................ 1,232 

Additional Information or Comments: 

To request more information or to 

obtain a copy of the information 

collection justification, forms, and/or 

supporting material, contact Kennisha 

Tucker at (312) 469–2591 or 

Kennisha.Tucker@rrb.gov. Comments 

regarding the information collection 

should be addressed to Brian Foster, 

Railroad Retirement Board, 844 North 

Rush Street, Chicago, Illinois 60611– 

1275 or emailed to Brian.Foster@rrb.gov. 

Written comments should be received 

within 60 days of this notice. 

Brian D. Foster, 

Clearance Officer. 

[FR Doc. 2020–26414 Filed 11–27–20; 8:45 am] 

BILLING CODE 7905–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meetings 

TIME AND DATE: Notice is hereby given, 

pursuant to the provisions of the 

Government in the Sunshine Act, Public 

Law 94–409, that the Securities and 

Exchange Commission Asset 

Management Advisory Committee 

(‘‘AMAC’’) will hold a public meeting 

on Tuesday, December 1, 2020 at 9:00 

a.m. 

PLACE: The meeting will be conducted 

by remote means. Members of the public 

may watch the webcast of the meeting 

on the Commission’s website at 

www.sec.gov. 

STATUS: The meeting will begin at 9:00 

a.m. and will be open to the public by 

webcast on the Commission’s website at 

www.sec.gov. 

MATTERS TO BE CONSIDERED: On 

November 9, 2020, the Commission 

issued notice of the meeting (Release 

No. 34–90376), indicating that the 

meeting is open to the public and 

inviting the public to submit written 

comments to AMAC. This Sunshine Act 

notice is being issued because a majority 

of the Commission may attend the 

meeting. 

The meeting will include a discussion 

of matters in the asset management 

industry relating to (1) the Private 

Investments Subcommittee; (2) the ESG 

Subcommittee, including a discussion 

of potential recommendations from that 

Subcommittee; and (3) the Diversity and 

Inclusion Subcommittee, including a 

panel discussion on improving diversity 

and inclusion. 

The meeting will also include a 

discussion of AMAC’s administrative 

matters during a portion of the meeting 

that will not be open to the public. 

CONTACT PERSON FOR MORE INFORMATION: 

For further information, please contact 

Vanessa A. Countryman from the Office 

of the Secretary at (202) 551–5400. 

Dated: November 24, 2020. 

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2020–26413 Filed 11–25–20; 11:15 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90478; File No. SR– 

PEARL–2020–26] 

Self-Regulatory Organizations; MIAX 

PEARL, LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Exchange 

Rule 2618, Risk Settings and Trading 

Risk Metrics 

November 23, 2020. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on November 

13, 2020, MIAX PEARL, LLC (‘‘MIAX 

PEARL’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of the Substance 

of the Proposed Rule Change 

The Exchange is filing a proposed rule 

change to provide Equity Members 3 the 

Net Notional Trade Value risk setting, 

an additional optional risk setting under 

Exchange Rule 2618 when trading 

equity securities on the Exchange’s 

equity trading platform (referred to 

herein as ‘‘MIAX PEARL Equities’’). The 

Exchange also proposes to make a nonVerDate Sep<11>2014 20:03 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00117 Fmt 4703 Sfmt 4703 E:\FR\FM\30NON1.SGM 30NON1

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4The proposed rule changes are substantially 

similar to a recent rule amendment by Cboe BZX 

Exchange, Inc. (‘‘BZX’’) and Cboe EDGX Exchange, 

Inc. (‘‘EDGX’’). See Interpretation and Policy .03 to 

BZX Rule 11.13 and Interpretation and Policy .03 

to EDGX Rule 11.10. See Securities Exchange Act 

Nos. 88599 (April 8, 2020) 85 FR 20793 (April 14, 

2020) (the ‘‘BZX Approval’’); and 88783 (April 30, 

2020), 85 FR 26991 (May 6, 2020) (the ‘‘EDGX 

Notice’’). See also Securities Exchange Act Release 

Nos. 89032 (June 9, 2020), 85 FR 36246 (June 15, 

2020) (SR–CboeBZX–2020–44); and 89000 (June 3, 

2020), 85 FR 35344 (June 9, 2020) (SR–CboeEDGX– 

2020–023). 

5See Securities Exchange Act Release No. 89971 

(September 23, 2020), 85 FR 61053 (September 29, 

2020) (SR–PEARL–2020–16). 

6As discussed below, if an Equity Member 

revokes the responsibility of establishing and 

adjusting the risk settings identified in proposed 

paragraph (a), the settings applied by the Equity 

Member would be applicable. 

7The term ‘‘Clearing Member’’ refers to a Member 

that is a member of a Qualified Clearing Agency and 

clears transactions on behalf of another Member. 

See Exchange Rule 2620(a). Exchange Rule 2620(a) 

also: (i) Outlines the process by which a Clearing 

Member shall affirm its responsibility for clearing 

any and all trades executed by the Equity Member 

designating it as its Clearing Firm; and (ii) provides 

that the rules of a Qualified Clearing Agency shall 

govern with respect to the clearance and settlement 

of any transactions executed by the Equity Member 

on the Exchange. 

8See supra note 5. 

9One difference between this proposed rule 

change and those of BZX and EDGX is that both 

BZX and EDGX only allow the net credit risk limits 

to be set at the MPID Level or to a subset of orders 

identified within that MPID (the ‘‘risk group 

identifier’’ level). See supra note 4. The Exchange 

believes allowing for limits to be set at the MPID, 

session, or firm level provides Equity Members 

greater flexibility in managing their risk exposure. 

10See supra note 5. 

11As discussed below, if an Equity Member 

revokes the responsibility of establishing and 

adjusting the risk settings identified in proposed 

paragraph (a), the settings applied by the Equity 

Member would be applicable. 

12See supra note 5. 

13 Id. 

14The term ‘‘Qualified Clearing Agency’’ means 

a clearing agency registered with the Commission 

pursuant to Section 17A of the Act that is deemed 

qualified by the Exchange. See Exchange Rule 1901. 

The rules of any such clearing agency shall govern 

with the respect to the clearance and settlement of 

any transactions executed by the Member on the 

Exchange. 

substantive technical clarifications to 

paragraphs (a)(5) and (6) of Exchange 

Rule 2618. 

The text of the proposed rule change 

is available on the Exchange’s website at 

http://www.miaxoptions.com/rulefilings/pearl at MIAX PEARL’s principal 

office, and at the Commission’s Public 

Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to adopt the ‘‘Net Notional 

Trade Value’’ risk setting, which would 

provide Equity Members an additional 

optional risk setting under Exchange 

Rule 2618 when trading equity 

securities on MIAX PEARL Equities.4

The Exchange also proposes to make a 

non-substantive technical clarifications 

to paragraphs (a)(5) and (6) of Exchange 

Rule 2618. 

Net Notional Risk Setting 

The Exchange recently adopted the 

Gross Notional Trade Value risk setting 

to help Equity Members manage their 

risk.5 In that proposal, the Exchange 

also proposed to allow an Equity 

Member that does not self-clear the 

ability to allocate and revoke 6 the 

responsibility of establishing and 

adjusting the risk settings identified in 

proposed paragraph (a)(2) of Exchange 

Rule 2618, which presently only 

includes the Gross Notional Trade Value 

risk setting, to a Clearing Member 7 that 

clears transactions on behalf of the 

Equity Member, if designated in a 

manner prescribed by the Exchange.8

The Exchange now proposes to offer 

Net Notional Trade Value, an additional 

optional risk setting that would 

authorize the Exchange to take 

automated action if a designated limit 

for an Equity Member is breached. Like 

Gross Notional Trade Value, Net 

Notional Trade Value would provide 

Equity Members with enhanced abilities 

to manage their risk with respect to 

orders on the Exchange. The Exchange 

proposes to set forth Net Notional Trade 

Value under paragraph (a)(2) of Rule 

2618 as follows: 

• The ‘‘Net Notional Trade Value’’ 

which refers to a pre-established 

maximum daily dollar amount for 

purchases and sales across all symbols, 

where purchases are counted as positive 

values and sales are counted as negative 

values. For purposes of calculating the 

Net Notional Trade Value, only 

executed orders are included. 

Like Gross Notional Trade Value, the 

proposed Net Notional Trade Value risk 

setting is similar to credit controls 

measuring net exposure provided for in 

paragraph (a)(1)(A) of Exchange Rule 

2618 and allow limits to be set at the 

Market Participant Identifier (‘‘MPID’’), 

session, and firm level.9 Therefore, the 

proposed risk management functionality 

would allow an Equity Member to 

manage its risk more comprehensively 

and across various level settings. 

Further, like our existing credit controls 

measuring gross exposure, the proposed 

risk setting would also be based on a 

notional execution value. The Exchange 

notes that the current gross notional 

control noted in paragraph (a)(2)(A) of 

Exchange Rule 2618 will continue to be 

available in addition to the proposed 

risk setting. 

Like for the Gross Notional Trade 

Value risk setting,10 the processes set 

forth under existing paragraphs (a)(3) 

through (6) of Exchange Rule 2618 

would also apply to the Net Notional 

Trade Value Risk Setting and are further 

described below. 

Equity Members that do not self-clear 

may, pursuant to paragraph (a)(4) of 

Exchange Rule 2618, allocate and 

revoke 11 the responsibility of 

establishing and adjusting the Net 

Notional Trade Value risk settings to a 

Clearing Member that clears 

transactions on behalf of the Equity 

Member in the identical manner as they 

may do today for the Gross Notional 

Trade Value risk setting.12

By way of background and as 

explained in its proposal to adopt the 

Gross Notional Trade Value risk 

setting,13 Exchange Rule 2620(a) 

requires that all transactions passing 

through the facilities of the Exchange 

shall be cleared and settled through a 

Qualified Clearing Agency using a 

continuous net settlement system.14 As 

reflected in Exchange Rule 2620(a), this 

requirement may be satisfied by direct 

participation, use of direct clearing 

services, or by entry into a 

corresponding clearing arrangement 

with another Equity Member that clears 

through a Qualified Clearing Agency 

(i.e., a Clearing Member). If an Equity 

Member clears transactions through 

another Equity Member that is a 

Clearing Member, such Clearing 

Member shall affirm to the Exchange in 

writing, through letter of authorization, 

letter of guarantee or other agreement 

acceptable to the Exchange, its 

agreement to assume responsibility for 

clearing and settling any and all trades 

executed by the Equity Member 


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15An Equity Member can designate one Clearing 

Member per MPID associated with the Equity 

Member. 

16See Exchange Rule 100 for a definition of 

‘‘System.’’ 

17See supra note 5. 

18A Clearing Member would have the ability to 

enable alerts regardless of whether it was allocated 

responsibilities pursuant to proposed paragraph 

(a)(4) of Exchange Rule 2618. 

19See supra note 5. 

20 17 CFR 240.15c3–5. 

21See Division of Trading and Markets, 

Responses to Frequently Asked Questions 

Concerning Risk Management Controls for Brokers 

or Dealers with Market Access, available at https:// 

www.sec.gov/divisions/marketreg/faq-15c-5-riskmanagement-controls-bd.htm. 

22By using the optional risk settings provided in 

paragraph (a) of Exchange Rule 2618, an Equity 

Member opts-in to the Exchange sharing its risk 

settings with its Clearing Member. Any Equity 

Member that does not wish to share such risk 

settings with its Clearing Member can avoid sharing 

such settings by becoming a Clearing Member. See, 

e.g., Securities Exchange Act Release No. 89563 

(August 14, 2020), 85 FR 51510 (August 20, 2020) 

(SR–PEARL–2020–03) (‘‘Equities Approval Order’’). 

designating it as its clearing firm.15

Thus, while not all Equity Members are 

Clearing Members, all Equity Members 

are required either to clear their own 

transactions or to have in place a 

relationship with a Clearing Member 

that has agreed to clear transactions on 

their behalf in order to conduct business 

on the Exchange. Therefore, the Clearing 

Member that guarantees the Equity 

Member’s transactions on the Exchange 

has a financial interest in the risk 

settings utilized within the System 16 by 

the Equity Member. 

Paragraph (a) of Rule 2620 allows 

Clearing Members an opportunity to 

manage their risk of clearing on behalf 

of other Equity Members, if authorized 

to do so by the Equity Member trading 

on MIAX PEARL Equities. Such 

functionality is designed to help 

Clearing Members to better monitor and 

manage the potential risks that they 

assume when clearing for Equity 

Members of the Exchange. Like it does 

today for the Gross Notional Trade 

Value risk setting, an Equity Member 

may allocate or revoke the responsibility 

of establishing and adjusting the risk 

settings for the Net Notional Trade 

Value risk setting to its Clearing 

Member in a manner prescribed by the 

Exchange. By allocating such 

responsibility, an Equity Member cedes 

all control and ability to establish and 

adjust such risk settings to its Clearing 

Member unless and until such 

responsibility is revoked by the Equity 

Member, as discussed in further detail 

below. Because the Equity Member is 

responsible for its own trading activity, 

the Exchange will not provide a 

Clearing Member authorization to 

establish and adjust the Net Notional 

Trade Value risk setting on behalf of an 

Equity Member without first receiving 

consent from the Equity Member. The 

Exchange considers an Equity Member 

to have provided such consent if it 

allocates the responsibility to establish 

and adjust risk settings to its Clearing 

Member in a manner prescribed by the 

Exchange. By allocating such 

responsibilities to its Clearing Member, 

the Equity Member consents to the 

Exchange taking action, as set forth in 

paragraph (a)(6) of Exchange Rule 2618, 

with respect to the Equity Member’s 

trading activity. Specifically, like for the 

Gross Notional Trade Value risk setting, 

if the Net Notional Trade Value risk 

settings established by the Clearing 

Member are breached, the Equity 

Member consents that the Exchange will 

automatically block new orders 

submitted and cancel open orders until 

such time that the applicable risk setting 

is adjusted to a higher limit by the 

Clearing Member. An Equity Member 

may also revoke responsibility allocated 

to its Clearing Member pursuant to (a)(6) 

of Exchange Rule 2618 at any time in a 

manner prescribed by the Exchange. 

Like for the Gross Notional Trade 

Value risk setting, paragraph (a)(3) 

Exchange Rule 2618 provides that either 

an Equity Member or its Clearing 

Member, if allocated such responsibility 

pursuant to paragraph (a)(4) of Exchange 

Rule 2618, may establish and adjust 

limits for the Net Notional Trade Value 

risk setting. An Equity Member or 

Clearing Member may establish and 

adjust limits for the risk setting in a 

manner prescribed by the Exchange. 

The risk management web portal page 

will also provide a view of all 

applicable limits for each Equity 

Member, which will be made available 

to the Equity Member and its Clearing 

Member, as discussed in further detail 

below. 

Paragraph (a)(5) of Exchange Rule 

2618 provides optional alerts to signal 

when an Equity Member is approaching 

its designated limit. If enabled, the 

alerts would generate when the Equity 

Member breaches certain percentage 

thresholds of its designated risk limit, 

including the proposed Net Notional 

Trade Value risk setting, as determined 

by the Exchange. Based on current 

industry standards, in its proposal to 

adopt the Gross Notional Trade Value 

risk setting, the Exchange initially set 

these thresholds at seventy-five or 

ninety percent of the designated risk 

limit.17 These thresholds would also 

apply to the Net Notional Trade Value 

risk setting. Both the Equity Member 

and Clearing Member 18 would have the 

option to enable the alerts via the risk 

management tool on the web portal and 

designate email recipients of the 

notification. The proposed alert system 

is meant to warn an Equity Member and 

Clearing Member of the Equity 

Member’s trading activity, and will have 

no impact on the Equity Member’s order 

and trade activity if a warning 

percentage is breached. Proposed 

paragraph (a)(6) of Exchange Rule 2618 

would authorize the Exchange to 

automatically block new orders 

submitted and cancel all open orders in 

the event that a risk setting is breached. 

The Exchange will continue to block 

new orders submitted until the Equity 

Member or Clearing Member, if 

allocated such responsibility pursuant 

to proposed paragraph (a)(4) of 

Exchange Rule 2618, adjusts the risk 

settings to a higher threshold. The 

proposed functionality is designed to 

assist Equity Members and Clearing 

Members in the management of, and 

risk control over, their credit risk. 

Further, the proposed functionality 

would allow the Equity Member to 

seamlessly avoid unintended executions 

that exceed their stated risk tolerance. 

Like it did for the Gross Notional 

Trade Value risk setting,19 the Exchange 

does not guarantee that the proposed 

Net Notional Trade Value risk setting 

and the processes described in 

paragraphs (a)(2) through (6) are 

sufficiently comprehensive to meet all 

of an Equity Member’s risk management 

needs. Pursuant to Rule 15c3–5 under 

the Act,20 a broker-dealer with market 

access must perform appropriate due 

diligence to assure that controls are 

reasonably designed to be effective, and 

otherwise consistent with the rule.21

Use of the Exchange’s risk settings 

included in proposed paragraphs (a)(2) 

through (6) of Exchange Rule 2618 will 

not automatically constitute compliance 

with Exchange or federal rules and 

responsibility for compliance with all 

Exchange and SEC rules remains with 

the Equity Member. 

Lastly, as the Exchange currently has 

the authority to share any of an Equity 

Member’s risk settings specified in 

paragraph (a) of Exchange Rule 2618 

under Exchange Rule 2620(f) with the 

Clearing Member that clears 

transactions on behalf of the Equity 

Member. Existing Exchange Rule 2620(f) 

provides the Exchange with authority to 

directly provide Clearing Members that 

clear transactions on behalf of an Equity 

Member, to share any of the Equity 

Member’s risk settings set forth under 

paragraph (a) of Exchange Rule 2618.22

The purpose of such a provision under 

Exchange Rule 2620(f) was 


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Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Notices 76633 

23See, e.g., Interpretation and Policy .03 to EDGX 

Rule 11.13. 

24 15 U.S.C. 78f(b). 

25 15 U.S.C. 78f(b)(5). 

26See supra note 5. 27 15 U.S.C. 78f(b)(5). 

implemented to reduce the 

administrative burden on participants 

on MIAX PEARL Equities, including 

both Clearing Members and Equity 

Members, and to ensure that Clearing 

Members receive information that is up 

to date and conforms to the settings 

active in the System. Further, the 

provision was adopted because the 

Exchange believed such functionality 

would help Clearing Members to better 

monitor and manage the potential risks 

that they assume when clearing for 

Equity Members of the Exchange. 

Paragraph (f) of Exchange Rule 2620 

further authorizes the Exchange to share 

any of an Equity Member’s risk settings 

specified in paragraph (a)(2) to 

Exchange Rule 2618 with the Clearing 

Member that clears transactions on 

behalf of the Equity Member. 

The Exchange notes that the use by an 

Equity Member of the risk settings 

offered by the Exchange is optional. By 

using these proposed optional risk 

settings, an Equity Member therefore 

also opts-in to the Exchange sharing its 

designated risk settings with its Clearing 

Member. The Exchange believes that its 

proposal to offer an additional risk 

setting will allow Equity Members to 

better manage their credit risk. Further, 

by allowing Equity Members to allocate 

the responsibility for establishing and 

adjusting such risk settings to its 

Clearing Member, the Exchange believes 

Clearing Members may reduce potential 

risks that they assume when clearing for 

Equity Members of the Exchange. The 

Exchange also believes sharing a 

Member’s risk settings set forth under 

paragraph (a)(2) to Exchange Rule 2618, 

including the proposed Net Notional 

Trade Value risk setting, directly with 

Clearing Members reduces the 

administrative burden on participants 

on the Exchange, including both 

Clearing Members and Equity Members, 

and ensures that Clearing Members are 

receiving information that is up to date 

and conforms to the settings active in 

the System. 

Non-Substantive Clarification 

The Exchange proposes to clarify that 

paragraphs (a)(5) and (6) of Exchange 

Rule 2618 apply only to the existing 

Gross Notional Trade Value and 

proposed Net Notional Trade Value risk 

setting set forth under paragraph (a)(2) 

of Exchange Rule 2618.23 This is 

consistent with the rules of other 

exchanges, but the Exchange believes 

this clarification is necessary due to the 

different structure of the Exchange Rule 

2618. The Exchange does not propose to 

make any other changes to paragraphs 

(a)(5) and (6) of Exchange Rule 2618. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) of the 

Act,24 in general, and furthers the 

objectives of Section 6(b)(5),25 in 

particular, because it is designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to foster 

cooperation and coordination with 

persons engaged in regulating, clearing, 

settling, processing information with 

respect to, and facilitating transactions 

in securities, to remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system, and, in general, to protect 

investors and the public interest. 

Net Notional Trade Value 

Specifically, the Exchange believes 

the proposed amendment will remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system because it 

provides additional functionality for an 

Equity Member to manage its credit risk. 

Like for the Gross Notional Trade Value 

risk setting,26 the processes set forth 

under existing paragraphs (a)(3) through 

(6) of Exchange Rule 2618 would also 

apply to the Net Notional Trade Value 

Risk Setting. In addition, the proposed 

risk setting could provide Clearing 

Members, who have assumed certain 

risks of Equity Members, greater control 

over risk tolerance and exposure on 

behalf of their correspondent Equity 

Members, if allocated responsibility 

pursuant to proposed paragraph (a)(4) of 

Exchange Rule 2618, while also 

providing an alert system that would 

help to ensure that both Equity 

Members and its Clearing Member are 

aware of developing issues. As such, the 

Exchange believes that the proposed 

risk settings would provide a means to 

address potentially market-impacting 

events, helping to ensure the proper 

functioning of the market. 

In addition, the Exchange believes 

that the proposed rule change is 

designed to protect investors and the 

public interest because the proposed 

functionality is a form of risk mitigation 

that will aid Equity Members and 

Clearing Members in minimizing their 

financial exposure and reduce the 

potential for disruptive, market-wide 

events. In turn, the introduction of such 

risk management functionality could 

enhance the integrity of trading on the 

securities markets and help to assure the 

stability of the financial system. 

Further, the Exchange believes that 

the proposed rule will foster 

cooperation and coordination with 

persons facilitating transactions in 

securities because the Exchange will 

provide alerts when an Equity Member’s 

trading activity reaches certain 

thresholds, which will be available to 

both the Equity Member and Clearing 

Member. As such, the Exchange may 

help Clearing Members monitor the risk 

levels of correspondent Equity Members 

and provide tools for Clearing Members, 

if allocated such responsibility, to take 

action. 

The proposal will permit Clearing 

Members who have a financial interest 

in the risk settings of Equity Members 

to better monitor and manage the 

potential risks assumed by Clearing 

Members, thereby providing Clearing 

Members with greater control and 

flexibility over setting their own risk 

tolerance and exposure. To the extent a 

Clearing Member might reasonably 

require an Equity Member to provide 

access to its risk settings as a 

prerequisite to continuing to clear trades 

on the Equity Member’s behalf, the 

Exchange’s proposal to share those risk 

settings directly reduces the 

administrative burden on participants 

on the Exchange, including both 

Clearing Members and Equity Members. 

Moreover, providing Clearing Members 

with the ability to see the risk settings 

established for Equity Members for 

which they clear will foster efficiencies 

in the market and remove impediments 

to and perfect the mechanism of a free 

and open market and a national market 

system. The proposal also ensures that 

Clearing Members are receiving 

information that is up to date and 

conforms to the settings active in the 

System. The Exchange believes that the 

proposal is consistent with the Act, 

particularly Section 6(b)(5),27 because it 

will foster cooperation and coordination 

with persons engaged in facilitating 

transactions in securities and more 

generally, will protect investors and the 

public interest, by allowing Clearing 

Members to better monitor their risk 

exposure and by fostering efficiencies in 

the market and removing impediments 

to and perfect the mechanism of a free 

and open market and a national market 

system. 

Finally, the Exchange believes that 

the proposed rule change does not 

unfairly discriminate among the 

Exchange’s Members because use of the 

risk settings is optional and are not a 

prerequisite for participation on the 


TKELLEY on DSKBCP9HB2PROD with NOTICES
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28See supra note 5. 

29See supra note 4. 

30 Id. 

31See supra note 5. 

32 15 U.S.C. 78f(b)(5). 

33See, e.g., Interpretation and Policy .03 to EDGX 

Rule 11.13. 

34 Id. 

35 15 U.S.C. 78s(b)(3)(A). 

36 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires a self-regulatory organization to 

give the Commission written notice of its intent to 

file the proposed rule change, along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date of filing 

of the proposed rule change, or such shorter time 

as designated by the Commission. The Exchange 

has satisfied this requirement. 

Exchange. The proposed risk settings 

are completely voluntary and, as they 

relate solely to optional risk 

management functionality, no Equity 

Member is required or under any 

regulatory obligation to utilize them. 

Like for the Gross Notional Trade 

Value risk setting, the processes set 

forth under existing paragraphs (a)(3) 

through (6) of Exchange Rule 2618, 

which were previously filed with the 

Commission for immediate 

effectiveness, would also apply to the 

Net Notional Trade Value risk setting.28

The proposed rule change is also based 

on Interpretation and Policy .03 of 

EDGX Rule 11.10 and Interpretation and 

Policy .03 of BZX Rule 11.13, with a few 

minor differences.29 First, both BZX and 

EDGX only allow the net credit risk 

limits to be set at the MPID level or to 

a subset of orders identified within that 

MPID (the ‘‘risk group identifier’’ level) 

while the Exchange proposes to allow 

the risk limits to be set at the MPID, 

session, and firm level. Second, EDGX 

proposed additional changes to its Rule 

11.13(a) to allow their clearing members 

access to its members risk settings. The 

Exchange does not need to include 

similar changes in this proposal as 

Exchange Rule 2620(a) already provides 

Clearing Members this ability and 

includes text identical to that which 

EDGX recently adopted.30 Also unlike 

EDGX, the Exchange’s proposed Net 

Notional Trade Value and existing 

credit controls measuring net exposure 

are both based on notional execution 

value. The controls noted in paragraph 

(h) of Interpretation and Policy .03 of 

the EDGX Rules are applied based on a 

combination of outstanding orders on 

the EDGX book and notional execution 

value, while their Net Credit Risk Limit 

is based on notional execution value 

only, as the Exchange proposes herein 

and currently does so for its Gross 

Notional Trade Value risk setting. The 

Exchange notes that it proposes to 

generate alerts when the Equity Member 

breaches certain percentage thresholds 

of its designated risk limit, as 

determined by the Exchange. Based on 

current industry standards, the 

Exchange anticipates initially setting 

these thresholds at seventy-five or 

ninety percent of the designated risk 

limit. The Exchange notes that EDGX 

stated these thresholds would be set at 

fifty, seventy, or ninety percent. These 

differences also exist in the Exchange’s 

proposal to adopt the Gross Notional 

Trade Value risk setting, which was 

previously filed for immediate 

effectiveness and published by the 

Commission.31

Non-Substantive Clarifications 

The Exchange also believes its nonsubstantive, technical clarifications to 

paragraphs (a)(5) and (6) of Exchange 

Rule 2618 is consistent with Section 

6(b)(5) 32 because they will remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system. The 

proposed clarification to paragraphs 

(a)(5) and (6) of Exchange Rule 2618 that 

is applies only to the existing Gross 

Notional Trade Value and proposed Net 

Notional Trade Value risk setting set 

forth under paragraph (a)(2) of Exchange 

Rule 2618 33 is consistent with the rules 

of other exchanges, but the Exchange 

believes this clarification is necessary 

due to the different structure of the 

Exchange Rule 2618. These changes to 

Exchange Rule 2618(a)(5) and (6) 

promote just and equitable principles of 

trade by making the Exchange’s rules 

clearer and easier to understand, 

thereby avoiding potential investor 

confusion. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. In fact, the 

Exchange believes that the proposal may 

have a positive effect on competition 

because it would allow the Exchange to 

offer risk management functionality that 

is comparable to functionality that has 

been adopted by other national 

securities exchanges.34 Further, by 

providing Equity Members and their 

Clearing Members additional means to 

monitor and control risk, the proposed 

rule may increase confidence in the 

proper functioning of the markets and 

contribute to additional competition 

among trading venues and brokerdealers. Rather than impede 

competition, the proposal is designed to 

facilitate more robust risk management 

by Equity Members and Clearing 

Members, which, in turn, could enhance 

the integrity of trading on the securities 

markets and help to assure the stability 

of the financial system. Lastly, the 

proposed clarifications to Exchange 

Rule 2618(a)(5) and (6) simply seek to 

make the Exchange’s rules clearer and 

easier to understand, and, therefore, do 

they impose any burden on competition 

that is not necessary or appropriate in 

furtherance of the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 35 and Rule 19b– 

4(f)(6) thereunder.36

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

change should be approved or 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

PEARL–2020–26 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 


TKELLEY on DSKBCP9HB2PROD with NOTICES
Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Notices 76635 

37 17 CFR 200.30–3(a)(12). 

1The Commission has based this statement, in 

part, on its experience regulating EU CCPs for 

security-based swaps, and therefore this release 

primarily discusses the Commission’s processes for 

registration as a clearing agency and for requesting 

exemptions with respect to such CCPs. However, 

the Commission notes that the policy and guidance 

set forth in this statement, by its terms and as set 

forth below, also applies to an EU CCP that clears 

securities other than security-based swaps. 

2See 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) (stating that 

‘‘[t]he Committee believes the banking and security 

industries must move quickly toward the 

establishment of a fully integrated national system 

for the prompt and accurate processing and 

settlement of securities transactions’’). 

3See Release No. 34–11904 (Dec. 5, 1975), 40 FR 

57872 (Dec. 12, 1975) (considering requests for 

exemptions from non-U.S. clearing agencies). 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–PEARL–2020–26. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of such 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–PEARL–2020–26, and 

should be submitted on or before 

December 21, 2020. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.37

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–26281 Filed 11–27–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90492] 

Statement on Central Counterparties 

Authorized Under the European 

Markets Infrastructure Regulation 

Seeking To Register as a Clearing 

Agency or To Request Exemptions 

From Certain Requirements Under the 

Securities Exchange Act of 1934 

AGENCY: Securities and Exchange 

Commission. 

ACTION: Policy statement; guidance. 

SUMMARY: The Securities and Exchange 

Commission (‘‘SEC’’) is issuing a policy 

statement and guidance regarding future 

applications from a central counterparty 

(‘‘CCP’’) authorized under the European 

Market Infrastructure Regulation 

(‘‘EMIR’’) and based in the European 

Union (an ‘‘EU CCP’’) that is seeking to 

register as a clearing agency with the 

SEC under the Securities Exchange Act 

of 1934 (‘‘Exchange Act’’) and future 

requests by EU CCPs for exemptions 

from certain SEC requirements. 

DATES: The Commission’s policy 

statement is effective November 30, 

2020. 

FOR FURTHER INFORMATION CONTACT: 

Matthew Lee, Assistant Director; 

Stephanie Park, Senior Special Counsel; 

or Claire Noakes, Special Counsel; at 

202–551–7000 in the Division of 

Trading and Markets, U.S. Securities 

and Exchange Commission, 100 F Street 

NE, Washington, DC 20549. 

SUPPLEMENTARY INFORMATION: The SEC 

regulates as clearing agencies two EU 

CCPs authorized under EMIR that 

provide CCP services for security-based 

swaps.1 Where an EU CCP has been 

authorized under EMIR, it is subject to 

requirements that are generally 

consistent with the same international 

standards for CCPs as are the SEC’s 

requirements for CCPs. Based on these 

factors, the SEC is issuing this policy 

statement and guidance to describe the 

processes for EU CCPs seeking to 

register as clearing agencies or to 

request exemptions from SEC 

requirements. To provide transparency 

into SEC processes and to highlight 

efficient ways that EU CCPs can comply 

with SEC rules, this policy statement 

and guidance identifies the information 

that an EU CCP can provide in its 

registration application and provides a 

summary of the factors that the SEC will 

consider, as applicable, with respect to 

future requests for exemptions. 

Specifically, with respect to the 

registration process, EU CCPs can use 

preexisting materials, including selfassessments, in their applications to 

demonstrate compliance with EMIR and 

consistency with SEC requirements for 

CCPs. Such materials and selfassessments could facilitate both the EU 

CCP’s efficient preparation of the 

application and the SEC’s review of 

applications for registration. With 

respect to requests for exemptions, the 

SEC identifies below specific factors 

that it will consider if relevant to a 

particular future request for an 

exemption by an EU CCP. As an 

example of one such factor, an EU CCP 

may request an exemption because it 

has determined that the application of 

SEC requirements would impose 

unnecessary, duplicative, or 

inconsistent requirements in light of 

EMIR requirements to which it is 

subject. Issuing this policy statement 

and guidance is relevant to the SEC’s 

ongoing dialogue with the European 

Commission (‘‘EC’’) regarding the EC’s 

consideration of whether to find the 

SEC’s regulatory framework for CCPs 

equivalent to EMIR. 

Table of Contents 

I. Introduction 

II. Background 

A. SEC Requirements for CCPs 

B. EMIR Requirements for CCPs 

C. SEC-Registered Clearing Agencies Based 

in the EU 

III. SEC Process for Review of Applications 

for Registration as a Clearing Agency and 

Requests for Exemptions by EU CCPS 

A. Applications for Registration as a 

Clearing Agency 

B. Requests for Exemptions 

IV. Conclusion 

I. Introduction 

The SEC regulates centralized 

clearance and settlement systems for 

securities, including those provided by 

CCPs and central securities depositories 

(‘‘CSDs’’). As part of the Securities Acts 

Amendments of 1975 (‘‘1975 

Amendments’’), Congress directed the 

SEC to facilitate the establishment of a 

national system for the prompt and 

accurate clearance and settlement of 

securities transactions.2 Since the 

enactment of the 1975 Amendments, the 

SEC has given regular consideration to 

how non-U.S. clearing agencies fit 

within the SEC’s regulatory framework 

under the Exchange Act.3 The SEC also 

acted to facilitate the central clearing of 

credit default swaps by permitting 

certain entities that performed CCP 

services to clear and settle credit default 


TKELLEY on DSKBCP9HB2PROD with NOTICES