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

2 17 CFR 240.19b–4. 

3See Notice of Filing infra note 4, at 88 FR 48926. 

4Securities Exchange Act Release No. 97969 (July 

24, 2023), 88 FR 48926 (July 28, 2023) (File No. SR– 

FICC–2023–010) (‘‘Notice of Filing’’). 

5CME provides central counterparty services for 

futures, options, and swaps. See Financial Stability 

Oversight Council (‘‘FSOC’’) 2012 Annual Report, 

Appendix A, https://home.treasury.gov/system/ 

files/261/here.pdf (last visited July 17, 2023). 

6The Existing Agreement is incorporated in the 

GSD Rules available at www.dtcc.com/legal/rulesand-procedures.aspx. Unless otherwise specified, 

capitalized terms not defined herein shall have the 

meanings ascribed to them in the GSD Rules, which 

includes the Existing Agreement. 

7FICC provided data demonstrating that the 

proposal would likely increase the range of 

potential reduction in margin related to crossmargining positions. FICC provided its analysis of 

the potential effects on margin requirements to the 

Commission in a confidential Exhibit 3 to File No. 

SR–FICC–2023–010. 

8FICC provided the SLA in a confidential Exhibit 

3 to File No. SR–FICC–2023–010. 

9The following CME products would become 

eligible for cross-margining: CBT 3YR 3-year TNotes Futures, CBT TN Ultra Ten-Year T-Note 

Futures, CBT UBE Ultra U.S. Treasury Bond 

Futures, CBT TWE 20-Year U.S. Treasury Bond 

Futures, CBT 41 30 Day Federal Funds Futures, 

CME SR1 One-Month SOFR Futures, and CME SR3 

Three-Month SOFR Futures. See Notice of Filing, 

88 FR at 48928, n.14. At the same time, certain CME 

products would no longer be eligible due to lack of 

use under the current arrangement. Id. 

10The following FICC products will no longer be 

eligible for cross-margining with CME products: 

Treasury bills (maturity of one year or less) and 

Treasury Inflation-Protected Securities (TIPS). See 

Notice of Filing, 88 FR at 48929, n.29. U.S. Treasury 

notes and bonds cleared by FICC would continue 

to be eligible for cross-margining. See Notice of 

Filing, 88 FR at 48929. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98327; File No. SR–FICC– 

2023–010] 

Self-Regulatory Organizations; the 

Fixed Income Clearing Corporation; 

Order Granting Approval of Proposed 

Rule Change To Amend and Restate 

the Cross-Margining Agreement 

Between FICC and CME 

September 8, 2023. 

I. Introduction 

On July 17, 2023, the Fixed Income 

Clearing Corporation (‘‘FICC’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change SR–FICC–2023– 

010 (‘‘Proposed Rule Change’’) pursuant 

to section 19(b) of the Securities 

Exchange Act of 1934 (‘‘Exchange 

Act’’) 1 and Rule 19b–4 2 thereunder to 

change the terms of its cross-margining 

arrangement with the Chicago 

Mercantile Exchange Inc. (‘‘CME’’).3 The 

Proposed Rule Change was published 

for public comment in the Federal 

Register on July 28, 2023.4 The 

Commission has received no comments 

regarding the Proposed Rule Change. 

This order approves the Proposed Rule 

Change. 

II. Background 

FICC is a central counterparty 

(‘‘CCP’’), which means it interposes 

itself as the buyer to every seller and 

seller to every buyer for the financial 

transactions it clears. FICC operates two 

divisions: the Government Securities 

Division (‘‘GSD’’) and the MortgageBacked Securities Division (‘‘MBSD’’). 

GSD provides trade comparison, netting, 

risk management, settlement, and 

central counterparty services for the 

U.S. Government securities market. As 

such, FICC is exposed to the risk that 

one or more of its members may fail to 

make a payment or to deliver securities. 

A key tool that FICC uses to manage 

its credit exposures to its members is 

the daily collection of margin from each 

member. A member’s margin is 

designed to mitigate potential losses 

associated with liquidation of the 

member’s portfolio in the event of that 

member’s default. The aggregated 

amount of all GSD members’ margin 

constitutes the GSD Clearing Fund, 

which FICC would be able to access 

should a defaulted member’s own 

margin be insufficient to satisfy losses to 

FICC caused by the liquidation of that 

member’s portfolio. Each member’s 

margin consists of a number of 

applicable components, including a 

value-at-risk (‘‘VaR’’) charge (‘‘VaR 

Charge’’) designed to capture the 

potential market price risk associated 

with the securities in a member’s 

portfolio. The VaR Charge is typically 

the largest component of a member’s 

margin requirement. The VaR Charge is 

designed to cover FICC’s projected 

liquidation losses with respect to a 

defaulted member’s portfolio at a 99 

percent confidence level. 

Margin requirements are typically 

designed, in part, to recognize the 

potential relationship between products 

in a member’s portfolio (e.g., some 

products may naturally gain value when 

others lose value). Members may, 

however, hold assets or enter into 

transactions that reduce risk, but are not 

visible to the CCP. For example, a 

market participant might purchase a 

debt security, and at the same time, 

contract to sell the same security in the 

future. The risk to the market 

participant is combination of these two 

offsetting transactions as opposed to the 

risk of each added together because it is 

unlikely that both positions would lose 

value at the same time under normal 

market conditions. 

To recognize potential offsets in the 

risk presented by related products, FICC 

has an ongoing cross-margining 

arrangement with CME, which acts as a 

CCP for futures related to the debt 

instruments that FICC clears.5 The 

cross-margining arrangement is 

governed by a contract (the ‘‘Existing 

Agreement’’) that, among other things, 

defines the methodology by which FICC 

and CME determine offsets between 

cleared products that could reduce the 

margin requirement of an FICC 

member.6 FICC and CME have 

negotiated a new agreement (the 

‘‘Restated Agreement’’) that FICC 

proposes to adopt to govern the crossmargining arrangement between FICC 

and CME. 

III. Description of the Proposed Rule 

Change 

The proposed changes to the crossmargining arrangement are primarily 

designed to (i) expand the scope of CME 

products eligible for cross-margining, 

(ii) replace the methodology for 

calculating the margin reductions 

available to FICC’s members; 7 and (iii) 

improve the default management and 

loss sharing processes that FICC and 

CME would engage in if a common 

member were to default. FICC also 

proposes relocating certain timing and 

operational aspects of the cross-margin 

arrangement to a supporting service 

level agreement (the ‘‘SLA’’).8 For 

example, the SLA would cover 

operational issues such as the creation 

and maintenance of special accounts for 

managing settlement and liquidation of 

a defaulting common member’s cross 

margin positions as well as the 

operational steps involved in managing 

the default of a common member. The 

SLA would also define the times by 

which FICC and CME would be 

expected to exchange certain 

information and reports. 

The following sections describe the 

proposed changes to the crossmargining arrangement in more detail. 

A. Products Eligible for Cross-Margining 

The margin reductions provided by 

FICC and CME to common members are 

based on the relationship between the 

products that each CCP clears. Only 

products specified in the Existing 

Agreement currently may be considered 

when determining margin reductions 

(the ‘‘Eligible Products’’). As noted 

above, in the Restated Agreement, FICC 

proposes to expand the scope of CME 

products eligible for cross-margining.9

FICC also proposes to reduce the scope 

of products it clears that would be 

eligible for cross-margining.10 The 


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11FICC provided data demonstrating that the 

proposed change in eligible products would have 

reduced the average daily margin requirements by 

approximately 1.33 percent for the small set of 

members who participated in the cross-margining 

program. FICC provided its analysis of the potential 

effects on margin requirements to the Commission 

in a confidential Exhibit 3 to File No. SR–FICC– 

2023–010. 

12Future changes to FICC’s rules, such as the 

terms of the Restated Agreement, are outside the 

scope of this proposal. The Restated Agreement and 

the SLA provide a mechanism for changing the list 

of Eligible Products; however, the agreement would 

not alter FICC’s filing obligations pursuant to 

section 19(b) of the Exchange Act or section 806(e) 

of the Dodd-Frank Wall Street Reform and 

Consumer Protection Act of 2010. See 15 U.S.C. 

78s(b) and 12 U.S.C. 5465(e). 

13For the small set of members involved in crossmargining, the proposed change would widen the 

potential range of margin reductions. See Notice of 

Filing, 88 FR at 48927. Specifically, the average 

range of reductions to total margin was 0.1 percent 

to 17.4 percent under the current methodology, and 

would have been 0 percent to 36.6 percent under 

the proposed methodology. Id. The overall 

reduction to margin at FICC would have been 

significantly smaller because cross-margining 

related margin requirements account for only small 

amount of total margin requirements on average. 

See Notice of Filing, 88 FR at 48927, n.10. 

14Backtesting data showed that, even with the 

broadened range of margin reductions, FICC’s 

ability to cover exposures presented by members 

would have improved. FICC provided backtesting 

data in a confidential Exhibit to File No. SR–FICC– 

2023–010. 

15The threshold would initially be set at 1 

percent to prevent any negatively correlated 

portfolios or portfolios with little to no correlation 

to receive cross-margin benefit because of the 

operational coordination required to provide such 

benefit. See Notice of Filing, 88 FR at 48930, n.40. 

Additionally, FICC provided information pertaining 

to thresholds for the maximum margin reduction 

allowable under the proposed rule change as well. 

See Notice of Filing, 88 FR at 48927, n.10. 

16For example, assume that FICC suspends 

Member A, but CME does not. CME must require 

Member A to pay both the margin reduction 

provided by FICC (which CME passes to FICC) and 

the margin reduction provided by CME (which is 

retained by CME). Such a payment would provide 

each CCP with the collateral it would have 

collected if the common member did not participate 

in the cross-margining arrangement. 

17 In contrast, the provisions of the Existing 

Agreement set out a complex series of conditional 

statements and calculations that flow into further 

loss sharing provisions in the event that only one 

CCP suspends a common member. 

18The Restated Agreement would allow for either 

FICC or CME to buy-out the other with regard to 

the cross-margined positions of the defaulter. 

Failing joint action or buy-out, the Restated 

Agreement allows for separate liquidation followed 

by loss sharing, similar to the provisions of the 

Existing Agreement. 

19Specifically, FICC and CME would each 

calculate their respective net gain or loss as well as 

the overall combined gain or loss across the CCPs 

to determine their respective allocation of losses or 

gains arising out the liquidation. 

combined effect of the proposed 

changes to products eligible for crossmargining would expand the potential 

reductions members could receive 

through cross-margining program.11 The 

new set of products eligible for crossmargining would be listed in exhibits to 

the Restated Agreement.12

B. Methodology for Margining CrossMargin Portfolios 

In addition to changing the set of 

products eligible for cross-margining, 

FICC proposes replacing the 

methodology for calculating margin 

requirements for cross-margined 

positions. The proposed methodology is 

designed to more accurately estimate 

the risk presented by the cross-margined 

positions. Margin requirements set by 

the proposed methodology would allow 

for, on average, a wider range of margin 

reductions; 13 however, because of the 

increased accuracy, the proposed 

methodology would not reduce FICC’s 

ability to cover the credit risk posed by 

its members.14

The proposed methodology is also 

less complex than the current 

methodology. FICC proposes to 

calculate the margin reduction from 

cross-margining based on the combined 

portfolio of eligible products of a 

common member (i.e., both the products 

cleared at FICC and the related products 

cleared at CME) with a VaR 

methodology. The proposed 

methodology calculates portfolio margin 

reductions based on correlations at the 

security level. FICC and CME would 

separately calculate the potential margin 

reduction resulting from offsetting 

positions in a common member’s 

portfolio using their respective margin 

methodologies and agree to reduce the 

member’s margin requirement by the 

more conservative amount (i.e., the 

smaller reduction). Further, FICC 

proposes to apply such a margin 

reduction only if it exceeds a minimum 

threshold.15

Conversely, the current methodology 

involves a series of steps to allow FICC 

and CME to separately consider offsets 

for their respective products. Such steps 

include the conversion of products into 

other products to facilitate comparison 

of a common member’s Treasury and 

futures contracts (e.g., FICC would 

convert CME products into equivalent 

FICC products). The current 

methodology also requires FICC and 

CME to group products by maturity into 

‘‘Offset Classes’’ to facilitate the 

calculation of a member’s margin 

reduction. As noted above, the current 

process is complex and produces less 

accurate offsets that could negatively 

affect FICC’s ability to cover the 

exposures presented by its members. 

C. Default Management and Loss 

Sharing 

FICC proposes to strengthen its 

default management coordination with 

CME and to simplify the sharing of 

losses arising out of a common member 

default. The Restated Agreement would 

provide three potential default 

management paths and would favor 

joint action by FICC and CME as a first, 

best option. In contrast, the Existing 

Agreement merely seeks to align the 

time at which the CCPs liquidate a 

common member’s positions. With 

regard to loss sharing, the Restated 

Agreement provides for a relatively 

simple division of gains and losses. 

Further, the Restated Agreement would 

align cashflows through the exchange of 

variation margin, which is not 

contemplated by the Existing 

Agreement. 

Default Management Coordination: 

The proposed changes would simplify 

the scenario in which only one of the 

CCPs suspends a common member by 

requiring the common member to repay 

the margin reduction realized under the 

cross-margin arrangement.16 If the 

common member fails to pay back the 

margin reduction, then the CCPs must 

both suspend and liquidate the 

member’s portfolio.17 In the event that 

both FICC and CME suspend a common 

member, the Restated Agreement is 

designed to facilitate joint liquidation of 

common member’s cross-margin 

portfolio. The Existing Agreement 

requires only that FICC and CME make 

reasonable efforts to coordinate when 

off-setting positions are closed out and 

to report losses to each other. In 

contrast, the Restated Agreement would 

require in the first instance a good faith 

attempt to jointly transfer, liquidate, or 

close-out positions. The Restated 

Agreement would further describe 

alternatives where joint liquidation is 

either infeasible or inadvisable, 

including separate liquidation similar to 

what is contemplated under the Existing 

Agreement.18

Loss Sharing. The Restated Agreement 

would simplify loss sharing in the event 

of a common member default and would 

introduce a new feature to align 

cashflows during default management. 

As stated above, the Restated Agreement 

is designed to facilitate joint default 

management by FICC and CME. In the 

event the CCPs jointly transfer, 

liquidate, or close-out the common 

member’s cross-margin positions, if one 

CCP faces a loss greater than (or gain 

less than) their share of total losses (or 

gains), the other CCP would pay the 

difference to ensure that each CCP was 

responsible for its respective portion of 

losses or gains.19

In the case of a joint liquidation, the 

Restated Agreement would also provide 

for an exchange of variation margin. 


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20 In the event that either FICC or CME buys out 

the other’s cross-margin positions and related 

collateral, no loss sharing would occur. 

21 15 U.S.C. 78s(b)(2)(C). 

22 15 U.S.C. 78q–1(b)(3)(F). 

23 17 CFR 240.17Ad–22(e)(6) and 17 CFR 

240.17Ad–22(e)(20). 

24 15 U.S.C. 78q–1(b)(3)(F). 

25See Securities Exchange Act Release No. 63986 

(Feb. 28, 2011), 76 FR 12144, 12153 (Mar. 4, 2011) 

(File No. SR–FICC–2010–09) (approving the 

introduction of cross-margining for positions held 

at FICC and New York Portfolio Clearing, LLC) 

(citations omitted) (‘‘NYPC Order’’). 

26See id. (citations omitted). 

27See id. 

28See Securities Exchange Act Release No. 90464 

(Nov. 19, 2020), 85 FR 75384, 75386 (Nov. 25, 2020 

(File No. SR–OCC–2020–010) (approving a second 

amended and restated cross-margining agreement 

between the Options Clearing Corp. and CME); 

Securities Exchange Act Release No. 38584 (May 8, 

1997), 62 FR 26602, 26604–05 (May 14, 1997) (File 

No. SR–OCC–97–04) (establishing a cross-margining 

agreement with the Options Clearing Corp., CME, 

and the Commodity Clearing Corporation). 

29See id. 

30See id. See also NYPC Order at 12153. 31 15 U.S.C. 78q–1(b)(3)(F). 

Such an exchange would improve the 

efficiency of the default management 

process by aligning cashflows in a 

scenario in which either CME or FICC 

has a payment obligation arising out of 

cross-margin positions that could be 

covered by the variation margin gains 

on offsetting cross-margin positions 

held by the other CCP. The Existing 

Agreement does not contemplate any 

exchange of variation margin between 

FICC and CME. 

The Restated Agreement would also 

simplify the sharing of losses where 

FICC and CME liquidate the defaulter’s 

cross-margin positions separately. In the 

case of separate liquidations, if either 

FICC or CME has a net gain and the 

other has a net loss, then the CCP with 

the net gain would make a payment to 

the CCP with the net loss. Such 

payment would be the lesser of the net 

gain or net loss realized by the CCPs.20

IV. Discussion and Commission 

Findings 

Section 19(b)(2)(C) of the Exchange 

Act directs the Commission to approve 

a proposed rule change of a selfregulatory organization if it finds that 

such proposed rule change is consistent 

with the requirements of the Exchange 

Act and the rules and regulations 

thereunder applicable to such 

organization.21 After carefully 

considering the Proposed Rule Change, 

the Commission finds that the proposal 

is consistent with the requirements of 

the Exchange Act and the rules and 

regulations thereunder applicable to 

FICC. More specifically, the 

Commission finds that the proposal is 

consistent with section 17A(b)(3)(F) of 

the Exchange Act,22 and Rules 17Ad– 

22(e)(6) and (e)(20) 23 thereunder, as 

described in detail below. 

A. Consistency With Section 

17A(b)(3)(F) of the Exchange Act 

Section 17A(b)(3)(F) of the Exchange 

Act requires, among other things, that 

the rules of a clearing agency be 

designed to remove impediments to and 

help perfect the mechanism of a 

national system for the prompt and 

accurate clearance and settlement of 

securities transactions; and to foster 

cooperation and coordination with 

persons engaged in the clearance and 

settlement of securities transactions.24

The Commission has historically 

supported and approved crossmargining at clearing agencies and has 

recognized the potential benefits of 

cross-margining systems, which include 

freeing capital through reduced margin 

requirements, reducing clearing costs by 

integrating clearing functions, reducing 

clearing agency risk by centralizing 

asset management, and harmonizing 

liquidation procedures.25 The 

Commission has encouraged crossmargining arrangements as a way to 

promote more efficient risk management 

across product classes.26 Crossmargining arrangements may be 

consistent with section 17A(b)(3)(F) in 

that they may strengthen the 

safeguarding of assets through effective 

risk controls that more broadly take into 

account offsetting positions of 

participants in both the cash and futures 

markets, and promote prompt and 

accurate clearance and settlement of 

securities through increased 

efficiencies.27

The Commission continues to view 

cross-margining programs as consistent 

with clearing agency responsibilities 

under section 17A of the Exchange 

Act.28 Cross-margining programs 

enhance member liquidity and systemic 

liquidity both in times of normal trading 

and in times of market stress by 

reducing margin requirements for 

members, which could prove crucial in 

maintaining member liquidity during 

periods of market volatility, and 

enhancing market liquidity as a 

whole.29 By enhancing market liquidity, 

cross-margining arrangements remove 

impediments to and help perfect the 

mechanism of a national system for the 

prompt and accurate clearance and 

settlement of securities transactions.30

Based on a review of the record, and for 

the reasons described below, the 

Commission believes that the Proposed 

Rule Change is consistent with 

removing of impediments to and 

helping to perfect the mechanism of a 

national system for the prompt and 

accurate clearance and settlement of 

securities transactions as well as 

fostering cooperation and coordination 

with persons engaged in the clearance 

and settlement of securities 

transactions. 

As described above, FICC proposes to 

expand the set of products accepted as 

part of its cross-margining arrangement 

with CME. Expanding the set of Eligible 

Products will increase the opportunities 

to reduce member margin requirements, 

which could support the maintenance of 

market participants’ liquidity during 

periods of market volatility. The 

expansion of product eligibility would 

also support market participants’ use of 

the national system for the prompt and 

accurate clearance and settlement 

without being impeded by the market 

structure in which different CCPs serve 

different asset classes. 

Also as described above, the proposed 

changes would reduce margin 

requirements overall by a small amount 

without reducing FICC’s ability to cover 

the credit risk posed by its members. 

Although the margin reductions 

provided by the proposed changes 

would not diminish FICC’s ability to 

cover the credit risk posed by its 

members, the link represented by the 

cross-margining arrangement 

necessitates cooperation not only during 

normal operations, but also following 

the default of a common member. The 

proposed Restated Agreement details 

the processes for default management 

and loss sharing. The Restated 

Agreement favors joint liquidation by 

the parties and also contemplates 

alternative default management 

scenarios in which a joint liquidation is 

not feasible or advisable. The Proposed 

Rule Change would also introduce 

variation margin sharing across the 

CCPs to facilitate default management. 

The Commission finds, therefore, that 

the Proposed Rule Change is consistent 

with the requirements of section 

17A(b)(3)(F) of the Exchange Act.31

B. Consistency With Rule 17Ad–22(e)(6) 

Under the Exchange Act 

Rule 17Ad–22(e)(6)(v) under the 

Exchange Act requires that a covered 

clearing agency establish, implement, 

maintain, and enforce written policies 

and procedures reasonably designed to 

cover, if the covered clearing agency 

provides central counterparty services, 

its credit exposures to its participants by 

establishing a risk-based margin system 

that, at a minimum, uses an appropriate 

method for measuring credit exposure 

that accounts for relevant product risk 


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32 17 CFR 240.17Ad–22(e)(6)(v). 

33See Standards for Covered Clearing Agencies, 

Exchange Act Release No. 78961, 81 FR 70786, 

70819 (Oct. 13, 2016) (File No. S7–03–14) 

(‘‘Standards for Covered Clearing Agencies’’). 

34See id. 

35Supra note 14. 

36 17 CFR 240.17Ad–22(e)(6)(v). 

37 17 CFR 240.17Ad–22(e)(20). 

38 12 U.S.C. 5462(6)(A). 

39 17 CFR 240.17Ad–22(a)(8). 

40See Standards for Covered Clearing Agencies, 

81 FR at 70841. 

41 Id. 

42 Id. 

43See FSOC 2012 Annual Report, Appendix A, 

https://home.treasury.gov/system/files/261/here.pdf 

(last visited July 17, 2023). 44Supra note 14. 

factors and portfolio effects across 

products.32 In adopting Rule 17Ad– 

22(e)(6), the Commission provided 

guidance that a covered clearing agency 

generally should consider in 

establishing and maintaining policies 

and procedures for margin.33 The 

Commission stated that a covered 

clearing should consider, in calculating 

margin requirements, whether it allows 

offsets or reductions in required margin 

across products that it clears or between 

products that it an another clearing 

agency clear, if the risk of one product 

is significantly and reliably correlated 

with the risk of the other product; and 

where two or more clearing agencies are 

authorized to offer cross-margining, 

whether they have appropriate 

safeguards and harmonized overall risk 

management systems.34

The Proposed Rule Change would 

support the continued allowance of 

margin reductions in recognition of the 

correlation between products cleared by 

CME and FICC. Whether the reduced 

margin represents an appropriate 

measure of the credit exposure posed to 

FICC may be viewed in terms of 

whether such margin is sufficient to 

cover the potential losses associated 

with cross-margined positions following 

a member default. As described above, 

backtesting data demonstrates that the 

proposed margin methodology would 

not reduce FICC’s ability to cover the 

credit risk posed by its members within 

the context of cleared products eligible 

for cross-margining under the Restated 

Agreement.35 Further, the Restated 

Agreement includes provisions to 

safeguard FICC against a scenario in 

which it ceases to act for a common 

member, but CME does not. 

Specifically, the Restated Agreement 

would require the payment to FICC of 

the margin reduction granted under the 

cross-margining arrangement, which 

would avoid a mismatch between the 

margin collected and the portfolio to be 

liquidated. 

Accordingly, the Commission finds 

that the proposed model changes are 

consistent with Rule 17Ad–22(e)(6)(v) 

under the Exchange Act.36

C. Consistency With Rule 17Ad– 

22(e)(20) Under the Exchange Act 

Rule 17Ad–22(e)(20) under the 

Exchange Act requires that a covered 

clearing agency establish, implement, 

maintain, and enforce written policies 

and procedures reasonably designed to 

identify, monitor, and manage risks 

related to any link the covered clearing 

agency establishes with one or more 

other clearing agencies, financial market 

utilities, or trading markets.37 The term 

financial market utility means any 

person that manages or operates a 

multilateral system for the purpose of 

transferring, clearing, or settling 

payments, securities, or other financial 

transactions among financial 

institutions or between financial 

institutions and the person.38 For the 

purposes of Rule 17Ad–22(e)(20), link 

means, among other things, a set of 

contractual and operational 

arrangements between two or more 

clearing agencies, financial market 

utilities, or trading markets that connect 

them directly or indirectly for the 

purposes of cross margining.39

In adopting Rule 17Ad–22(e)(20), the 

Commission provided guidance that a 

covered clearing agency generally 

should consider in establishing and 

maintaining policies and procedures 

that address links.40 Notably, the 

Commission stated that a covered 

clearing should consider whether a link 

has a well-founded legal basis, in all 

relevant jurisdictions, that supports its 

design and provides adequate protection 

to the covered clearing agencies 

involved in the link.41 The Commission 

further stated that, when in a CCP link 

arrangement, a covered clearing agency 

should consider whether it is able to 

cover, at least on a daily basis, its 

current and potential future exposures 

to the linked CCP and its participant, if 

any, fully with a high degree of 

confidence without reducing the 

covered clearing agency’s own ability to 

fulfill its obligations to its own 

participants at any time.42

CME is a CCP for futures contracts 

and also meets the definition of a 

financial market utility.43 The crossmargin arrangement between FICC and 

CME, therefore, is a link for the 

purposes of Rule 17Ad–22(e)(20), as 

defined in Rule 17Ad–22(a)(8). As 

described above, FICC proposes to adopt 

the Restated Agreement to amend its 

cross-margining arrangement with CME. 

The terms of the Restated Agreement, 

which would replace the Existing 

Agreement, would continue to specify, 

among other matters, which members 

may participate in the arrangement, 

which products are eligible for 

consideration under the arrangement, 

how margin requirements will be set for 

positions considered under the 

arrangement, and how FICC and CME 

would manage the default of member 

who participates in the arrangement. 

The Restated Agreement would also 

address issues of indemnification, 

information sharing, and other routine 

terms currently addressed in the 

Existing Agreement. Further, the 

Restated Agreement would also provide 

for the use of an SLA that would 

provide additional supporting detail 

with regard to timing and certain 

operational processes related to the 

cross-margining arrangement. The 

Commission believes that the Restated 

Agreement would continue to support 

the design of the cross-margin 

arrangement between FICC and CME by 

addressing matters currently covered in 

the Existing Agreement as well as those 

changes to the structure of the crossmargin arrangement described above 

(e.g., product eligibility, margin 

requirements, default management). 

Further, the incorporation of certain 

timing and operational aspects of the 

cross-margining arrangement in a 

separate SLA would streamline the 

language of the Restated Agreement and 

more clearly present operational details, 

such as those related to daily settlement 

procedures. The CCPs would also have 

the ability to review the service level 

details separately and modify them 

without requiring changes to the full 

agreement. Simplifying the presentation 

and maintenance of such operational 

details would serve to reduce risks 

associated with the link between FICC 

and CME. 

The Proposed Rule Change also 

addresses margin reductions, default 

management, and loss sharing. With 

regard to margin, backtesting data 

demonstrates that the proposed margin 

methodology would not reduce FICC’s 

ability to cover the credit risk posed by 

its members.44 The Commission 

believes that such backtesting data 

suggests that the proposed changes 

would support FICC’s ability to cover its 

current and potential future exposures 

to its participants. The Proposed Rule 

Change would support FICC’s ability to 

meet its obligations by providing for the 

exchange of variation margin between 

FICC and CME during the management 

of a common member default. With 

regard to default management, the 

Restated Agreement explicitly 


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Federal Register / Vol. 88, No. 177 / Thursday, September 14, 2023 / Notices 63189 

45 17 CFR 240.17Ad–22(e)(20). 

46 In approving this Proposed Rule Change, the 

Commission has considered the proposed rules’ 

impact on efficiency, competition, and capital 

formation. See 15 U.S.C. 78c(f). 

47 15 U.S.C. 78s(b)(2). 

48 17 CFR 200.30–3(a)(12). 

prioritizes coordination and joint 

management of a common member 

default. The Commission believes that 

such default management and loss 

sharing provisions as those proposed in 

the Restated Agreement would further 

support FICC’s ability to cover its 

current and potential future exposures 

without reducing its ability to fulfill its 

obligations to its own participants. 

Accordingly, the Commission finds 

that the proposed model changes are 

consistent with Rule 17Ad–22(e)(20) 

under the Exchange Act.45

V. Conclusion 

On the basis of the foregoing, the 

Commission finds that the Proposed 

Rule Change is consistent with the 

requirements of the Exchange Act, and 

in particular, the requirements of 

section 17A of the Exchange Act 46 and 

the rules and regulations thereunder. 

It is therefore ordered, pursuant to 

section 19(b)(2) of the Exchange Act,47

that the Proposed Rule Change (SR– 

FICC–2023–010) be, and hereby is, 

approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.48

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–19839 Filed 9–13–23; 8:45 am] 

BILLING CODE 8011–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

[Docket # FAA–2023–1261] 

Airport Terminal Program; FY 2024 

Funding Opportunity 

AGENCY: Federal Aviation 

Administration (FAA). 

ACTION: Notice of Funding Opportunity. 

SUMMARY: The Department of 

Transportation (DOT), Federal Aviation 

Administration (FAA) announces the 

opportunity to apply for approximately 

$1 billion in FY 2024 discretionary 

funds for the Airport Terminal Program 

(ATP), made available under the 

Infrastructure Investment and Jobs Act 

of 2021 (IIJA), Public Law 117–58, 

herein referred to as the Bipartisan 

Infrastructure Law (BIL). The purpose of 

the ATP is to make annual grants 

available to eligible airports for airport 

terminal and airport-owned Airport 

Traffic Control Towers development 

projects that address the aging 

infrastructure of our nation’s airports. 

In addition, ATP grants will align 

with DOT’s Strategic Framework 

FY2022–2026 at https://

www.transportation.gov/ 

administrations/office-policy/fy2022- 

2026-strategic-frameworkhttps://

www.transportation.gov/ 

administrations/office-policy/fy2022- 

2026-strategic-framework. The FY 2024 

ATP will be implemented consistent 

with law and in alignment with the 

priorities in Executive Order 14052, 

Implementation of the Infrastructure 

Investments and Jobs Act (86 FR 64355), 

which are to invest efficiently and 

equitably; promote the competitiveness 

of the U.S. economy; improve job 

opportunities by focusing on high labor 

standards; strengthen infrastructure 

resilience to all hazards including 

climate change; and to effectively 

coordinate with State, local, Tribal, and 

territorial government partners. 

DATES: Airport sponsors that wish to be 

considered for FY 2024 ATP 

discretionary funding should submit an 

application that meets the requirements 

of this Notice of Funding Opportunity 

(NOFO) as soon as possible, but no later 

than 5:00 p.m. Eastern time, October 16, 

2023. 

ADDRESSES: Submit applications 

electronically at www.faa.gov/bil/ 

airport-terminals per instructions in this 

NOFO. 

FOR FURTHER INFORMATION CONTACT: 

Robin K. Hunt, Manager, BIL Branch 

APP–540, FAA Office of Airports, at 

(202) 267–3263 or our FAA BIL email 

address: 9-ARP-BILAirports@faa.gov. 

SUPPLEMENTARY INFORMATION: 

A. Program Description 

BIL established the ATP, a 

competitive discretionary grant 

program, which provides approximately 

$1 billion in grant funding annually for 

five years (Fiscal Years 2022–2026) to 

upgrade, modernize, and rebuild our 

nation’s airport terminals and airportowned Airport Traffic Control Towers 

(ATCTs). This includes bringing airport 

facilities into conformity with current 

standards; constructing, modifying, or 

expanding facilities as necessary to meet 

demonstrated aeronautical demand; 

enhancing environmental sustainability; 

encouraging actual and potential 

competition; and providing a balanced 

system of airports to meet the roles and 

functions necessary to support civil 

aeronautical demand. The FAA is 

committed to advancing safe, efficient 

transportation, including projects 

funded under the ATP. The ATP also 

supports the President’s goals to 

mobilize American ingenuity to build 

modern infrastructure and an equitable, 

clean energy future. In support of 

Executive Order 13985, Advancing 

Racial Equity and Support for 

Underserved Communities Through the 

Federal Government (86 FR 7009), the 

FAA encourages applicants to consider 

how the project will address the 

challenges faced by individuals in 

underserved communities and rural 

areas, as well as accessibility for persons 

with disabilities. 

The ATP falls under the project grant 

authority for the Airport Improvement 

Program (AIP) in 49 United States Code 

(U.S.C.) § 47104. Per 2 Code of Federal 

Regulations (CFR) part 200—Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards, the AIP Federal 

Assistance Listings Number is 20.106, 

with the objective to assist eligible 

airports in the development and 

improvement of a nationwide system 

that adequately meets the needs of civil 

aeronautics. The FY 2024 ATP will be 

implemented, as appropriate and 

consistent with BIL, in alignment with 

the priorities in Executive Order 14052, 

Implementation of the Infrastructure 

Investments and Jobs Act (86 FR 64355), 

which are to invest efficiently and 

equitably; promote the competitiveness 

of the U.S. economy; improve 

opportunities for good-paying jobs with 

the free and fair choice to join a union 

by focusing on high labor standards; 

strengthen infrastructure resilience to 

all hazards including climate change; 

and to effectively coordinate with State, 

local, Tribal, and territorial government 

partners. Consistent with statutory 

criteria and Executive Order 14008, 

Tackling the Climate Crisis at Home and 

Abroad (86 FR 7619), the FAA also 

seeks to fund projects under the ATP 

that reduce greenhouse gas emissions 

and are designed with specific elements 

to address climate change impacts. 

Specifically, the FAA is looking to 

award projects that align with the 

President’s greenhouse gas reduction 

goals, promote energy efficiency, 

support fiscally responsible land use 

and transportation efficient design, 

support terminal development 

compatible with the use of sustainable 

aviation fuels and technologies, increase 

climate resilience, incorporate 

sustainable and less emissions-intensive 

pavement and construction materials as 

allowable, and reduce pollution. 

The FAA will also consider projects 

that advance the goals of the Executive 

Orders listed under Section E.2. 


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