Federal Register / Vol. 86, No. 13 / Friday, January 22, 2021 / Notices 6729 

46 Id. 

47 Id. 

48 Id. 

49 17 CFR 240.17Ad–22(e)(21). 

50Additionally, when a FICC member fails to 

meet its settlement obligations, the member incurs 

FICC’s fails charge, which could further impact the 

member’s liquidity. See Section 14, Rule 11— 

Netting System, supra note 6. 

51 17 CFR 240.17Ad–22(e)(21). 52 Id. 

in the Advance Notice are consistent 

with the objectives of reducing systemic 

risks and supporting the stability of the 

broader financial system.46

The Commission further believes that 

FICC’s proposals in the Advance Notice 

are consistent with the objectives of 

promoting robust risk management and 

promoting safety and soundness. First, 

as discussed above in Section I.A., FICC 

currently acts as CCP for the End Leg of 

same-day starting repos. In that role, 

FICC risk manages, novates, and 

guarantees settlement of such trades. 

The proposed Same-Day Settling 

Service would expand FICC’s role as 

CCP to include the Start Leg of sameday starting repos, thereby applying 

FICC’s existing risk management 

standards to such trades. The 

Commission believes that extending 

FICC’s existing risk management 

standards in acting as CCP for the Start 

Leg of same-day settling repos is 

consistent with the objective of 

promoting robust risk management.47

Additionally, as discussed above in 

Section I.C., the proposed Pair-Off 

Service would enable participating 

members to settle their offsetting failed 

securities settlement obligations each 

day, shortly after the Fedwire closes. 

FICC’s current process is for such failed 

obligations to go through the evening 

netting system, with settlement 

rescheduled for the following business 

day. The proposed Pair-Off Service 

represents a more efficient process for 

resolving failed settlement obligations 

because settlement would occur on the 

day they arise, rather than continuing as 

settlement fails to the next business day. 

As discussed above, failed obligations 

that remain unsettled overnight present 

market risk exposure to both FICC and 

the parties to such trades. By enabling 

the earlier settlement of a member’s 

offsetting obligations for those members 

who choose to use the service, the 

proposed Pair-Off Service could reduce 

such overnight market risk and protect 

FICC from sustaining associated losses. 

Accordingly, the Commission believes 

that adopting the proposed Pair-Off 

Service is consistent with the objectives 

of promoting robust risk management 

and promoting safety and soundness.48

B. Consistency With Rule 17Ad– 

22(e)(21) 

Rule 17Ad–22(e)(21) under the 

Exchange Act requires each covered 

clearing agency to establish, implement, 

maintain, and enforce written policies 

and procedures reasonably designed to 

be efficient and effective in meeting the 

requirements of its participants and the 

markets it serves, and have the covered 

clearing agency’s management regularly 

review the efficiency and effectiveness 

of its (i) clearing and settlement 

arrangements, (ii) operating structure, 

including risk management policies, 

procedures and systems, and (iii) scope 

of products cleared or settled.49

As discussed above in Section I.B, the 

proposed Same-Day Settling Service 

would eliminate bilateral settlements 

between the parties to the Start Leg of 

a DVP repo and allow FICC to settle 

both the Start and End Legs of a DVP 

Repo. In that regard, the proposed 

Same-Day Settling Service represents a 

more efficient and effective settlement 

process than FICC’s current process, 

which generally includes bilateral 

settlement of the Start Leg. FICC 

designed the Same-Day Settling Service 

in response to requests from its 

members, to mitigate the operational 

risk that can result in settlement fails. 

As discussed above, if not contained, 

settlement fails can spread to other 

market participants and undermine the 

liquidity of a well-functioning market.50

In contrast, reducing the occurrence of 

settlement fails (and their resultant 

effects) would strengthen broader 

market liquidity. Therefore, by reducing 

the risk of settlement fails, the proposal 

would benefit FICC’s members when it 

results in transactions that settle on time 

that might have otherwise failed, with 

lower overall transaction costs. 

Accordingly, the Commission believes 

that adopting the proposed Same-Day 

Settling Service would be consistent 

with Rule 17Ad–22(e)(21) 51 because the 

proposal would broaden the scope of 

the DVP Service to include the Start Leg 

of same-day starting repos in a manner 

designed to be efficient and effective in 

reducing settlement fails to the benefit 

of FICC’s members and the broader DVP 

repo market. 

Moreover, as discussed above in 

Section I.C, the proposed Pair-Off 

Service would enable participating 

members to settle their offsetting failed 

securities settlement obligations each 

day, shortly after the Fedwire closes. 

Under FICC’s current process, such 

failed obligations go through the 

evening netting system, with settlement 

rescheduled for the following business 

day. The proposed Pair-Off Service 

represents a more efficient process for 

resolving failed settlement obligations 

because settlement would occur on the 

day the obligations arise, rather than 

continuing as settlement fails to the next 

business day. As discussed above, failed 

obligations that remain unsettled 

overnight present market risk exposure 

to both FICC and the parties to such 

trades. By enabling earlier settlement of 

a member’s offsetting obligations, the 

proposed Pair-Off Service could reduce 

such overnight market risk. 

Accordingly, the Commission believes 

that adopting the proposed Pair-Off 

Service would be consistent with Rule 

17Ad–22(e)(21) 52 because the proposal 

would enable the earlier settlement of a 

member’s offsetting failed obligations in 

a manner designed to be efficient and 

effective in reducing overnight market 

risk to the benefit of FICC’s members. 

III. Conclusion 

It is therefore noticed, pursuant to 

Section 806(e)(1)(I) of the Clearing 

Supervision Act, that the Commission 

does not object to Advance Notice (SR– 

FICC–2020–803) and that FICC is 

authorized to implement the proposed 

change as of the date of this notice or 

the date of an order by the Commission 

approving proposed rule change SR– 

FICC–2020–015, whichever is later. 

By the Commission. 

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–01324 Filed 1–21–21; 8:45 am] 

BILLING CODE 8011–01–P 

DEPARTMENT OF STATE 

[Public Notice: 11330] 

Notice of Department of State 

Sanctions Actions on Hong Kong 

Normalization 

SUMMARY: The Secretary of State has 

imposed sanctions on fourteen 

individuals pursuant to Executive Order 

13936, the President’s Executive Order 

on Hong Kong Normalization. 

DATES: The Secretary of State’s 

determination regarding the fourteen 

individuals identified in the 

SUPPLEMENTARY INFORMATION section 

was effective on December 7, 2020. 

FOR FURTHER INFORMATION CONTACT: 

Taylor Ruggles, Director, Office of 

Economic Sanctions Policy and 

Implementation, Bureau of Economic 

and Business Affairs, Department of 

State, Washington, DC 20520, tel.: (202) 

647–7677, email: RugglesTV@state.gov. 

SUPPLEMENTARY INFORMATION: Pursuant 

to Section 4(a)(iii)(A) of E.O. 13936 the 


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6730 Federal Register / Vol. 86, No. 13 / Friday, January 22, 2021 / Notices 

Secretary of State, in consultation with 

the Secretary of the Treasury, or the 

Secretary of the Treasury, in 

consultation with the Secretary of State 

may authorize blocking of all property 

or interests in property that are in the 

United States, that hereafter come 

within the United States, or that are in 

or hereafter come within the possession 

or control of any United States person, 

of any foreign person upon determining 

that the person is or has been a leader 

or official of any entity, including any 

government entity, that has engaged in, 

or whose members have engaged in, 

developing, adopting, or implementing 

the Law of the People’s Republic of 

China on Safeguarding National 

Security in the Hong Kong 

Administrative Region (the ‘‘National 

Security Law’’). 

The Secretary of State has 

determined, pursuant to section 

4(a)(iii)(A) of E.O. 13936, that Wang 

Chen, Cao Jianming, Zhang Chunxian, 

Shen Yueyue, Ji Bingxuan, Arken 

Imirbaki, Wan Exiang, Chen Du, Wang 

Dongming, Padma Choling, Ding 

Zhongli, Hao Mingjin, Cai Dafeng, and 

Wu Weihua, are or have been leaders or 

officials of an entity, including any 

government entity, that has engaged in, 

or whose members have engaged in, 

developing, adopting, or implementing, 

the National Security Law, and has 

approved the Department of Treasury 

adding them to the Specially Designated 

and Blocked Persons List (SDN List). All 

property and interests in property 

subject to U.S. jurisdiction of these 

individuals are blocked, and U.S. 

persons are generally prohibited from 

engaging in transactions with them. 

Peter Haas, 

Principal Deputy Assistant Secretary, Bureau 

of Economic and Business Affairs, 

Department of State. 

[FR Doc. 2021–01276 Filed 1–21–21; 8:45 am] 

BILLING CODE 4710–AE–P 

DEPARTMENT OF STATE 

[Public Notice 11329] 

Notice of Department of State 

Sanctions Actions on Hong Kong 

Normalization. 

SUMMARY: The Secretary of State has 

imposed sanctions on four individuals 

pursuant to Executive Order 13936, the 

President’s Executive Order on Hong 

Kong Normalization. 

DATES: The Secretary of State’s 

determination regarding the four 

individuals identified in the 

SUPPLEMENTARY INFORMATION section 

was effective on November 9, 2020. 

FOR FURTHER INFORMATION CONTACT: 

Taylor Ruggles, Director, Office of 

Economic Sanctions Policy and 

Implementation, Bureau of Economic 

and Business Affairs, Department of 

State, Washington, DC 20520, tel.: (202) 

647 7677, email: RugglesTV@state.gov. 

SUPPLEMENTARY INFORMATION: Pursuant 

to Section 4(a)(iii)(A) of E.O. 13936 the 

Secretary of State, in consultation with 

the Secretary of the Treasury, or the 

Secretary of the Treasury, in 

consultation with the Secretary of State 

may authorize blocking of all property 

or interests in property that are in the 

United States, that hereafter come 

within the United States, or that are in 

or hereafter come within the possession 

or control of any United States person, 

of any foreign person upon determining 

that the person is or has been a leader 

or official of any entity, including any 

government entity, that has engaged in, 

or whose members have engaged in, 

developing, adopting, or implementing 

the Law of the People’s Republic of 

China on Safeguarding National 

Security in the Hong Kong 

Administrative Region (the ‘‘National 

Security Law’’), or in actions or policies 

that threaten the peace, security, 

stability, or autonomy of Hong Kong. 

The Secretary of State has 

determined, pursuant to section 

4(a)(iii)(A) of E.O. 13936, that Li 

Jiangzhou, Edwina Lau, and Steve Li 

Kwai-Wah are or have been leaders or 

officials of entities, including any 

government entity, that have engaged in, 

or whose members have engaged in, 

developing, adopting, or implementing 

the National Security Law, and 

approved the Department of the 

Treasury adding them to the Specially 

Designated Nationals and Blocked 

Person List (SDN List). All property and 

interests in property subject to U.S. 

jurisdiction of these individuals are 

blocked, and U.S. persons are generally 

prohibited from engaging in transactions 

with them. 

The Secretary of State has determined 

that Deng Zhonghua is or has been a 

leader or official of an entity, including 

any government entity, that has engaged 

in, or whose members have engaged in, 

actions or policies that threaten the 

peace, security, stability or autonomy of 

Hong Kong, pursuant to section 

4(a)(iii)(A) of E.O. 13936, and approved 

OFAC adding him to the SDN List. All 

property and interests in property 

subject to U.S. jurisdiction of these 

individuals are blocked, and U.S. 

persons are generally prohibited from 

engaging in transactions with them. 

Peter Haas, 

Principal Deputy Assistant Secretary, Bureau 

of Economic and Business Affairs, 

Department of State. 

[FR Doc. 2021–01274 Filed 1–21–21; 8:45 am] 

BILLING CODE 4710–AE–P 

DEPARTMENT OF STATE 

[Public Notice: 11331] 

Imposition of Nonproliferation 

Measures Against Foreign Persons, 

Including a Ban on U.S. Government 

Procurement 

AGENCY: Bureau of International 

Security and Nonproliferation, 

Department of State. 

ACTION: Notice. 

SUMMARY: A determination has been 

made that a number of foreign persons 

have engaged in activities that warrant 

the imposition of measures pursuant to 

the Iran, North Korea, and Syria 

Nonproliferation Act. The Act provides 

for penalties on foreign entities and 

individuals for the transfer to or 

acquisition from Iran since January 1, 

1999; the transfer to or acquisition from 

Syria since January 1, 2005; or the 

transfer to or acquisition from North 

Korea since January 1, 2006, of goods, 

services, or technology controlled under 

multilateral control lists (Missile 

Technology Control Regime, Australia 

Group, Chemical Weapons Convention, 

Nuclear Suppliers Group, Wassenaar 

Arrangement) or otherwise having the 

potential to make a material 

contribution to the development of 

weapons of mass destruction (WMD) or 

cruise or ballistic missile systems. The 

latter category includes (a) items of the 

same kind as those on multilateral lists 

but falling below the control list 

parameters when it is determined that 

such items have the potential of making 

a material contribution to WMD or 

cruise or ballistic missile systems, (b) 

items on U.S. national control lists for 

WMD/missile reasons that are not on 

multilateral lists, and (c) other items 

with the potential of making such a 

material contribution when added 

through case-by-case decisions. 

DATES: Effective January 13, 2021. 

FOR FURTHER INFORMATION CONTACT: On 

general issues: Pam Durham, Office of 

Missile, Biological, and Chemical 

Nonproliferation, Bureau of 

International Security and 

Nonproliferation, Department of State, 

Telephone (202) 647–4930. For U.S. 

Government procurement ban issues: 


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