6140 Federal Register / Vol. 89, No. 21 / Wednesday, January 31, 2024 / Notices 

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

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(1). 

4 17 CFR 240.19b–4. 

may be obtained by contacting Office of 

Personnel Management, Suitability 

Executive Agent Programs, P.O. Box 

699, Slippery Rock, PA 16057, or by 

electronic mail at SuitEAForms@

opm.gov. Please contact Alexys Stanley 

at 202–936–2501, if you have questions. 

SUPPLEMENTARY INFORMATION: As 

required by the Paperwork Reduction 

Act of 1995, OPM is soliciting 

comments for this collection (OMB No. 

3206–0258). This information collection 

was previously published in the Federal 

Register on November 1, 2023, at 88 FR 

75078, allowing for a 60-day public 

comment period. No comments were 

received for this collection. The purpose 

of this notice is to allow an additional 

30 days for public comments. OPM is 

particularly interested in comments 

that: 

1. Evaluate whether the proposed 

collection of information is necessary 

for the proper performance of the 

functions of the agency, including 

whether the information will have 

practical utility; 

2. Evaluate the accuracy of the 

agency’s estimate of the burden of the 

proposed collection of information, 

including the validity of the 

methodology and assumptions used; 

3. Enhance the quality, utility, and 

clarity of the information to be 

collected; and 

4. Minimize the burden of the 

collection of information on those who 

are to respond, including through the 

use of appropriate automated, 

electronic, mechanical, or other 

technological collection techniques or 

other forms of information technology, 

e.g., permitting electronic submissions 

of responses. 

Background: The Questionnaire for 

Public Trust Positions, SF 85P, and 

Supplemental Questionnaire for 

Selected Positions, SF 85P–S, are 

information collections completed by 

applicants for, or incumbents of, Federal 

Government civilian positions, or 

positions in private entities performing 

work for the Federal Government under 

contract (SF 85P only). The collections 

are used as the basis of information for 

background investigations to establish 

that such persons are: 

Suitable for employment or retention 

in Federal employment in a public trust 

position or fit for employment or 

retention in Federal employment in the 

excepted service when the duties to be 

performed are equivalent in degree of 

trust reposed in the incumbent to a 

public trust position; 

Fit to perform work on behalf of the 

Federal Government pursuant to the 

Government contract, when the duties 

to be performed are equivalent in degree 

of trust reposed in the individual to a 

public trust position; and 

Eligible for physical and logical 

access to federally controlled facilities 

or information systems, when the duties 

to be performed by the individual are 

equivalent to the duties performed by an 

employee in a public trust position. 

For applicants, the SF 85P and SF 

85P–S are to be used only after a 

conditional offer of employment has 

been made. The SF 85P–S is 

supplemental to the SF 85P and is used 

only as approved by OPM, for certain 

positions such as those requiring 

carrying of a firearm. eApp (Electronic 

Application) is a web-based application 

that houses the SF 85P and SF 85P–S. 

A variable in assessing burden hours is 

the nature of the electronic application. 

The electronic application includes 

branching questions and instructions 

which provide for a tailored collection 

from the respondent based on varying 

factors in the respondent’s personal 

history. The burden on the respondent 

is reduced when the respondent’s 

personal history is not relevant to a 

particular question. The question 

branches, or expands for additional 

details, only for those persons who have 

pertinent information to provide 

regarding that line of questioning. 

Accordingly, the burden on the 

respondent will vary depending on 

whether the respondent’s personal 

history relates to the information 

collection. 

OPM recommends renewal of the 

form. Since posting the 60 Day Notice, 

OPM is making a minor change to the 

Instructions and Fair Credit Reporting 

Disclosure and Authorization that 

accompanies the form by removing 

instructions related to security freezes 

on consumer or credit files. With the 

passage of the Economic Growth, 

Regulatory Relief, and Consumer 

Protection Act which was signed into 

law on May 24, 2018, security freezes do 

not apply to the making of a credit 

report for use in connection with 

employment or background screening 

purposes. Therefore, it is no longer 

necessary for individuals undergoing a 

background investigation to request the 

freeze be lifted. 

Analysis: 

Agency: Suitability Executive Agent 

Programs, Office of Personnel 

Management. 

Title: Questionnaire for Public Trust 

Positions (SF 85P) and Supplemental 

Questionnaire for Selected Positions (SF 

85P–S). 

OMB Number: 3206–0258. 

Frequency: On occasion. 

Affected Public: Individuals or 

Households. 

Number of Respondents: 152,700 (SF 

85P); 16,700 (SF 85P–S). 

Estimated Time per Respondent: 155 

minutes (SF 85P); 10 minutes (SF 85P– 

S). 

Total Burden Hours: 394,475 (SF 

85P); 2,783 (SF 85P–S). 

Office of Personnel Management. 

Kayyonne Marston, 

Federal Register Liaison. 

[FR Doc. 2024–01859 Filed 1–30–24; 8:45 am] 

BILLING CODE 6325–66–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99432; File No. SR–NSCC– 

2023–007] 

Self-Regulatory Organizations; 

National Securities Clearing 

Corporation; Notice of Filing of 

Amendment No. 2 to Proposed Rule 

Change To Modify the Amended and 

Restated Stock Options and Futures 

Settlement Agreement and Make 

Certain Revisions to the NSCC Rules 

January 25, 2024. 

On August 10, 2023, National 

Securities Clearing Corporation 

(‘‘NSCC’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’) 

proposed rule change SR–NSCC–2023– 

007 (‘‘Filing’’) pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’ or ‘‘Exchange Act’’) 1 and 

Rule 19b–4 thereunder.2 The Filing was 

published for comment in the Federal 

Register on August 30, 2023. On 

November 8, 2023, NSCC filed 

Amendment No. 1 to the Filing. Notice 

is hereby given that on January 24, 2024, 

NSCC filed with the Commission 

Amendment No. 2 to the Filing 

(‘‘Amendment No. 2’’) as described in 

Items I and II below, which Items have 

been prepared by NSCC. This 

Amendment No. 2 supersedes and 

replaces the Filing in its entirety. The 

Commission is publishing this notice to 

solicit comments on this Amendment 

No. 2 from interested persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change 

Pursuant to the provisions of Section 

19(b) of the Exchange Act,3 and Rule 

19b–4 thereunder,4 National Securities 

Clearing Corporation (‘‘NSCC’’) is filing 


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Federal Register / Vol. 89, No. 21 / Wednesday, January 31, 2024 / Notices 6141 

5The Existing Accord was previously approved 

by the Commission. See Securities Exchange Act 

Release Nos. 81266, 81260 (Jul. 31, 2017), 82 FR 

36484 (Aug. 4, 2017) (File Nos. SR–NSCC–2017– 

007; SR–OCC–2017–013). 

6Capitalized terms not defined herein are defined 

in the NSCC Rules. The NSCC Rules are available 

at www.dtcc.com/-/media/Files/Downloads/legal/ 

rules/nscc_rules.pdf. 

7NSCC initially filed a proposed rule change 

concerning the proposed Phase 1 changes on 

August 10, 2023. See Securities Exchange Act 

Release No. 98213 (Aug. 24, 2023), 88 FR 59968 

(Aug. 30, 2023) (File No. SR–NSCC–2023–007) 

(‘‘Initial Filing’’). NSCC subsequently submitted a 

partial amendment to clarify the proposed 

implementation plan for the Initial Filing. See 

Securities Exchange Act Release No. 98930 (Nov. 

14, 2023), 88 FR 80790 (Nov. 20, 2023) (File No. 

SR–NSCC–2023–007) (‘‘Amendment No. 1’’). OCC 

also has submitted proposed rule change and 

advance notice filings with the Commission in 

connection with this proposal. See Securities 

Exchange Act Release No. 98215 (Aug. 24, 2023), 

88 FR 59976 (Aug. 30, 2023) (File No. SR–OCC– 

2023–007) and Securities Exchange Act Release No. 

98214 (Aug. 24, 2023), 88 FR 59988 (Aug. 30, 2023) 

(SR–OCC–2023–801). (‘‘OCC Filings’’). 

8The term ‘‘physically-settled’’ as used 

throughout the OCC Rules refers to cleared 

contracts that settle into their underlying interest 

(i.e., options or futures contracts that are not cashsettled). The OCC By-Laws and OCC Rules are 

available at www.theocc.com/companyinformation/documents-and-archives/by-laws-andrules. When a contract settles into its underlying 

interest, shares of stock are sent, i.e., delivered, to 

contract holders who have the right to receive the 

shares from contract holders who are obligated to 

deliver the shares at the time of exercise/assignment 

in the case of an option and maturity in the case 

of a future. 

9Under the Existing Accord, such options and 

futures are defined as ‘‘E&A/Delivery 

Transactions,’’ which refers to ‘‘Exercise & 

Assignment Delivery Transactions.’’ 

this Amendment No. 2 to proposed rule 

change SR–NSCC–2023–007 with the 

Commission to (1) modify the Stock 

Options and Futures Settlement 

Agreement dated August 5, 2017, 

between NSCC and The Options 

Clearing Corporation (‘‘OCC,’’ and 

together with NSCC, the ‘‘Clearing 

Agencies’’) (‘‘Existing Accord’’) 5 to 

permit OCC to elect to make a cash 

payment to NSCC following the default 

of a common clearing participant that 

would cause NSCC’s central 

counterparty trade guaranty to attach to 

certain obligations of that participant 

(‘‘Phase 1’’); (2) improve information 

sharing between the Clearing Agencies 

to facilitate the upcoming transition to 

a T+1 standard securities settlement 

cycle and allow OCC, after the 

compliance date under amended 

Exchange Act Rule 15c6–1(a), to provide 

certain assurances to NSCC prior to the 

default of a common clearing 

participant that would enable NSCC to 

begin processing E&A/Delivery 

Transactions (defined below) before the 

central counterparty trade guaranty 

attaches to certain obligations of that 

participant (‘‘Phase 2’’); and (3) make 

certain revisions to the NSCC Rules & 

Procedures (‘‘NSCC Rules’’) 6 in 

connection with the proposed Phase 1 

and Phase 2 modifications to the 

Existing Accord.7 This Amendment No. 

2 would amend and replace the Initial 

Filing and Amendment No. 1 in their 

entirety. 

The proposed changes to the NSCC 

Rules and the Existing Accord are 

included in Exhibits 5A and 5B of 

Amendment No. 2 to File No. SR– 

NSCC–2023–007. Material proposed to 

be added is underlined and material 

proposed to be deleted is marked in 

strikethrough text, as described in 

greater detail below. 

II. Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

In its filing with the Commission, the 

clearing agency 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 

clearing agency has prepared 

summaries, set forth in sections A, B, 

and C below, of the most significant 

aspects of such statements. 

(A) Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

1. Purpose 

Executive Summary 

NSCC is a clearing agency that 

provides clearing, settlement, risk 

management, and central counterparty 

services for trades involving equity 

securities. OCC is the sole clearing 

agency for standardized equity options 

listed on national securities exchanges 

registered with the Commission, 

including options that contemplate the 

physical delivery of equities cleared by 

NSCC in exchange for cash (‘‘physicallysettled’’ options).8 OCC also clears 

certain futures contracts that, at 

maturity, require the delivery of equity 

securities cleared by NSCC in exchange 

for cash. As a result, the exercise/ 

assignment of certain options or 

maturation of certain futures cleared by 

OCC effectively results in stock 

settlement obligations. NSCC and OCC 

maintain a legal agreement, generally 

referred to by the parties as the 

‘‘Accord’’ agreement, that governs the 

processing of such physically-settled 

options and futures cleared by OCC that 

result in settlement obligations in 

underlying equity securities to be 

cleared by NSCC (i.e., the Existing 

Accord). 

The Existing Accord establishes terms 

under which NSCC accepts for clearing 

certain securities transactions that result 

from the exercise and assignment of 

relevant options contracts and the 

maturity of futures contracts that are 

cleared and settled by OCC.9 It also 

establishes the time when OCC’s 

settlement guaranty in respect of those 

transactions ends and NSCC’s 

settlement guaranty begins. 

The Existing Accord allows for a 

scenario in which NSCC could choose 

not to guarantee the settlement of such 

securities arising out of E&A/Delivery 

Transactions. Specifically, NSCC is not 

obligated to guarantee settlement until 

its member has met its collateral 

requirements at NSCC. If NSCC chooses 

not to guarantee settlement, OCC would 

engage in an alternate method of 

settlement outside of NSCC. This 

scenario presents two primary 

problems. First, the cash required for 

OCC and its Clearing Members in 

certain market conditions to facilitate 

settlement outside of NSCC could be 

significantly more than the amount 

required if NSCC were to guarantee the 

relevant transactions. This is because 

settlement of the transactions in the 

underlying equity securities outside of 

NSCC would mean that they would no 

longer receive the benefit of netting 

through the facilities of NSCC. In such 

a scenario, the additional collateral 

required from Clearing Members to 

support OCC’s continuing settlement 

guarantee would also have to be 

sufficiently liquid to properly manage 

the risks associated with those 

transactions being due on the second 

business day following the option 

exercise or the relevant futures contract 

maturity date. Based on an analysis of 

scenarios using historical data where it 

was assumed that OCC could not settle 

transactions through the facilities of 

NSCC, the worst-case outcome resulted 

in extreme liquidity demands of over 

$300 billion for OCC to effect settlement 

via an alternative method, e.g., by way 

of gross broker-to-broker settlement, as 

discussed in more detail below. OCC 

Clearing Members, by way of their 

contributions to the OCC Clearing Fund, 

would bear the brunt of this demand. 

Furthermore, there is no guarantee that 

OCC Clearing Members could fund the 

entire amount of any similar real-life 

scenarios. By contrast, projected 

Guaranty Substitution Payments, 

defined below, identified during the 

study ranged from approximately $419 

million to over $6 billion, also as 

discussed in more detail below. 


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10See Rule 11 (CNS System) and Procedure VII 

(CNS Accounting Operation) of the NSCC Rules, 

supra note 6. 

11A firm that is both an OCC Clearing Member 

and an NSCC Member or is an OCC Clearing 

Member that has designated an NSCC Member to 

act on its behalf is referred to herein as a ‘‘Common 

Member.’’ The term ‘‘Clearing Member’’ as used 

herein has the meaning provided in OCC’s By-Laws. 

See OCC By-Laws, supra, note 6. The term 

‘‘Member’’ as used herein has the meaning provided 

in the NSCC Rules. See NSCC Rules, supra note 6. 

12OCC provided its analysis of the financial 

impact of alternate means of settlement as an 

exhibit to the OCC Filings. 

13See Rule 11 (CNS System) and Procedure VII 

(CNS Accounting Operation) of the NSCC Rules, 

supra note 6. 

14See Rule 8 (Balance Order and Foreign Security 

Systems) and Procedure V (Balance Order 

Accounting Operation) of the NSCC Rules, supra 

note 6. 

15See Chapter IX of OCC’s Rules (Delivery of 

Underlying Securities and Payment), supra note 8. 

16See OCC Rule 901, supra note 8. 

17See Addendum K and Procedure III of the 

NSCC Rules, supra note 6. 

The second primary problem relates 

to the significant operational 

complexities if settlement occurs 

outside of NSCC. More specifically, 

netting through NSCC reduces the 

volume and value of settlement 

obligations. For example, in 2022 it is 

estimated that netting through NSCC’s 

continuous net settlement (‘‘CNS’’) 

accounting system 10 reduced the value 

of CNS settlement obligations by 

approximately 98% or $510 trillion 

from $519 trillion to $9 trillion. If 

settlement occurred outside of NSCC, on 

a broker-to-broker basis between OCC 

Clearing Members, for example, shares 

would not be netted, and Clearing 

Members would have to coordinate 

directly with each other to settle the 

relevant transactions. The operational 

complexities and uncertainty associated 

with alternate means of settlement 

would impact every market participant 

involved in a settlement of OCC-related 

transactions. 

To address these problems, the 

Clearing Agencies are proposing certain 

changes as part of Phase 1 to amend and 

restate the Existing Accord and make 

related changes to their respective rules 

that would allow OCC to elect to make 

a cash payment (the ‘‘Guaranty 

Substitution Payment’’ or ‘‘GSP’’) to 

NSCC following the default of a 

Common Member 11 that would cause 

NSCC to guarantee settlement of that 

Common Member’s transactions and, 

therefore, cause those transactions to be 

settled through processing by NSCC. In 

connection with this proposal, OCC also 

would enhance its daily liquidity stress 

testing processes and procedures to 

account for the possibility of OCC 

making such a payment to NSCC in the 

event of a Common Member default. By 

making these enhancements to its stress 

testing, OCC could include the liquid 

resources necessary to make the 

payment in its resource planning. The 

Clearing Agencies believe that by NSCC 

accepting such a payment from OCC, 

the operational efficiencies and reduced 

costs related to the settlement of 

transactions through NSCC would limit 

market disruption following a Common 

Member default because settlement 

through NSCC following such a default 

would be less operationally complex 

and would be expected to require less 

liquidity and other collateral from 

market participants than the processes 

available to OCC for closing out 

positions. Additionally, proposed 

enhancements by OCC to its liquidity 

stress testing would add assurances that 

OCC could make such a payment in the 

event of a Common Member default. 

The Clearing Agencies believe that their 

respective clearing members and all 

other participants in the markets for 

which OCC provides clearance and 

settlement would benefit from OCC’s 

ability to choose to make a cash 

payment to effect settlement through the 

facilities of NSCC. This change would 

provide more certainty around certain 

default scenarios and would blunt the 

financial and operational burdens 

market participants could experience in 

the case of most clearing member 

defaults.12

Finally, the Clearing Agencies are also 

proposing certain changes as part of 

Phase 2 that, if approved, would not be 

implemented until after the Commission 

shortens the standardized settlement 

cycle under Exchange Act Rule 15c6– 

1(a) from two days after the traded date 

(‘‘T+2’’) to one day after the trade date 

(‘‘T+1’’), which currently is set for May 

28, 2024. The Phase 2 changes would 

address the operational realities 

concerning the Accord that will result 

from the Commission’s adoption and 

implementation of a new standard 

settlement cycle of T+1 pursuant to Rule 

15c6–1(a) under the Act. The Phase 2 

changes generally are designed to allow 

OCC to provide certain assurances with 

respect to OCC’s ability to make a GSP 

in the event of a Common Member 

default to NSCC that would permit 

NSCC to begin processing Common 

Members’ E&A/Delivery Transactions in 

a shortened settlement cycle prior to 

guaranty substitution occurring by 

introducing new or amended terms and 

setting out the processes associated 

therewith. 

Background 

OCC acts as a central counterparty 

clearing agency for U.S.-listed options 

and futures on a number of underlying 

financial assets including common 

stocks, currencies, and stock indices. In 

connection with these services, OCC 

provides the OCC Guaranty pursuant to 

its By-Laws and Rules. NSCC acts as a 

central counterparty clearing agency for 

certain equity securities, corporate and 

municipal debt, exchange traded funds 

and unit investment trusts that are 

eligible for its services. Eligible trading 

activity may be processed through 

NSCC’s CNS system 13 or through its 

Balance Order Accounting system,14

where all eligible compared and 

recorded transactions for a particular 

settlement date are netted by issue into 

one net long (buy), net short (sell) or flat 

position. As a result, for each day with 

activity, each Member has a single 

deliver or receive obligation for each 

issue in which it has activity at NSCC. 

In connection with these services, NSCC 

also provides the NSCC Guaranty 

pursuant to Addendum K of the NSCC 

Rules. 

OCC’s Rules provide that delivery of, 

and payment for, securities underlying 

certain exercised stock options and 

matured single stock futures that are 

physically settled are generally effected 

through the facilities of NSCC and are 

not settled through OCC’s facilities.15

OCC and NSCC executed the Existing 

Accord to facilitate, via NSCC’s systems, 

the physical settlement of securities 

arising out of options and futures 

cleared by OCC. OCC Clearing Members 

that clear and settle physically-settled 

options and futures transactions through 

OCC also are required under OCC’s 

Rules 16 to be Members of NSCC or to 

have appointed or nominated a Member 

of NSCC to act on its behalf. As noted 

above, these firms are referred to as 

‘‘Common Members’’ in the Existing 

Accord. 

Summary of the Existing Accord 

The Existing Accord governs the 

transfer between OCC and NSCC of 

responsibility for settlement obligations 

that involve a delivery and receipt of 

stock in the settlement of physicallysettled options and futures that are 

cleared and settled by OCC and for 

which the underlying securities are 

eligible for clearing through the 

facilities of NSCC (‘‘E&A/Delivery 

Transactions’’). It also establishes the 

time when OCC’s settlement guarantee 

(the ‘‘OCC Guaranty’’) ends and NSCC’s 

settlement guarantee (the ‘‘NSCC 

Guaranty’’) 17 begins with respect to 

E&A/Delivery Transactions. However, in 


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18A Common Member that has been suspended 

by OCC or for which NSCC has ceased to act is 

referred to as a ‘‘Mutually Suspended Member.’’ 

19For example, OCC evaluated certain Clearing 

Member default scenarios in which OCC assumed 

that NSCC would not accept the settlement 

obligations under the Existing Accord, including 

the default of a large Clearing Member coinciding 

with a monthly options expiration. OCC has 

estimated that in such a Clearing Member default 

scenario, the aggregate liquidity burden on OCC in 

connection with obligations having to be settled on 

a gross broker-to-broker basis could reach a 

significantly high level. For example, in January 

2022, the largest gross broker-to-broker settlement 

amount in the case of a larger Clearing Member 

default would have resulted in liquidity needs of 

approximately $384,635,833,942. OCC provided the 

data and analysis as an exhibit to the OCC Filings. 

20 In broker-to-broker settlement, Clearing 

Member parties are responsible for coordinating 

settlement—delivery and payment—among 

themselves on a transaction-by-transaction basis. 

Once transactions settle, the parties also have an 

obligation to affirmatively notify OCC so that OCC 

can close out the transactions. If either one of or 

both of the parties do not notify OCC, the 

transaction would remain open on OCC’s books 

indefinitely until the time both parties have 

provided notice of settlement to OCC. 

21Each day that both OCC and NSCC are open for 

accepting trades for clearing is referred to as an 

‘‘Activity Date’’ in the Existing Accord. Securities 

eligible for settlement at NSCC are referred to 

collectively as ‘‘Eligible Securities’’ in the Existing 

Accord. Eligible securities are settled at NSCC 

through NSCC’s CNS Accounting Operation or 

NSCC’s Balance Order Accounting Operation. 

22The term ‘‘NSCC Clearing Fund’’ as used herein 

has the same meaning as the term ‘‘Clearing Fund’’ 

as provided in the NSCC Rules. Procedure XV of 

the NSCC Rules provides that all NSCC Clearing 

Fund requirements and other deposits must be 

made within one hour of demand, unless NSCC 

determines otherwise, supra note 6. 

23This is referred to in the Existing Accord as the 

‘‘Guaranty Substitution Time,’’ and the process of 

the substitution of the NSCC Guaranty for the OCC 

Guaranty with respect to E&A/Delivery 

Transactions is referred to as ‘‘Guaranty 

Substitution.’’ 

24 Guaranty Substitution by NSCC (discussed 

further below) does not occur with respect to an 

E&A/Delivery Transaction that is not submitted to 

NSCC in the proper format or that involves a 

security that is not identified as an Eligible Security 

on the then-current NSCC Eligibility Master File. 

25Under NSCC’s Rules, a default would generally 

be referred to as a ‘‘cease to act’’ and could 

encompass a number of circumstances, such as an 

NSCC Member’s failure to make a Required Fund 

Deposit in a timely fashion. See NSCC Rule 46 

(Restrictions on Access to Services), supra note 6. 

An NSCC Member for which it has ceased to act is 

referred to in the Existing Accord as a ‘‘Defaulting 

NSCC Member.’’ Transactions associated with a 

Defaulting NSCC Member are referred to as 

‘‘Defaulted NSCC Member Transactions’’ in the 

Existing Accord. 

the case of a Common Member default 18

NSCC can reject these settlement 

obligations, in which case the 

settlement guaranty would not transfer 

from OCC to NSCC and OCC would not 

have a right to settle the transactions 

through the facilities of NSCC. Instead, 

OCC would have to engage in 

alternative methods of settlement that 

have the potential to create significant 

liquidity and collateral requirements for 

both OCC and its non-defaulting 

Clearing Members.19 More specifically, 

this could involve broker-to-broker 

settlement between OCC Clearing 

Members.20 This settlement method is 

operationally complex because it 

requires bilateral coordination directly 

between numerous Clearing Members 

rather than relying on NSCC to facilitate 

multilateral netting to settle the relevant 

settlement obligations. As described 

above, it also potentially could result in 

significant liquidity and collateral 

requirements for both OCC and its nondefaulting Clearing Members because 

the transactions would not be netted 

through the facilities of NSCC. 

Alternatively, where NSCC accepts the 

E&A/Delivery Transactions from OCC, 

the OCC Guaranty ends and the NSCC 

Guaranty takes effect. The transactions 

are then netted through NSCC’s systems, 

which allows settlement obligations for 

the same settlement date to be netted 

into a single deliver or receive 

obligation. This netting reduces the 

costs associated with securities transfers 

by reducing the number of securities 

movements required for settlement and 

further reduces operational and market 

risk. The benefits of such netting by 

NSCC may be significant with respect to 

the large volumes of E&A/Delivery 

Transactions processed during monthly 

options expiry periods. 

Pursuant to the Existing Accord, on 

each trading day NSCC delivers to OCC 

a file that identifies the securities, 

including stocks, exchange-traded funds 

and exchange-traded notes, that are 

eligible (1) to settle through NSCC and 

(2) to be delivered in settlement of (i) 

exercises and assignments of stock 

options cleared and settled by OCC or 

(ii) delivery obligations from maturing 

stock futures cleared and settled by 

OCC. OCC, in turn, delivers to NSCC a 

file identifying securities to be 

delivered, or received, for physical 

settlement in connection with OCC 

transactions.21

After NSCC receives the list of eligible 

transactions from OCC and NSCC has 

received all required deposits to the 

NSCC Clearing Fund from all Common 

Members taking into consideration 

amounts required to physically settle 

the OCC transactions, the OCC Guaranty 

would end and the NSCC Guaranty 

would begin with respect to physical 

settlement of the eligible OCC-related 

transactions.22 At this point, NSCC is 

solely responsible for settling the 

transactions.23

Each day, NSCC is required to 

promptly notify OCC at the time the 

NSCC Guaranty takes effect. If NSCC 

rejects OCC’s transactions due to an 

improper submission 24 or if NSCC 

‘‘ceases to act’’ for a Common 

Member,25 NSCC’s Guaranty would not 

take effect for the affected transactions 

pursuant to the NSCC Rules. 

NSCC is required to promptly notify 

OCC if it ceases to act for a Common 

Member. Upon receiving such a notice, 

OCC would not continue to submit to 

NSCC any further unsettled transactions 

that involve such Common Member, 

unless authorized representatives of 

both OCC and NSCC otherwise consent. 

OCC would, however, deliver to NSCC 

a reversal file containing a list of all 

transactions that OCC already submitted 

to NSCC and that involve such Common 

Member. The NSCC Guaranty ordinarily 

would not take effect with respect to 

transactions for a Common Member for 

which NSCC has ceased to act, unless 

both Clearing Agencies agree otherwise. 

As such, NSCC does not have any 

existing contractual obligation to 

guarantee such Common Member’s 

transactions. To the extent the NSCC 

Guaranty does not take effect, OCC’s 

Guaranty would continue to apply, and, 

as described above, OCC would remain 

responsible for effecting the settlement 

of such Common Member’s transactions 

pursuant to OCC’s By-Laws and Rules. 

As noted above, the Existing Accord 

does provide that the Clearing Agencies 

may agree to permit additional 

transactions for a Common Member 

default (‘‘Defaulted NSCC Member 

Transactions’’) to be processed by NSCC 

while subject to the NSCC Guaranty. 

This optional feature, however, creates 

uncertainty for the Clearing Agencies 

and market participants about how 

Defaulted NSCC Member Transactions 

may be processed following a Common 

Member default, and also does not 

provide NSCC with the ability to collect 

collateral from OCC that it may need to 

close out these additional transactions. 

While the optional feature would 

remain in the agreement as part of this 

proposal, the proposed changes to the 

Existing Accord, as described below, 

could significantly reduce the 

likelihood that it would be utilized. 

Proposed Phase 1 Changes 

The proposed changes to the Existing 

Accord would permit OCC to make a 

cash payment, referred to as the 

‘‘Guaranty Substitution Payment’’ or 

‘‘GSP,’’ to NSCC. This cash payment 

could occur on either or both of the day 

that the Common Member becomes a 

Mutually Suspended Member and on 

the next business day. Upon NSCC’s 

receipt of the Guaranty Substitution 

Payment from OCC, the NSCC Guaranty 


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26Acceptance of such transactions by NSCC 

would be subject to NSCC’s standard validation 

criteria for incoming trades. See NSCC Rule 7, 

supra note 6. 

27The term ‘‘OCC Clearing Fund’’ as used herein 

has the same meaning as the term ‘‘Clearing Fund’’ 

in OCC’s By-Laws, supra note 8. 

28The term ‘‘Margin Assets’’ as used herein has 

the same meaning as provided in OCC’s By-Laws, 

supra note 8. 

29The Required Fund Deposit is calculated 

pursuant to Rule 4 (Clearing Fund) and Procedure 

XV (Clearing Fund Formula and Other Matters) of 

the NSCC Rules, see supra note 6. 

30Under the NSCC Rules, NSCC collects 

additional cash deposits from those Members who 

would generate the largest settlement debits in 

stressed market conditions, referred to as 

‘‘Supplemental Liquidity Deposits’’ or ‘‘SLD.’’ See 

Rule 4A of the NSCC Rules, supra note 6. 

31NSCC provided a draft of the revised SLA for 

Phase 1 to the Commission as confidential Exhibit 

3E to this filing. 

32The impact study was conducted at the 

Commission’s request to cover a three-day period 

and reviewed the ten Common Members with the 

largest Required Fund Deposits attributable to the 

Mutually Suspended Member’s E&A/Delivery 

Transactions. Over the 30 instances in the study, 

approximately 15 instances resulted in an 

underestimate of the Required Fund Deposit by an 

average of approximately $112,900,926, four 

instances where the proxy calculation was the same 

as the Required Fund Deposit, and eleven instances 

of an overestimate of the Required Fund Deposit by 

an average of approximately $59,654,583. NSCC 

filed additional detail related to the referenced 

study in confidential Exhibit 3A of this filing. 

33OCC and NSCC agreed that performing the 

necessary technology build during Phase 1 would 

delay the implementation of Phase 1 of this 

proposal. NSCC would incorporate those 

technology updates in connection with Phase 2 of 

this proposal. 

34OCC filed additional detail related to the 

referenced study as an exhibit to the OCC Filings. 

35As of September 30, 2023, OCC held 

approximately $12.37 billion in qualifying liquid 

resources. See OCC Quantitative Disclosure, July– 

September 2023, available at www.theocc.com/riskmanagement/pfmi-disclosures. 

would take effect for the Common 

Member’s transactions, and they would 

be accepted by NSCC for clearance and 

settlement.26 OCC could use all Clearing 

Member contributions to the OCC 

Clearing Fund 27 and certain Margin 

Assets 28 of a defaulted Clearing 

Member to pay the GSP, as described in 

more detail below. 

NSCC would calculate the Guaranty 

Substitution Payment as the sum of the 

Mutually Suspended Member’s unpaid 

required deposit to the NSCC Clearing 

Fund (‘‘Required Fund Deposit’’) 29 and 

the unpaid Supplemental Liquidity 

Deposit 30 obligation that is attributable 

to E&A/Delivery Transactions. The 

proposed changes to the Existing 

Accord define how NSCC would 

calculate the Guaranty Substitution 

Payment. 

More specifically, NSCC would first 

determine how much of the member’s 

unpaid Clearing Fund requirement 

would be included in the GSP. NSCC 

would look at the day-over-day change 

in gross market value of the Mutually 

Suspended Member’s positions as well 

as day-over-day change in the member’s 

NSCC Clearing Fund requirements. 

Based on such changes, NSCC would 

identify how much of the change in the 

Clearing Fund requirement was 

attributable to E&A/Delivery 

Transactions coming from OCC. If 100 

percent of the day-over-day change in 

the NSCC Clearing Fund requirement is 

attributable to activity coming from 

OCC, then the GSP would include 100 

percent of the member’s NSCC Clearing 

Fund requirement. If less than 100 

percent of the change is attributable to 

activity coming from OCC, then the GSP 

would include that percent of the 

member’s unpaid NSCC Clearing Fund 

requirement attributable to activity 

coming from OCC. NSCC would then 

determine the portion of the member’s 

unpaid SLD obligation that is 

attributable to E&A/Delivery 

Transactions. As noted above, the GSP 

would be the sum of these two amounts. 

A member’s NSCC Clearing Fund 

requirement and SLD obligation at 

NSCC are designed to address the credit 

and liquidity risks that a member poses 

to NSCC. The GSP calculation is 

intended to assess how much of a 

member’s obligations arise out of 

activity coming from OCC so that the 

amount paid by OCC is commensurate 

with the risk to NSCC of guarantying 

such activity. 

To permit OCC to anticipate the 

potential resources it would need to pay 

the GSP for a Mutually Suspended 

Member, each business day, NSCC 

would provide OCC with (1) Required 

Fund Deposit and Supplemental 

Liquidity Deposit obligations, as 

calculated pursuant to the NSCC Rules, 

and (2) the gross market value of the 

E&A/Delivery Transactions and the 

gross market value of total Net Unsettled 

Positions (as such term is defined in the 

NSCC Rules). On options expiry days 

that fall on a Friday, NSCC would also 

provide OCC with information regarding 

liquidity needs and resources, and any 

intraday SLD requirements of Common 

Members. Such information would be 

delivered pursuant to the ongoing 

information sharing obligations under 

the Existing Accord (as proposed to be 

amended) and the Service Level 

Agreement (‘‘SLA’’) to which both 

NSCC and OCC are a party pursuant to 

Section 2 of the Existing Accord.31 The 

SLA addresses specifics regarding the 

time, form, and manner of various 

required notifications and actions 

described in the Accord and also 

includes information applicable under 

the Accord. 

NSCC and OCC believe the proposed 

calculation of the Required Fund 

Deposit portion of the GSP is 

appropriate because it is designed to 

provide a reasonable proxy for the 

impact of the Mutually Suspended 

Member’s E&A/Delivery Transactions 

on its Required Fund Deposit. While 

impact study data did show that the 

proposed calculation could result in a 

GSP that overestimates or 

underestimates the Required Fund 

Deposit attributable to the Mutually 

Suspended Member’s E&A/Delivery 

Transactions,32 current technology 

constraints prohibit NSCC from 

performing a precise calculation of the 

GSP on a daily basis for every Common 

Member.33

Implementing the ability for OCC to 

make the GSP and cause the E&A/ 

Delivery Transactions to be cleared and 

settled through NSCC would promote 

the ability of OCC and NSCC to be 

efficient and effective in meeting the 

requirements of the markets they serve. 

This is because data demonstrates that 

the expected size of the GSP would be 

smaller than the amount of cash that 

would otherwise be needed by OCC and 

its Clearing Members to facilitate 

settlement outside of NSCC. More 

specifically, based on a historical study 

of alternate means of settlement 

available to OCC from September 2021 

through September 2022, in the event 

that NSCC did not accept E&A/Delivery 

Transactions, the worst-case scenario 

peak liquidity need OCC identified was 

$384,635,833,942 for settlement to occur 

on a gross broker-to-broker basis. OCC 

estimates that the corresponding GSP in 

this scenario would have been 

$863,619,056. OCC also analyzed 

several other large liquidity demand 

amounts that were identified during the 

study if OCC effected settlement on a 

gross broker-to-broker basis.34 These 

liquidity demand amounts and the 

largest liquidity demand amount OCC 

observed of $384,635,833,942 

substantially exceed the amount of 

liquid resources currently available to 

OCC.35 By contrast, projected GSPs 

identified during the study ranged from 

$419,297,734 to $6,281,228,428. For 

each of these projected GSP amounts, 

OCC observed that the Margin Assets 

and OCC Clearing Fund contributions 

that would have been required of 

Clearing Members in these scenarios 

would have been sufficient to satisfy the 

amount of the projected GSPs. 

To help address the current 

technology constraint that prohibits 

NSCC from performing a precise 

calculation of the GSP on a daily basis 


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36CNS reduces the value of obligations that 

require financial settlement by approximately 98%, 

where, for example $519 trillion in trades could be 

netted down to approximately $9 trillion in net 

settlements. 

37OCC filed data regarding simulated events as an 

exhibit to the OCC Filings. 

38The term ‘‘Stock Options’’ is defined in the 

Existing Accord within the definition of ‘‘Eligible 

Securities’’ and refers to options issued by OCC. 

39The term ‘‘Stock Futures’’ is defined in the 

Existing Accord within the definition of ‘‘Eligible 

Securities’’ and refers to stock futures contracts 

cleared by OCC. 

40 11 U.S.C. 101 et seq., including §§ 362(b)(6), 

(7), (17), (25) and (27) (exceptions to the automatic 

stay), §§ 546(e)–(g) and (j) (limitations on avoiding 

powers), and §§ 555–556 and 559–562 (contractual 

right to liquidate, terminate or accelerate certain 

contracts). 

41 15 U.S.C. 78aaa–lll, including § 78eee(b)(2)(C) 

(exceptions to the stay). 

42The term ‘‘OCC Participating Member’’ is 

defined in the Existing Accord to mean ‘‘(i) a 

Common Member; (ii) an OCC Clearing Member 

that is an ‘Appointing Clearing Member’ (as defined 

in Article I of OCC’s By-Laws) and has appointed 

an Appointed Clearing Member that is an NSCC 

Member to effect settlement of E&A/Delivery 

Transactions through NSCC on the Appointing 

Clearing Member’s behalf; (iii) an OCC Clearing 

Member that is an Appointed Clearing Member; or 

(iv) a Canadian Clearing Member.’’ No changes are 

proposed to this definition. 

43The term ‘‘NSCC Participating Member’’ is 

defined in the Existing Accord to mean ‘‘(i) a 

Common Member; (ii) an NSCC Member that is an 

‘Appointed Clearing Member’ (as defined in Article 

I of OCC’s By-Laws); or (iii) [Canadian Depository 

for Securities Limited or ‘‘CDS’’]. For the avoidance 

of doubt, the Clearing Agencies agree that CDS is 

an NSCC Member for purposes of this Agreement.’’ 

No changes are proposed to this definition. 

for every Common Member, proposed 

Section 6(b)(i) of the Existing Accord 

and related Section 7(d) of the SLA 

would provide that with respect to a 

Mutually Suspended Member, either 

NSCC or OCC may require that the 

Required Fund Deposit portion of the 

GSP be re-calculated by calculating the 

Required Fund Deposit for the Mutually 

Suspended Member both before and 

after the delivery of the E&A/Delivery 

Transactions and utilize the precise 

amount that is attributable to that 

activity in the final GSP. If such a 

recalculation is required, the result 

would replace the Required Fund 

Deposit component of the GSP that was 

initially calculated. The SLD component 

of the GSP would be unchanged by such 

recalculation. 

As the above demonstrates, the GSP is 

intended to address the significant 

collateral and liquidity requirements 

that could be required of OCC Clearing 

Members in the event of a Common 

Member default. Allowing OCC to make 

a GSP payment also is intended to allow 

for settlement processing to take place 

through the facilities of NSCC to retain 

operational efficiencies associated with 

the settlement process. Alternative 

settlement means such as broker-tobroker settlement add operational 

burdens because transactions would 

need to be settled individually on oneoff bases. In contrast, NSCC’s netting 

reduces the volume and value of 

settlement obligations that would need 

to be closed out in the market.36

Because the clearance and settlement of 

obligations through NSCC’s facilities 

following a Common Member default, 

including netting of E&A/Delivery 

Transactions with a Common Member’s 

positions at NSCC, would avoid these 

potentially significant operational 

burdens for OCC and its Clearing 

Members, OCC and NSCC believe that 

the proposed changes would limit 

market disruption relating to a Common 

Member default. NSCC netting 

significantly reduces the total number of 

obligations that require the exchange of 

money for settlement. Allowing more 

activity to be processed through NSCC’s 

netting systems would minimize risk 

associated with the close out of those 

transactions following the default of a 

Common Member. 

Amending the Existing Accord to 

define the terms and conditions under 

which Guaranty Substitution may occur, 

at OCC’s election, with respect to 

Defaulted NSCC Member Transactions 

after a Common Member becomes a 

Mutually Suspended Member would 

also provide more certainty to both the 

Clearing Agencies and market 

participants generally about how a 

Mutually Suspended Member’s 

Defaulted NSCC Member Transactions 

may be processed. 

NSCC and OCC have agreed it is 

appropriate to limit the availability of 

the proposed provision to the day of the 

Common Member default and the next 

business day because, based on 

historical simulations of cease to act 

events involving Common Members, 

most activity of a Mutually Suspended 

Member is closed out on those days.37

Furthermore, the benefits of netting 

through NSCC’s systems would be 

reduced for any activity submitted to 

NSCC after that time. 

To implement the proposed Phase 1 

changes to the Existing Accord, OCC 

and NSCC propose to make the 

following changes. 

Section 1—Definitions 

First, new definitions would be 

added, and existing definitions would 

be amended in Section 1, which is the 

Definitions section. 

The new defined terms would be as 

follows. 

• The term ‘‘Close Out Transaction’’ 

would be defined to mean ‘‘the 

liquidation, termination or acceleration 

of one or more exercised or matured 

Stock Options 38 or Stock Futures 39

contracts, securities contracts, 

commodity contracts, forward contracts, 

repurchase agreements, swap 

agreements, master netting agreements 

or similar agreements of a Mutually 

Suspended Member pursuant to OCC 

Rules 901, 1006 and 1101 through 1111 

(including but not limited to Rules 1104 

and 1107) and/or NSCC Rule 18.’’ This 

proposed definition would make it clear 

that the payment of the Guaranty 

Substitution Payment and NSCC’s 

subsequent acceptance of Defaulted 

NSCC Member Transactions for 

clearance and settlement are intended to 

fall within the ‘‘safe harbors’’ provided 

in the Bankruptcy Code,40 the Securities 

Investor Protection Act,41 and other 

similar laws. 

• The term ‘‘Guaranty Substitution 

Payment’’ would be defined to mean 

‘‘an amount calculated by NSCC in 

accordance with the calculations set 

forth in Appendix A [to the Existing 

Accord (as proposed to be amended)], to 

include two components: (i) a portion of 

the Mutually Suspended Member’s 

Required Fund Deposit deficit to NSCC 

at the time of the cease to act; and (ii) 

a portion of the Mutually Suspended 

Member’s unpaid Supplemental 

Liquidity Deposit obligation at the time 

of the cease to act.’’ 

• The term ‘‘Mutually Suspended 

Member’’ would mean ‘‘any OCC 

Participating Member 42 that has been 

suspended by OCC that is also an NSCC 

Participating Member 43 for which 

NSCC has ceased to act.’’ 

• The term ‘‘Required Fund Deposit’’ 

would have the meaning ‘‘provided in 

Rule 4 of NSCC’s Rules and Procedures 

(or any replacement or substitute rule), 

the version of which, with respect to 

any transaction or obligation incurred 

that is the subject of this Agreement, is 

in effect at the time of such transaction 

or incurrence of obligation.’’ 

• The term ‘‘Supplemental Liquidity 

Deposit’’ would have the meaning 

‘‘provided in Rule 4A of NSCC’s Rules 

and Procedures (or any replacement or 

substitute rule), the version of which, 

with respect to any transaction or 

obligation incurred that is the subject of 

this Agreement, is in effect at the time 

of such transaction or incurrence of 

obligation.’’ 

The defined terms that would be 

amended in Section 1 of the Existing 

Accord are as follows. 

• The definition for the term ‘‘E&A/ 

Delivery Transaction’’ generally 

contemplates a transaction that involves 

a delivery and receipt of stock in the 

settlement of physically-settled options 


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44See Rule 46 (Restrictions on Access to Services) 

of the NSCC Rules, supra note 6. 

45The section of the Existing Accord that 

addresses circumstances in which NSCC ceases to 

act and/or an NSCC Member defaults is currently 

part of Section 6(a). It would be re-designated as 

Section 6(b) for organizational purposes. 

46The Required Fund Deposit is calculated 

pursuant to Rule 4 (Clearing Fund) and Procedure 

XV (Clearing Fund Formula and Other Matters) of 

the NSCC Rules, see supra note 6. 

47The Supplemental Liquidity Deposit is 

calculated pursuant to Rule 4A (Supplemental 

Liquidity Deposits) of the NSCC Rules, see supra 

note 6. 

48The time by which OCC would be required to 

notify NSCC of its intent would be defined in the 

Service Level Agreement. As of the time of this 

filing, the parties intend to set that time as one hour 

after OCC’s receipt of the calculated Guaranty 

Substitution Payment from NSCC. 

49Under the current and proposed terms of the 

Existing Accord, NSCC would be permitted to 

voluntarily guaranty and settle the Defaulted NSCC 

Member Transactions. 

and futures that are cleared and settled 

by OCC and for which the underlying 

securities are eligible for clearing 

through the facilities of NSCC. The 

definition would be amended to make 

clear that it would apply in respect of 

a ‘‘Close Out Transaction’’ of a 

‘‘Mutually Suspended Member’’ as 

those terms are proposed to be defined 

(described above). 

• The definition for the term ‘‘Eligible 

Securities’’ generally contemplates the 

securities that are eligible to be used for 

physical settlement under the Existing 

Accord. The term would be modified to 

clarify that this may include, for 

example, equities, exchange-traded 

funds and exchange-traded notes that 

are underlying securities for options 

issued by OCC. 

Section 6—Default by an NSCC 

Participating Member or OCC 

Participating Member 

Section 6 of the Existing Accord 

provides that NSCC is required to 

provide certain notice to OCC in 

circumstances in which NSCC has 

ceased to act for a Common Member. 

Currently, Section 6(a)(ii) of the Existing 

Accord also requires NSCC to notify 

OCC if a Common Member has failed to 

satisfy its Clearing Fund obligations to 

NSCC, but for which NSCC has not yet 

ceased to act. In practice, this provision 

would trigger a number of obligations 

(described below) when a Common 

Member fails to satisfy its NSCC 

Clearing Fund obligations for any 

reason, including those due to an 

operational delay. Therefore, OCC and 

NSCC are proposing to remove the 

notification requirement under Section 

6(a)(ii) from the Existing Accord. Under 

Section 7(d) of the Existing Accord, 

NSCC and OCC are required to provide 

each other with general surveillance 

information regarding Common 

Members, which includes information 

regarding any Common Member that is 

considered by the other party to be in 

distress. Therefore, if a Common 

Member has failed to satisfy its NSCC 

Clearing Fund obligations and NSCC 

believes this failure is due to, for 

example, financial distress and not, for 

example, due to a known operational 

delay, and NSCC has not yet ceased to 

act for that Common Member, such 

notification to OCC would still occur 

but would be done pursuant to Section 

7(d) of the Existing Accord (as proposed 

to be amended), and not Section 6(a)(ii). 

Notifications under Section 6 of the 

Existing Accord (as proposed to be 

amended) would be limited to instances 

when NSCC has actually ceased to act 

for a Common Member pursuant to the 

NSCC Rules.44

Following notice by NSCC that it has 

ceased to act for a Common Member, 

OCC is obligated in turn to deliver to 

NSCC a list of all E&A/Delivery 

Transactions (excluding certain 

transactions for which Guaranty 

Substitution does not occur) involving 

the Common Member.45 This provision 

would be amended to clarify that it 

applies in respect of such E&A/Delivery 

Transactions for the Common Member 

for which the NSCC Guaranty has not 

yet attached—meaning that Guaranty 

Substitution has not yet occurred. 

As described above in the summary of 

the Existing Accord, where NSCC has 

ceased to act for a Common Member, the 

Existing Accord refers to the Common 

Member as the Defaulting NSCC 

Member and also refers to the relevant 

E&A/Delivery Transactions in 

connection with that Defaulting NSCC 

Member for which a Guaranty 

Substitution has not yet occurred as 

Defaulted NSCC Member Transactions. 

If the Defaulting NSCC Member is also 

suspended by OCC, it would be covered 

by the proposed definition that is 

described above for a Mutually 

Suspended Member. For such a 

Mutually Suspended Member, the 

proposed changes in Section 6(b) would 

provide that NSCC, by a time agreed 

upon by the parties, would provide OCC 

with the amount of the Guaranty 

Substitution Payment as calculated by 

NSCC and related documentation 

regarding the calculation. The Guaranty 

Substitution Payment would be 

calculated pursuant to NSCC’s Rules as 

that portion of the unmet Required 

Fund Deposit 46 and Supplemental 

Liquidity Deposit 47 obligations of the 

Mutually Suspended Member 

attributable to the Defaulted NSCC 

Member Transactions. By a time agreed 

upon by the parties,48 OCC would then 

be required to either notify NSCC of its 

intent to make the full amount of the 

Guaranty Substitution Payment to NSCC 

or notify NSCC that it will not make the 

Guaranty Substitution Payment. If OCC 

makes the full amount of the Guaranty 

Substitution Payment, NSCC’s guaranty 

would take effect at the time of NSCC’s 

receipt of that payment and the OCC 

Guaranty would end. 

The proposed changes would further 

provide that if OCC does not suspend 

the Common Member (such that the 

Common Member would therefore not 

meet the proposed definition of a 

Mutually Suspended Member) or if OCC 

elects to not make the full amount of the 

Guaranty Substitution Payment to 

NSCC, then all of the Defaulted NSCC 

Member Transactions would be exited 

from NSCC’s CNS Accounting 

Operation and/or NSCC’s Balance Order 

Accounting Operation, as applicable, 

and Guaranty Substitution would not 

occur in respect thereof. Therefore, 

NSCC would continue to have no 

obligation to guarantee or settle the 

Defaulted NSCC Member Transactions, 

and the OCC Guaranty would continue 

to apply to them pursuant to OCC’s ByLaws and Rules.49

Proposed changes to the Existing 

Accord would also address the 

application of any Guaranty 

Substitution Payment by NSCC. 

Specifically, new Section 6(d) would 

provide that any Guaranty Substitution 

Payment made by OCC may be used by 

NSCC to satisfy any liability or 

obligation of the Mutually Suspended 

Clearing Member to NSCC on account of 

transactions involving the Mutually 

Suspended Clearing Member for which 

the NSCC Guaranty applies and to the 

extent that any amount of assets 

otherwise held by NSCC for the account 

of the Mutually Suspended Member 

(including any Required Fund Deposit 

or Supplemental Liquidity Deposit) are 

insufficient to satisfy its obligations 

related to transactions for which the 

NSCC Guaranty applies. Proposed 

changes to Section 6(d) would further 

provide for the return to OCC of any 

unused portion of the GSP. With regard 

to the portion of the Guaranty 

Substitution Payment that corresponds 

to a member’s Supplemental Liquidity 

Deposit obligation, NSCC must return 

any unused amount to OCC within 

fourteen (14) days following the 

conclusion of NSCC’s settlement, closeout and/or liquidation. With regard to 

the portion of the Guaranty Substitution 

Payment that corresponds to a Required 


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50Such amounts would be returned to OCC as 

appropriate and in accordance with a Netting 

Contract and Limited Cross-Guaranty, by and 

among The Depository Trust Company, Fixed 

Income Clearing Corporation, NSCC and OCC, 

dated as of January 1, 2003, as amended. 

51See supra note 42 defining OCC Participating 

Member. 

52See supra note 43 defining NSCC Participating 

Member. 

53See supra note 6. 

54The Existing Accord is currently the only 

agreement that would be considered a ‘‘Close-Out 

Agreement’’ under this new Section 9(b). 55See id. 

Fund Deposit, NSCC must return any 

unused amount to OCC under terms 

agreed to by the parties.50

Other Proposed Changes as Part of 

Phase 1 

Certain other technical changes are 

also proposed to the Existing Accord to 

conform it to the proposed changes 

described above. For example, the 

preamble and the ‘‘whereas’’ clauses in 

the Preliminary Statement would be 

amended to clarify that the agreement is 

an amended and restated agreement and 

to summarize that the agreement would 

be modified to contemplate the 

Guaranty Substitution Payment 

structure. Section 1(c), which addresses 

the terms in the Existing Accord that are 

defined by reference to NSCC’s Rules 

and Procedures and OCC’s By-Laws and 

Rules would be modified to state that 

such terms would have the meaning 

then in effect at the time of any 

transaction or obligation that is covered 

by the agreement rather than stating that 

such terms have the meaning given to 

them as of the effective date of the 

agreement. This change is proposed to 

help ensure that the meaning of such 

terms in the agreement will not become 

inconsistent with the meaning in the 

NSCC Rules and/or OCC By-Laws and 

Rules, as they may be modified through 

proposed rule changes with the 

Commission. 

Technical changes would be made to 

Sections 3(d) and (e) of the Existing 

Accord to provide that those provisions 

would not apply in the event new 

Section 6(b) described above, is 

triggered. Section 3(d) generally 

provides that OCC will no longer submit 

E&A/Delivery Transactions to NSCC 

involving a suspended OCC 

Participating Member.51 Similarly, 

Section 3(e) generally provides that OCC 

will no longer submit E&A/Delivery 

Transactions to NSCC involving an 

NSCC Participating Member 52 for 

which NSCC has ceased to act. A 

proposed change would also be made to 

Section 5 of the Existing Accord to 

modify a reference to Section 5 of 

Article VI of OCC’s By-Laws to instead 

provide that the updated cross-reference 

should be to Chapter IV of OCC’s Rules. 

Section 5 would also be amended to 

clarify that Guaranty Substitution 

occurs when NSCC has received both 

the Required Fund Deposit and 

Supplemental Liquidity Deposit, as 

calculated by NSCC in its sole 

discretion, from Common Members. The 

addition of the collection of the 

Supplemental Liquidity Deposit to the 

definition of the Guaranty Substitution 

Time in this Section 5 would reflect 

OCC and NSCC’s agreement that both 

amounts are components of the 

Guaranty Substitution Payment (as 

described above) and would make this 

definition consistent with that 

agreement. 

In Section 7 of the Existing Accord, 

proposed changes would be made to 

provide that NSCC would provide to 

OCC information regarding a Common 

Member’s Required Fund Deposit and 

Supplemental Liquidity Deposit 

obligations, to include the 

Supplemental Liquidity Deposit 

obligation in this notice requirement, 

and additionally that NSCC would 

provide OCC with information regarding 

the potential Guaranty Substitution 

Payment for the Common Member. On 

an options expiration date that is a 

Friday, NSCC would, by close of 

business on that day, also provide to 

OCC information regarding the intra-day 

liquidity requirement, intra-day 

liquidity resources and intra-day calls 

for a Common Member that is subject to 

a Supplemental Liquidity Deposit at 

NSCC. 

Finally, Section 14 of the Existing 

Accord would be modernized to provide 

that notices between the parties would 

be provided by email rather than by 

hand, overnight delivery service or firstclass mail. 

Proposed Phase 1 Changes to NSCC 

Rules 

In connection with the proposed 

changes to the Existing Accord, NSCC is 

also proposing changes to its Rules, 

described below. 

First, NSCC would amend Rule 18 

(Procedures for When the Corporation 

Ceases to Act), which describes the 

actions NSCC would take with respect 

to the transactions of a Member after 

NSCC has ceased to act for that 

Member.53 The proposed changes 

would include a new Section 9(a) to 

specify that following a Member default, 

NSCC may continue to act and provide 

the NSCC Guaranty pursuant to a 

‘‘Close-Out Agreement’’ such as the 

Existing Accord (as it is proposed to be 

amended); 54 a new Section 9(b) to 

specify that any transactions undertaken 

pursuant to a Close-Out Agreement 

would be treated as having been 

received, provided or undertaken for the 

account of the Member for which NSCC 

has ceased to act, but that any deposit, 

payment, financial assurance or other 

accommodation provided to NSCC 

pursuant to a Close-Out Agreement shall 

be returned or released as provided for 

in the agreement; and a new Section 

9(c), to provide that NSCC shall have a 

lien upon, and may apply, any property 

of the defaulting Member in satisfaction 

of any obligation, liability or loss that 

relates to a transaction undertaken or 

service provided pursuant to a CloseOut Agreement. 

NSCC would also propose 

clarifications to Sections 4, 6(b)(iii)(B) 

and 8 to use more precise references to 

the legal entity described in those 

sections of this Rule. 

Second, NSCC would amend Section 

B of Procedure III and Addendum K of 

the NSCC Rules 55 to provide that the 

NSCC Guaranty would not attach to 

Defaulted NSCC Member Transactions 

except as provided for in the Existing 

Accord (as it is proposed to be 

amended), and that the NSCC Guaranty 

attaches, with respect to obligations 

arising from the exercise or assignment 

of OCC options settled at NSCC or stock 

futures contracts cleared by OCC, as 

provided for in the Existing Accord (as 

it is proposed to be amended) or other 

arrangement with OCC. Finally, the 

proposed changes to Procedure III 

would clarify that Guaranty Substitution 

occurs when NSCC has received both 

the Required Fund Deposit and 

Supplemental Liquidity Deposit, 

consistent with the proposed revisions 

to Section 5 of the Current Accord, 

described above. As noted above, the 

proposal to include the collection of the 

Supplemental Liquidity Deposit in 

connection with the Guaranty 

Substitution reflect OCC and NSCC’s 

agreement that both amounts are 

components of the Guaranty 

Substitution Payment. NSCC also 

proposes to make a number of nonsubstantive clean up changes to 

Procedure III, such as correcting 

references to NSCC’s ‘‘guaranty.’’ 

Collectively, these proposed changes 

would establish and clarify the rights of 

both NSCC and a Member for which 

NSCC has ceased to act with respect to 

property held by NSCC and the 

operation and applicability of any 

Close-Out Agreement, and would make 

it clear that any payments received 

pursuant to a Close-Out Agreement and 

NSCC’s acceptance of a Mutually 


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56 17 CFR 240.15c6–1. 

57Securities Exchange Act Release No. 96930 

(Feb. 15, 2023), 88 FR 13872, 13873 (Mar. 6, 2023). 

58 Id. at 13881. 

59 Id. at 13917. 

60 Given the reduction in the settlement cycle and 

existing processes that must be completed for 

settlement, NSCC would not be able to safely 

compress its processing times further to allow 

processing to occur after the guaranty transfers from 

OCC to NSCC. NSCC provided proposed processing 

timelines in confidential Exhibit 3D to this filing. 61See supra note 43. 

Suspended Member’s transactions for 

clearance and settlement pursuant to a 

Close-Out Agreement are intended to 

fall within the Bankruptcy Code and 

Securities Investor Protection Act ‘‘safe 

harbors.’’ 

Proposed Phase 2 Changes 

On February 15, 2023, the 

Commission adopted amendments to 

Rule 15c6–1(a) under the Act 56 to 

shorten the standard settlement cycle 

for most broker-dealer transactions in 

securities from T+2 to T+1. In doing so, 

the Commission stated that a shorter 

settlement cycle ‘‘can promote investor 

protection, reduce risk, and increase 

operational and capital efficiency.’’ 57

Moreover, the Commission stated that 

delaying the move to a shorter 

settlement cycle would ‘‘allow undue 

risk to continue to exist in the U.S. 

clearance and settlement system’’ 58 and 

that it ‘‘believes that the May 28, 2024, 

compliance date will help ensure that 

market participants have sufficient time 

to implement the changes necessary to 

reduce risk, such as risks associated 

with the potential for increases in 

settlement fails.’’ 59 The Phase 2 changes 

proposed herein serve those risk 

reduction objectives related to securities 

settlements by endeavoring to limit 

market disruption following a Common 

Member default. The proposed changes 

would allow OCC to provide certain 

assurances with respect to its ability to 

make a GSP in the event of a Common 

Member default to NSCC in a shortened 

settlement cycle, which would permit 

NSCC to begin processing E&A/Delivery 

Transactions prior to Guaranty 

Substitution occurring. This, in turn, 

would promote settlement through 

NSCC that is less operationally complex 

and would be expected to require less 

collateral and liquidity from market 

participants than if OCC engaged in the 

alternative settlement processes 

discussed above. 

To address the operational realities 

concerning the Accord that will result 

from the Commission’s adoption and 

implementation of a new standard 

settlement cycle of T+1 pursuant to Rule 

15c6–1(a) under the Act, OCC and 

NSCC are proposing Phase 2 changes to 

further modify the Accord after the T+1 

settlement cycle becomes effective. As 

described in greater detail below, the 

Phase 2 changes would allow the GSP 

and other changes that are part of the 

Phase 1 changes to continue to function 

appropriately and efficiently in the new 

T+1 settlement environment. Because of 

the phased approach, a separate markup is provided in confidential Exhibit 

4A of the Phase 2 changes against the 

Accord as modified through the Phase 1 

changes. 

As described in more detail below, 

shortening the settlement cycle to T+1 

will require NSCC to process stock 

settlement obligations arising from E&A/ 

Delivery Transactions one day earlier, 

i.e., on the day after the trade date, than 

is currently the case. Moving processing 

times ahead by a full day will require 

processing to occur before the guaranty 

transfers from OCC to NSCC.60

In this new T+1 processing 

environment, the Phase 2 changes 

would limit market disruption following 

a Common Member default because the 

Phase 2 changes would allow OCC to 

provide certain assurances with respect 

to its ability to make a GSP in the event 

of a Common Member default to NSCC 

that would permit NSCC to begin 

processing the defaulting Common 

Member’s E&A/Delivery Transactions 

prior to Guaranty Substitution 

occurring. This, in turn, would promote 

settlement through NSCC that is less 

operationally complex and would be 

expected to require less collateral and 

liquidity from market participants than 

if OCC engaged in alternative settlement 

processes. The specific changes 

included in Phase 2 are described 

below. The changes would facilitate the 

continued ability of the GSP to function 

in an environment with a shorter 

settlement cycle. These changes are 

generally designed to allow OCC to 

provide certain assurances with respect 

to its ability to make a GSP in the event 

of a Common Member default to NSCC 

that would permit NSCC to begin 

processing E&A/Delivery Transactions 

prior to Guaranty Substitution occurring 

by introducing new or amended terms 

and setting out the processes associated 

therewith. All of the descriptions below 

explain the changes to the Accord as 

they would be made after the Accord 

has already been modified through prior 

implementation of the proposed Phase 1 

changes. 

Section 1—Definitions 

First, new definitions would be 

added, and existing definitions would 

be amended or removed in Section 1. 

The new defined terms would be as 

follows. 

• The term ‘‘GSP Monitoring Data’’ 

would be defined to mean a set of 

margin and liquidity-related data points 

provided by NSCC on each Activity 

Date prior to the submission of E&A/ 

Delivery Transactions by OCC to be 

used for informational purposes at OCC 

and NSCC. 

• The term ‘‘Final Guaranty 

Substitution Payment’’ would be 

defined to mean an amount calculated 

by NSCC for each Settlement Date in 

accordance with Appendix A to the 

Accord, to include two components: (i) 

a portion of the NSCC Participating 

Member’s 61 Required Fund Deposit 

deficit to NSCC calculated as a 

difference between the Required Fund 

Deposit deficit calculated on the NSCC 

Participating Member’s entire portfolio 

and the Required Fund Deposit deficit 

calculated on the NSCC Participating 

Member’s portfolio prior to submission 

of the E&A/Delivery Transactions; and 

(ii) the portion of the NSCC 

Participating Member’s unpaid 

Supplemental Liquidity Deposit 

obligation attributable to the additional 

activity to be guaranteed. 

• The term ‘‘Historical Peak Guaranty 

Substitution Payment’’ would be 

defined to mean the largest Final 

Guaranty Substitution Payment for an 

NSCC Participating Member and its 

affiliates that are also NSCC 

Participating Members over the 12 

months immediately preceding the 

Activity Date, to include two 

components: (i) the Required Fund 

Deposit deficits associated with E&A/ 

Delivery Transactions based on peak 

historical observations of the largest 

NSCC Participating Member and its 

affiliates that are also NSCC 

Participating Members; and (ii) the 

Supplemental Liquidity Deposit 

obligations associated with E&A/ 

Delivery Transactions based on peak 

historical observations as calculated in 

accordance with applicable NSCC or 

OCC Rules and procedures. 

• The term ‘‘Qualifying Liquid 

Resources’’ would be defined to have 

the meaning provided by Rule 17Ad– 

22(a)(14) of the Exchange Act, 17 CFR 

240.17Ad–22(a)(14), or any successor 

Rule under the Exchange Act. 

• The term ‘‘Settlement Date’’ would 

be defined to mean the date on which 

an E&A/Delivery Transaction is 

designated to be settled through 

payment for, and delivery of, the 

Eligible Securities underlying the 


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62See supra note 38. 

63See supra note 39. 

64The Required Fund Deposit is the portion of 

the defaulted Common Member’s Required Fund 

Deposit deficit to NSCC, calculated as a difference 

between the Required Fund Deposit deficit 

calculated on the entire portfolio and the Required 

Fund Deposit deficit calculated on the Common 

Member’s portfolio prior to the submission of E&A/ 

Delivery Transactions. The Phase 2 changes would 

refine the existing calculation methodology for the 

Required Fund Deposit in order to provide for a 

more accurate amount. 

65 If NSCC calculates a liquidity shortfall with 

respect to a defaulted Common Member, the 

Supplemental Liquidity Deposit is the portion of 

that shortfall that is attributable to the additional 

activity to be guaranteed. 

66 If OCC does not have sufficient cash to pay the 

Final GSP, then it must confirm for NSCC the 

availability of other qualifying liquid resources and 

the expecting timeline for converting such 

resources to cash. 

67Such terms and conditions may include, but 

would not be limited to, OCC’s agreement to (i) pay 

NSCC available cash resources in partial 

satisfaction of the Final Guaranty Substitution 

Payment; (ii) collect or otherwise source additional 

resources that would constitute NSCC Qualifying 

Liquid Resources to pay the full Final Guaranty 

Substitution Payment amount; and/or (iii) 

reimburse NSCC for any losses associated with 

closing out such E&A/Delivery Transactions. 

exercised Stock Option 62 or matured 

Stock Future,63 as the case may be. 

• The term ‘‘Weekday Expiration’’ 

would be defined to mean any 

expiration for which the options 

expiration date occurs on a date other 

than a Friday or for which the 

Settlement Date is any date other than 

the first business date following a 

weekend. 

• The term ‘‘Weekend Expiration’’ 

would be defined to mean any 

expiration for which the options 

expiration date occurs on a Friday or for 

which the Settlement Date is the first 

business date following a weekend. 

The defined term that would be 

removed in Section 1 is as follows. 

• ‘‘Guaranty Substitution Payment,’’ 

which would be replaced by the new 

defined terms ‘‘Final Guaranty 

Substitution Payment’’ and ‘‘Historical 

Peak Guaranty Substitution Payment.’’ 

The defined terms that would be 

amended in Section 1 are as follows. 

• The definition for the term ‘‘Eligible 

Securities’’ generally contemplates the 

securities that are eligible to be used for 

physical settlement under the Existing 

Accord. In Phase 2, the term would be 

modified to exclude any transactions 

settled through NSCC’s Balance Order 

System and any security undergoing a 

voluntary corporate action that is being 

supported by NSCC’s CNS system. This 

is because the processing of E&A/ 

Delivery Transactions and potential 

reversals of such transactions under the 

Phase 2 changes would not be feasible 

under the anticipated operation of 

NSCC’s CNS and Balance Order 

Accounting Operations under the 

shortened T+1 settlement cycle. 

Section 3—Historical Peak Guaranty 

Substitution Payment 

A new Section 3 would be added to 

describe the process by which OCC 

would send to NSCC evidence of 

sufficient funds to cover the Historical 

Peak Guaranty Substitution Payment. In 

particular, Section 3(a) would provide 

that on each Activity Date, at or before 

a time agreed upon by the Clearing 

Agencies (which may be modified on 

any given Activity Date with the 

consent of an authorized representative 

of OCC), NSCC will communicate to 

OCC the amount of the Historical Peak 

Guaranty Substitution Payment amount 

and the GSP Monitoring Data, which are 

to be used by OCC for informational 

purposes. The Historical Peak Guaranty 

Substitution Payment would reflect the 

largest GSP of the NSCC Participating 

Member and its affiliates over the prior 

twelve months and would be calculated 

based on the sum of the Required Fund 

Deposit deficits and Supplemental 

Liquidity Deposit associated with E&A/ 

Delivery Transactions. Section 3(b) 

would provide that OCC would then 

submit to NSCC an acknowledgement of 

the Historical Peak Guaranty 

Substitution Payment amount and 

evidence that OCC has sufficient cash 

resources in the OCC Clearing Fund to 

cover the Historical Peak Guaranty 

Substitution Payment. Section 3(c) 

would provide that if OCC does not 

provide NSCC with evidence within the 

designated time period that it has 

sufficient cash resources in the OCC 

Clearing Fund to cover the Historical 

Peak Guaranty Substitution Payment on 

the Activity Date, OCC will immediately 

contact NSCC to escalate discussions to 

discuss potential exposures and 

determine, among other things, whether 

OCC has other qualifying liquidity 

resources available to satisfy such 

amount. 

As described above, the Historical 

Peak Guaranty Substitution Payment is 

designed to serve as a reasonable proxy 

for the largest potential Final Guaranty 

Substitution Payment. Its purpose is to 

allow OCC to provide evidence that it 

likely will be able to satisfy the Final 

Guaranty Substitution Payment in the 

event of a Common Member default, 

which will provide NSCC with 

reasonable assurances such that NSCC 

can begin processing E&A/Delivery 

Transactions upon receipt and prior to 

the Guaranty Substitution occurring, 

which will minimize the probability of 

reversals in a default event in light of 

the shortened settlement cycle. The 

Historical Peak Guaranty Substitution 

Payment amount also will provide OCC 

with information that will allow OCC to 

include the amount of a potential GSP 

in its liquidity resource planning. 

Section 6—Final Guaranty Substitution 

Payment; OCC’s Commitment 

A new Section 6 would be added to 

provide the process by which NSCC 

would communicate the amount of, and 

OCC would commit to pay, the Final 

Guaranty Substitution Payment. In 

particular, Section 6(a) would provide 

that on each Settlement Date (or each 

Saturday for Weekend Expirations), by 

no later than the time(s) agreed upon by 

NSCC and OCC, NSCC will 

communicate to OCC the Final Guaranty 

Substitution Payment for each Common 

Member calculated by NSCC. NSCC 

would make such calculation according 

to a calculation methodology described 

in a new Appendix A to the Accord. 

This calculation would represent the 

sum of the Required Fund Deposit 64

and the Supplemental Liquidity 

Deposit 65 for the Common Member. As 

with the Phase 1 Accord, payment of the 

Final Guaranty Substitution Payment 

would be contingent on the mutual 

suspension of the Common Member and 

payment of the Final Guaranty 

Substitution Payment would continue to 

be the means by which Guaranty 

Substitution may occur. 

Section 6(b) would provide that, 

following NSCC’s communication of the 

Final Guaranty Substitution Payment for 

each Common Member to OCC, and by 

no later than the agreed upon time, OCC 

must either (i) commit to NSCC that it 

will pay the Final Guaranty Substitution 

Payment in the event of a mutual 

suspension of a Common Member,66 or 

(ii) notify NSCC that it will not have 

sufficient cash resources to pay the 

largest Final Guaranty Substitution 

Payment calculated for every Common 

Member. Section 6(b)(i) would further 

provide that for Weekday Expirations, 

OCC’s submission of E&A/Delivery 

Transactions to NSCC would constitute 

OCC’s commitment to pay the Final 

Guaranty Substitution Payment on the 

Settlement Date in the event of a mutual 

suspension of a Common Member. 

Section 6(c) would provide that if 

OCC notifies NSCC that it will not have 

sufficient cash resources to pay the 

Final Guaranty Substitution Payment, 

NSCC may, in its sole discretion (i) 

reject or reverse all E&A/Delivery 

Transactions, or (ii) voluntarily accept 

E&A/Delivery Transactions subject to 

certain terms and conditions mutually 

agreed upon by NSCC and OCC.67


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Section 6(c) would also provide that any 

necessary reversals of E&A/Delivery 

Transactions shall be delivered by 

NSCC to OCC at such time and in such 

form as the Clearing Agencies agree. 

Section 6(d) would provide that if, at 

any time after OCC has acknowledged 

the Historical Peak Guaranty 

Substitution Payment in accordance 

with proposed Section 3(b) of the 

Accord or committed to pay the Final 

Guaranty Substitution Payment in 

accordance with proposed Section 6(b) 

of the Accord, OCC has a reasonable 

basis to believe it will be unable to pay 

the Final Guaranty Substitution 

Payment, OCC will immediately notify 

NSCC. 

Section 8—Default by an NSCC 

Participating Member or OCC 

Participating Member 

Section 6(b)(i), which would be 

renumbered as Section 8(b)(i), would be 

amended to reflect the modified use of 

the Final Guaranty Substitution 

Payment in the event of a mutual 

suspension of a Common Member. 

Section 8(b)(i) would also be revised to 

remove the ability for OCC or NSCC to 

require that the Guaranty Substitution 

Payment be re-calculated in accordance 

with an alternative methodology. This 

would not be necessary under the 

calculation methodology used in the 

Phase 2 changes because the proposed 

methodology would result in a more 

accurate calculation. Section 8(b)(i) 

would further amend the Accord by 

providing NSCC with discretion to 

voluntarily accept Defaulted NSCC 

Member Transactions and assume the 

guaranty for such transactions, subject 

to certain terms and conditions 

mutually agreed upon by NSCC and 

OCC. The only remaining change to the 

Guaranty Substitution process from its 

operation under the Accord would be 

the shortened time duration under 

which OCC would elect (by way of its 

commitment) to make the Final 

Guaranty Substitution Payment and the 

timing under which the Guaranty 

Substitution would be processed in 

order to function in a T+1 environment. 

In particular, Section 8(b)(i) would 

provide that, with respect to a Mutually 

Suspended Member, if OCC has 

committed to make the Final Guaranty 

Substitution Payment, it will make such 

cash payment in full by no later than the 

agreed upon time(s). Upon NSCC’s 

receipt of the full amount of the Final 

Guaranty Substitution Payment, NSCC’s 

Guaranty would attach (and OCC’s 

Guaranty will no longer apply) to the 

Defaulted NSCC Member Transactions. 

NSCC would have no obligation to 

accept a Final Guaranty Substitution 

Payment and attach the NSCC Guaranty 

to any Defaulted NSCC Member 

Transactions for more than the Activity 

Date on which it has ceased to act for 

that Mutually Suspended Member and 

one subsequent Activity Date. If NSCC 

does not receive the full amount of the 

Final Guaranty Substitution Payment in 

cash by the agreed upon time, the 

Guaranty Substitution Time would not 

occur with respect to the Defaulted 

NSCC Member Transactions and Section 

8(b)(ii), described below, would apply. 

NSCC would, however, have discretion 

to voluntarily accept Defaulted NSCC 

Member Transactions and assume the 

guaranty for such transactions, subject 

to certain terms and conditions 

mutually agreed upon by NSCC and 

OCC. 

Section 6(b)(ii), which would be 

renumbered as Section 8(b)(ii), would 

also be amended to reflect the modified 

use of the Final Guaranty Substitution 

Payment in the event OCC continues to 

perform or does not make the Final 

Guaranty Substitution Payment. In 

particular, Section 8(b)(ii) would add an 

additional criterion of OCC not 

satisfying any alternative agreed upon 

terms for Guaranty Substitution to 

reflect this as an additional option 

under the Phase 2 changes. As 

amended, Section 8(b)(ii) would provide 

that if OCC does not suspend an OCC 

Participating Member for which NSCC 

has ceased to act, OCC does not commit 

to make the Final Guaranty Substitution 

Payment, NSCC does not receive the full 

amount of the Final Guaranty 

Substitution Payment in cash by the 

agreed upon time, or OCC does not 

satisfy any alternative agreed upon 

terms for Guaranty Substitution, 

Guaranty Substitution with respect to 

all Defaulted NSCC Member 

Transactions for that Activity Date will 

not occur, all Defaulted NSCC Member 

Transactions for that Activity Date will 

be reversed and exited from NSCC’s 

CNS accounting system, and NSCC will 

have no obligation to guaranty or settle 

such Defaulted NSCC Member 

Transactions. NSCC may, however, 

exercise its discretion to voluntarily 

accept the Defaulted NSCC Member 

Transactions, and assume the guaranty 

for such transactions, subject to certain 

agreed upon terms and conditions. 

Section 8(b) would also be modified 

to provide for escalated discussion 

between the Clearing Agencies in the 

event of an intraday NSCC Cease to Act 

and/or NSCC Participating Member 

Default, particularly to confirm that 

OCC has sufficient qualifying liquid 

resources to pay the projected Final 

Guaranty Substitution Payment for the 

Defaulting NSCC Member’s projected 

E&A/Delivery Transactions based on 

information provided in GSP 

Monitoring Data for such Defaulting 

NSCC Member. 

Conforming changes would also be 

made to Section 8(d) to reflect the use 

of the new defined term ‘‘Final 

Guaranty Substitution Payment.’’ 

Other Proposed Changes as Part of 

Phase 2 

Certain other technical changes are 

also proposed as part of the Phase 2 

changes, including to conform the 

Accord to the proposed changes 

described above. For example, Section 

9(c) would be revised regarding 

information sharing to reflect the 

introduction of the Historical Peak and 

Final Guaranty Substitution Payments 

and the GSP Monitoring Data; Section 

4(c)(ix) would be conformed to reflect 

the addition of ‘‘Settlement Date’’ as a 

defined term in Section 1; various 

sections would be renumbered and 

internal cross-references would be 

adjusted to reflect the addition of new 

sections proposed herein; correct 

current references throughout the 

Accord to ‘‘NSCC Rules and 

Procedures’’ would be changed to 

simply read ‘‘the NSCC Rules;’’ and 

various non-substantive textual changes 

would be made to increase clarity. 

Section 4(a) would also be modified 

to reflect that the Eligibility Master Files 

referenced in that paragraph, which 

identify Eligible Securities to OCC, are 

described in the SLA between OCC and 

NSCC. Section 9(b) would be modified 

to include OCC’s available liquidity 

resources, including Clearing Fund cash 

balances in the information OCC 

provides to NSCC and to specify that 

information will be provided on each 

Activity Date at an agreed upon time 

and in an agreed upon form by the 

Clearing Agencies. Finally, Section 

16(b) would be modified to provide the 

correct current delivery address 

information for NSCC. 

The Phase 2 changes would also 

include an Appendix A that would 

describe in detail the calculation 

methodology for the Guaranty 

Substitution Payment. This would 

provide the detailed technical 

calculation to determine each of the 

Mutually Suspended Member’s 

Required Fund Deposit deficit and 

liquidity shortfall to NSCC. The full text 

of Appendix A is filed confidentially 

with the Commission in Exhibit 5B to 

this filing. 

Phase 2 Guaranty Substitution Process 

Changes 

As described above, the Phase 2 

changes would modify the Guaranty 


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68NSCC provided a draft of the revised Phase 2 

SLA illustrating such changes to the Commission in 

confidential Exhibit 3F to this filing. 

69 If OCC does not have sufficient cash resources 

to pay the Final GSP and the Clearing Agencies are 

unable to reach an agreement on additional terms 

for NSCC to accept E&A/Delivery Transactions, 

OCC must submit a reversal file by 12:30 a.m. on 

Monday so that NSCC can remove the E&A/Delivery 

Transactions from CNS prior to the start of NSCC’s 

overnight processing. NSCC has included 

additional details on action deadlines and 

processing times in confidential Exhibit 3D of this 

filing. 

70 If, due to the timing of regulatory approval, the 

implementation dates for Phase 1 and Phase 2 

overlap, NSCC would implement only the Phase 2 

changes and Phase 1 changes that carry over to 

Phase 2. 

71 15 U.S.C. 78q–1(b)(3)(F). 

72 17 CFR 240.17Ad–22(e)(7), (20). 

Substitution process to reflect the 

shortened time duration under which 

the Guaranty Substitution will be 

processed in order to function in a T+1 

environment. Below is a description of 

how that process would operate. The 

actual process would be implemented 

pursuant to a modified SLA between the 

Clearing Agencies.68 All times provided 

below are in Eastern Time and represent 

the latest time by which the specified 

action must occur unless otherwise 

agreed by the Clearing Agencies. 

Weekend Expirations: On Friday (the 

Activity Date), NSCC would provide 

OCC with the Historical Peak GSP 

amount by 8:00 a.m. By 5:00 p.m. on 

Friday, OCC must acknowledge the 

Historical Peak GSP and provide 

evidence of OCC’s Clearing Fund cash 

resources sufficient to cover that 

amount, following which NSCC would 

provide the Eligibility Master File by 

5:45 p.m. By 1:00 a.m. on Saturday, 

OCC would then provide NSCC with the 

E&A/Delivery Transactions file and by 

8:00 a.m. NSCC would provide OCC 

with the Final GSP, which OCC must 

commit to pay by 9:00 a.m. in the event 

of a mutual suspension of a Common 

Member.69 By 8:00 a.m. Monday (the 

Settlement Date) if a cease to act is 

declared over the weekend (or the later 

of 10:00 a.m. or one hour after the cease 

to act is declared if declared on 

Monday), OCC must pay the Final GSP 

if there has been a mutual suspension of 

a Common Member. Finally, by 1:00 

p.m. on Monday, OCC must provide 

reversals for the defaulted member’s 

E&A/Delivery Transactions if OCC has 

not satisfied (or will not satisfy) the 

Final GSP. 

Weekday Expirations: On the Activity 

Date, NSCC would provide OCC with 

the Historical Peak GSP amount by 8:00 

a.m. By 5:00 p.m. on the Activity Date, 

OCC must acknowledge the Historical 

Peak GSP and provide evidence of its 

cash resources in the OCC Clearing 

Fund sufficient to cover that amount, 

following which NSCC would provide 

the Eligibility Master File by 5:45 p.m. 

By 1:00 a.m. on the Settlement Date (the 

day after the Activity Date in the T+1 

environment), OCC would then provide 

NSCC with the E&A/Delivery 

Transactions file, which also constitutes 

OCC’s commitment to pay the Final 

GSP. By 8:00 a.m. NSCC would provide 

OCC with the Final GSP. By the later of 

10:00 a.m. on the Settlement Date or one 

hour after a cease to act is declared, 

OCC must pay the Final GSP if there has 

been a mutual suspension of a Common 

Member. Finally, by 1:00 p.m. on the 

Settlement Date, OCC must provide 

reversals for the defaulted member’s 

E&A/Delivery Transactions if OCC has 

not satisfied (or will not satisfy) the 

Final GSP. 

For both Weekend Expirations and 

Weekday Expirations, Guaranty 

Substitution will take place only after 

the Common Members meet their start 

of day margin funding requirements at 

NSCC, if any. In a Common Member 

default event, the Guaranty Substitution 

will take place when OCC pays the 

Final GSP to NSCC. 

The Clearing Agencies note that the 

Phase 2 changes described above are 

designed to change the process by 

which the GSP is implemented such 

that the use of the GSP as a mechanism 

to facilitate the acceptance of settlement 

obligations by NSCC can continue to 

operate within the condensed timing for 

clearance and settlement in a T+1 

environment. However, the ultimate use 

of the GSP, its purpose, and its 

substantive import would remain 

consistent with the Phase 1 changes. 

Phase 2 Changes to NSCC Rules 

In connection with the proposed 

changes to the Accord, NSCC is also 

proposing changes to its Rules, 

described below. 

First, NSCC would amend Section B 

of Procedure III of the NSCC Rules to 

make conforming changes to align with 

the Phase 2 Accord. NSCC proposes to 

remove references to Balance Order 

Securities and the Balance Order 

Accounting Operation in Procedure III 

to align with the removal of Balance 

Order transactions from the types of 

Eligible Securities under the Phase 2 

Accord. NSCC would also update a 

reference to the Settlement Date for OCC 

E&A/Delivery Transactions to reflect 

that it would be one business day 

(rather than two business days) after 

exercise/assignment under the 

forthcoming T+1 settlement cycle. In 

addition, NSCC would add new 

language to Procedure III to clarify that 

E&A/Delivery Transactions that are 

indicated in a report or Consolidated 

Trade Summary shall have no force and 

effect with respect to the NSCC’s 

guaranty or a Member’s ultimate 

obligation to deliver or pay for the 

receipt of such securities unless and 

until such transactions have satisfied all 

requirements for the NSCC’s guaranty 

under Addendum K and the new 

Accord (unless NSCC notifies Members 

to the contrary). NSCC would also 

clarify that E&A/Delivery Transactions 

indicated in a report or Consolidated 

Trade Summary for which the NSCC’s 

guaranty does become effective shall be 

canceled and thereafter shall be null 

and void and such cancelation shall be 

reflected in the next available report or 

Consolidated Trade Summary. The 

proposed rule change is intended to 

reflect the timing of the receipt and 

processing of E&A/Delivery 

Transactions under the T+1 settlement 

cycle and the ultimate Guaranty 

Substitution and Guaranty Substitution 

Time under the Phase 2 Accord. 

Implementation Timeframe 

The proposed Phase 1 and Phase 2 

changes will be implemented as follows: 

• Phase 1: Within 120 days after the 

date OCC and NSCC receive all 

necessary regulatory approvals for these 

proposed changes to the Accord, NSCC 

will implement all Phase 1 changes. 

NSCC would announce the 

implementation date by an Important 

Notice posted to its public website at 

least seven days prior to 

implementation. 

• Phase 2: On the compliance date 

with respect to the final T+1 

amendments to Exchange Act Rule 

15c6–1(a) established by the 

Commission, NSCC will implement all 

Phase 2 changes, keep in place any 

applicable Phase 1 changes that carry 

over to Phase 2, and decommission all 

Phase 1 changes that do not apply to 

Phase 2.70

2. Statutory Basis 

NSCC believes the proposed changes 

to the Existing Accord and the NSCC 

Rules are consistent with the 

requirements of the Exchange Act and 

the rules and regulations thereunder 

applicable to a registered clearing 

agency. In particular, NSCC believes the 

proposed change is consistent with 

Section 17A(b)(3)(F) of the Act 71 and 

Rules 17Ad–22(e)(7) and (20), each 

promulgated under the Act,72 for the 

reasons described below. 

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

Act requires, among other things, that 

the rules of a clearing agency be 

designed to promote the prompt and 


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73 15 U.S.C. 78q–1(b)(3)(F). 

74 17 CFR 240.17Ad–22(e)(7). 

75 17 CFR 240.17Ad–22(e)(20). 76 15 U.S.C. 78q–1(b)(3)(I). 

accurate clearance and settlement of 

securities transactions, and in general, 

protect investors and the public 

interest.73 In addition, Rule 17Ad– 

22(e)(7) requires NSCC, in relevant part, 

to establish, implement, maintain and 

enforce written policies and procedures 

reasonably designed to effectively 

measure, monitor and manage the 

liquidity risk that arises in or is borne 

by NSCC and to, among other things, 

address foreseeable liquidity shortfalls 

that would not be covered by NSCC’s 

liquid resources.74 Rule 17Ad–22(e)(20) 

further requires NSCC to establish, 

implement, maintain and enforce 

written policies and procedures 

reasonably designed to identify, monitor 

and manage risks related to any link that 

NSCC establishes with one or more 

other clearing agencies, financial market 

utilities, or trading markets.75

Proposed Phase 1 Changes 

As described above, NSCC believes 

that providing OCC with the ability to 

make a Guaranty Substitution Payment 

to it with respect to any unmet 

obligations of a Mutually Suspended 

Member would promote prompt and 

accurate clearance and settlement 

because it would allow relevant 

securities settlement obligations to be 

accepted by NSCC for clearance and 

settlement, which would reduce the size 

of the related settlement obligations for 

both the Mutually Suspended Member 

and its assigned delivery counterparties 

through netting through NSCC’s CNS 

Accounting Operation and/or NSCC’s 

Balance Order Accounting Operation. 

Further, this proposal would reduce the 

circumstances in which OCC’s Guaranty 

would continue to apply to these 

settlement obligations, to be settled on 

a broker-to-broker basis between OCC 

Clearing Members, which could result 

in substantial collateral and liquidity 

requirements for OCC Clearing Members 

and that, in turn, could also increase a 

risk of default by the affected OCC 

Clearing Members at a time when a 

Common Member has already been 

suspended. For these reasons, NSCC 

believes that the proposed changes 

would be beneficial to and protective of 

OCC, NSCC, their participants, and the 

markets that they serve. NSCC believes 

the proposed Phase 1 changes are 

therefore designed to promote the 

prompt and accurate clearance and 

settlement of securities transactions 

and, in general, protect investors and 

the public interest. 

NSCC also believes the proposal is 

consistent the requirements of Rule 

17Ad–22(e)(7) because any increase to 

NSCC’s liquidity needs that may be 

created by applying the NSCC Guaranty 

to Defaulted Member Transactions 

would occur with a simultaneous 

increase to its liquidity resources in the 

form of the Guaranty Substitution 

Payment. Therefore, NSCC believes it 

would continue to adhere to the 

requirements of Rule 17Ad–22(e)(7) 

under the proposal. 

The Existing Accord between OCC 

and NSCC is a clearing agency link as 

contemplated by Rule 17Ad–22(e)(20). 

As described above, NSCC believes that 

implementation of the proposal would 

help manage the risks presented by the 

settlement link because, when the 

proposed provision is triggered by OCC, 

NSCC would receive the Guaranty 

Substitution Payment with respect to 

the relevant securities settlement 

obligations thereby ensuring that NSCC 

accepts those obligations for clearance 

and settlement and thereby reducing the 

size of the related settlement obligations 

for both the Mutually Suspended 

Member and its assigned delivery 

counterparties. 

Proposed Phase 2 Changes 

As described above, the Phase 2 

changes to the Existing Accord would 

enable OCC to provide certain 

assurances that would permit NSCC to 

begin processing E&A/Delivery 

Transactions prior to Guaranty 

Substitution occurring—thereby 

promoting the continued effectiveness 

of the Guaranty Substitution process 

contemplated by the Existing Accord 

and the Phase 1 changes discussed 

above. By effecting these changes, the 

Phase 2 Accord would facilitate the 

continued ability of the GSP model to 

function in an environment with a 

shorter settlement cycle. For these 

reasons, NSCC believes the proposed 

rule change would promote the prompt 

and accurate clearance and settlement of 

securities transactions and protect 

investors and the public interest. The 

proposed changes would facilitate 

implementation of the new settlement 

cycle and support the Commission’s 

stated goal of implementing necessary 

risk reducing changes in connection 

with the move to a T+1 settlement by 

the May 28, 2024, compliance date 

designated by the Commission. NSCC 

therefore believes that the proposed 

changes would be beneficial to and 

protective of NSCC, OCC, their 

participants, and the markets that they 

serve. As a result, NSCC believes the 

proposed rule change is consistent with 

Section 17A(b)(3)(F) of the Act. 

NSCC believes the Phase 2 changes 

are also consistent the requirements of 

Rule 17Ad–22(e)(7) because any 

increase to NSCC’s liquidity needs that 

may be created by applying the NSCC 

Guaranty to Defaulted Member 

Transactions would continue to occur 

with a simultaneous increase to NSCC’s 

liquidity resources in the form of the 

Guaranty Substitution Payment. 

Therefore, NSCC believes it would 

continue to adhere to the requirements 

of Rule 17Ad–22(e)(7) under the 

proposal. 

Finally, NSCC believe the proposed 

Phase 2 changes are consistent with the 

requirements of Rule 17Ad–22(e)(20). 

NSCC believes that the continued ability 

in the T+1 environment for OCC to 

make a Guaranty Substitution Payment 

to NSCC in the relevant circumstances 

involving a Mutually Suspended 

Member would help manage the risks 

presented to OCC, NSCC and their 

collective clearing members because the 

Guaranty Substitution Payment would 

ensure that the relevant securities 

settlement obligations would be 

accepted by NSCC, and therefore, the 

size of the related settlement obligations 

could be decreased from netting through 

NSCC’s CNS Accounting Operation. 

Furthermore, the Phase 2 changes 

would require OCC to provide certain 

assurances to NSCC that would permit 

NSCC to begin processing E&A/Delivery 

Transactions prior to Guaranty 

Substitution occurring—particularly, 

OCC’s acknowledgement of the 

Historical Peak GSP, demonstration of 

sufficient cash resources in its Clearing 

Fund to cover the Historical Peak GSP 

prior to submitting E&A/Delivery 

Transactions to NSCC, and OCC’s 

commitment to pay the Final GSP prior 

to NSCC processing such E&A/Delivery 

Transactions, further mitigating the 

risks presented by this link. 

(B) Clearing Agency’s Statement on 

Burden on Competition 

Section 17A(b)(3)(I) of the Act 76

requires that the rules of a clearing 

agency not impose any burden on 

competition not necessary or 

appropriate in furtherance of the 

purposes of the Act. NSCC does not 

believe that the proposal would impose 

any burden on competition. As 

described above, the proposed Phase 1 

changes would amend the Existing 

Accord to permit OCC in certain 

circumstances to make a Guaranty 

Substitution Payment to NSCC so that 

the NSCC Guaranty would take effect for 

the Defaulted NSCC Member 

Transactions, and the OCC Guaranty 


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77 17 CFR 200.30–3(a)(12). 

would end. The proposed Phase 2 

changes would further allow OCC to 

provide certain assurances to NSCC 

prior to the default of a Common 

Member that would enable NSCC to 

begin processing E&A/Delivery 

Transactions before the NSCC central 

counterparty trade guaranty attaches. 

The proposed changes would not inhibit 

access to NSCC’s services in any way, 

apply to all Members and do not 

disadvantage or favor any particular 

user in relationship to another user. 

Accordingly, NSCC does not believe 

that the proposed rule change would 

have any impact or impose a burden on 

competition. 

(C) Clearing Agency’s Statement on 

Comments on the Proposed Rule 

Change Received From Members, 

Participants, or Others 

NSCC has not received or solicited 

any written comments relating to this 

proposal. If any written comments are 

received, they will be publicly filed as 

an Exhibit 2 to this filing, as required by 

Form 19b–4 and the General 

Instructions thereto. 

Persons submitting comments are 

cautioned that, according to Section IV 

(Solicitation of Comments) of the 

Exhibit 1A in the General Instructions to 

Form 19b–4, the Commission does not 

edit personal identifying information 

from comment submissions. 

Commenters should submit only 

information that they wish to make 

available publicly, including their 

name, email address, and any other 

identifying information. 

All prospective commenters should 

follow the Commission’s instructions on 

how to submit comments, available at 

www.sec.gov/regulatory-actions/how-tosubmit-comments. General questions 

regarding the rule filing process or 

logistical questions regarding this filing 

should be directed to the Main Office of 

the Commission’s Division of Trading 

and Markets at tradingandmarkets@

sec.gov or 202–551–5777. 

NSCC reserves the right to not 

respond to any comments received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of the notice in the Federal 

Register or within such longer period 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the self-regulatory organization 

consents, the Commission will: 

(A) by order approve or disapprove 

such proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

The proposal shall not take effect 

until all regulatory actions required 

with respect to the proposal are 

completed. 

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 (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

NSCC–2023–007 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549. 

All submissions should refer to file 

number SR–NSCC–2023–007. 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 (https://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 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of NSCC 

and on DTCC’s website (https://

dtcc.com/legal/sec-rule-filings.aspx). Do 

not include personal identifiable 

information in submissions; you should 

submit only information that you wish 

to make available publicly. We may 

redact in part or withhold entirely from 

publication submitted material that is 

obscene or subject to copyright 

protection. All submissions should refer 

to file number SR–NSCC–2023–007 and 

should be submitted on or before 

February 15, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.77

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–01863 Filed 1–30–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meetings 

TIME AND DATE: 2:00 p.m. on Monday, 

January 29, 2024. 

PLACE: The meeting will be held via 

remote means and/or at the 

Commission’s headquarters, 100 F 

Street NE, Washington, DC 20549. 

STATUS: This meeting will be closed to 

the public. 

MATTERS TO BE CONSIDERED: 

Commissioners, Counsel to the 

Commissioners, the Secretary to the 

Commission, and recording secretaries 

will attend the closed meeting. Certain 

staff members who have an interest in 

the matters also may be present. 

In the event that the time, date, or 

location of this meeting changes, an 

announcement of the change, along with 

the new time, date, and/or place of the 

meeting will be posted on the 

Commission’s website at https://

www.sec.gov. 

The General Counsel of the 

Commission, or her designee, has 

certified that, in her opinion, one or 

more of the exemptions set forth in 5 

U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B) 

and (10) and 17 CFR 200.402(a)(3), 

(a)(5), (a)(6), (a)(7), (a)(8), (a)(9)(ii) and 

(a)(10), permit consideration of the 

scheduled matters at the closed meeting. 

The subject matter of the closed 

meeting will consist of the following 

topic: 

Resolution of litigation claims. 

At times, changes in Commission 

priorities require alterations in the 

scheduling of meeting agenda items that 

may consist of adjudicatory, 

examination, litigation, or regulatory 

matters. 

CONTACT PERSON FOR MORE INFORMATION: 

For further information; please contact 

Vanessa A. Countryman from the Office 

of the Secretary at (202) 551–5400. 

Authority: 5 U.S.C. 552b. 


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