Federal Register / Vol. 89, No. 229 / Wednesday, November 27, 2024 / Notices 93689 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 99802 

(Mar. 20, 2024), 89 FR 21118 (Mar. 26, 2024) (File 

No. SR–DTC–2024–003) (‘‘DTC Notice of Filing’’); 

Securities Exchange Act Release No. 99805 (Mar. 

20, 2024), 89 FR 21068 (Mar. 26, 2024) (File No. 

SR–FICC–2024–006) (‘‘FICC Notice of Filing’’); 

Securities Exchange Act Release No. 99803 (Mar. 

20, 2024), 89 FR 21091 (Mar. 26, 2024) (File No. 

SR–NSCC–2024–003) (‘‘NSCC Notice of Filing’’). 

4Specifically, the Commission received 

comments on the FICC Notice of Filing, and the 

comments are available at https://www.sec.gov/ 

comments/sr-ficc-2024-006/srficc2024006.htm. The 

comments generally relate to issues raised in other 

FICC proposed rule changes that are not relevant to 

the Notices of Filing. See, Securities Exchange Act 

Release Nos. 99817 (SR–FICC–2024–005) and 99844 

(SR–FICC–2024–007). The Commission considers 

the relevant comments related to the FICC Notice 

of Filing in its analysis at Section IV infra. 

5See Standards for Covered Clearing Agencies for 

U.S. Treasury Securities and Application of the 

Broker-Dealer Customer Protection Rule with 

Respect to U.S. Treasury Securities, Exchange Act 

Release No. 99149 (Feb. 15, 2023), 88 FR 13872 

(Jan. 16, 2024) (S7–23–22) (‘‘Treasury Clearing 

Adopting Release’’). 

6 17 CFR 240.17ad–22(e)(18)(iv)(C). 

7The Framework provides an outline for, among 

other things, how each of the Clearing Agencies 

comprehensively manages the risks, including the 

legal, credit, liquidity, operational, general 

business, investment, custody, and other risks, that 

arise in or are borne by it. 

8See DTC Notice of Filing, supra note 3, 89 FR 

at 21119; FICC Notice of Filing, supra note 3, 89 

FR at 21069; and NSCC Notice of Filing, supra note 

3, 89 FR at 21091. 

9See DTC Notice of Filing, supra note 3, 89 FR 

at 21119; FICC Notice of Filing, supra note 3, 89 

FR at 21069; and NSCC Notice of Filing, supra note 

3, 89 FR at 21092. 

10 17 CFR 240.17ad–22(e)(18)(iv)(C). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–27755 Filed 11–26–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101685; File Nos. SR–DTC– 

2024–003; SR–FICC–2024–006; SR–NSCC– 

2024–003] 

Self-Regulatory Organizations; The 

Depository Trust Company; Fixed 

Income Clearing Corporation; National 

Securities Clearing Corporation; Order 

Approving Proposed Rule Change To 

Amend the Clearing Agency Risk 

Management Framework 

November 21, 2024. 

I. Introduction 

On March 11, 2024, The Depository 

Trust Company (‘‘DTC’’), Fixed Income 

Clearing Corporation (‘‘FICC’’), and 

National Securities Clearing Corporation 

(‘‘NSCC,’’ each a ‘‘Clearing Agency,’’ 

and collectively, the ‘‘Clearing 

Agencies’’), filed with the Securities and 

Exchange Commission (‘‘Commission’’) 

proposed rule changes SR–DTC–2024– 

003, SR–FICC–2024–006, and SR– 

NSCC–2024–003, respectively, pursuant 

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

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

19b–4 thereunder (the ‘‘Proposed Rule 

Changes’’).2 The Proposed Rule Changes 

were published for comment in the 

Federal Register on March 26, 2024.3

The Commission has received 

comments on the changes proposed.4

For the reasons discussed below, the 

Commission is approving the Proposed 

Rule Changes. 

II. Background 

On December 13, 2023, the 

Commission adopted rules under the 

Act to amend the standards applicable 

to covered clearing agencies providing 

central counterparty services for 

transactions in U.S. Treasury securities 

to require policies and procedures be 

reasonably designed to ensure that the 

covered clearing agency has appropriate 

means to facilitate access to clearance 

and settlement services of all eligible 

secondary market transactions in U.S. 

Treasury securities, including those of 

indirect participants.5 The adopted 

rules also require that these policies and 

procedures be reviewed annually by the 

board of directors of such covered 

clearing agencies for U.S. Treasury 

securities.6 Currently, FICC is the only 

Clearing Agency providing clearance 

and settlement services to the U.S. 

Treasury securities market. 

To address the new requirements, the 

Clearing Agencies propose to amend 

their Clearing Agency Risk Management 

Framework (‘‘Framework).7 Specifically, 

the Proposed Rule Changes would add 

a new section to the Framework 

regarding ‘‘Solicitation of Participant 

and Stakeholder Views’’. This 

subsection would: (i) describe generally 

Clearing Agency participant and 

industry stakeholder outreach in the 

development and evaluation of new 

programs or risk management practices, 

and (ii) provide for the annual review of 

FICC’s Government Securities Division 

(‘‘GSD’’) access models by FICC’s Board 

of Directors. The proposal would also 

make other conforming and clean up 

changes to the text of the Framework, as 

described below. 

III. Description of the Proposed Rule 

Changes 

A. Subsection 3.4.1 General Solicitation 

of Views 

The Clearing Agencies state that they 

routinely solicit their participants’ and 

other industry stakeholders’ views when 

developing and evaluating products, 

services, or risk management practices 

so they may best meet the industry’s 

needs.8 To codify this practice, the 

proposal would add a new subsection to 

the Framework (entitled ‘‘General 

Solicitation of Views’’), which identifies 

several ways that the Clearing Agencies 

may seek the views of participants and 

stakeholders. Such methods would 

include targeted outreach to firms 

expected to be impacted by a proposal, 

widely distributed surveys, ad hoc 

forums, and standing advisory councils 

assembled to consider issues relevant to 

a proposal. This list of outreach 

methods is illustrative, not exhaustive. 

The subsection would also identify 

the industry stakeholders that may 

participate in such advisory councils, 

including for example, representatives 

from transfer agents, liquidity providers, 

market infrastructures, institutional and 

retail investors, customers of the 

Clearing Agencies’ participants, 

securities issuers, and securities 

holders. The Clearing Agencies state 

that the proposed changes in subsection 

3.4.1 do not create any obligation for the 

Clearing Agencies to conduct such 

outreach in any particular 

circumstances.9

B. Subsection 3.4.2 Required 

Solicitation of Views—Annual Review of 

GSD Access Models 

The Clearing Agencies propose 

adding a new subsection to the 

Framework (entitled ‘‘Required 

Solicitation of Views—Annual Review 

of GSD Access Models’’) in connection 

with the recently adopted requirement 

in Rule 17ad–22(e)(18)(iv)(C) that the 

board of directors of a covered clearing 

agency annually review the policies and 

procedures that the covered clearing 

agency uses to ensure that they have 

appropriate means to facilitate access to 

clearance and settlement services of all 

eligible secondary market transactions 

in U.S. Treasury securities, including 

those of indirect participants.10 To assist 

the board in their review of GSD access 

models, the Proposed Rule Changes 

would establish an advisory council 

comprised of participants, their 

customers, and other industry 

stakeholders. This advisory council 

review of GSD’s access models would be 

escalated to the FICC Board of Directors, 

or a committee thereof, with its annual 

review of GSD’s access models, which 


ddrumheller on DSK120RN23PROD with NOTICES1
93690 Federal Register / Vol. 89, No. 229 / Wednesday, November 27, 2024 / Notices 

11See DTC Notice of Filing, supra note 3, 89 FR 

at 21119; FICC Notice of Filing, supra note 3, 89 

FR at 21069; and NSCC Notice of Filing, supra note 

3, 89 FR at 21092. 

12See Fixed Income Clearing Corporation 

Government Securities Division Rulebook, Rule 1 

(defining Netting Member and associated terms), 

available at https://www.dtcc.com/∼/media/files/ 

downloads/legal/rules/ficc_gov_rules.pdf. 

13 In a separate proposed rule change, FICC 

proposed to add a framework to consider an 

applicant who does not meet the eligibility 

requirements of any existing categories. See 

Securities Exchange Act Release No. 99817 (Mar. 

21, 2024), 89 FR 21362, 21373 (Mar. 27, 2024) (File 

No. SR–FICC–2024–005). 

14See DTC Notice of Filing, supra note 3, 89 FR 

at 21120; FICC Notice of Filing, supra note 3, 89 

FR at 21070; and NSCC Notice of Filing, supra note 

3, at 3. 

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

16 15 U.S.C. 78q–1(b)(3)(F). 

17 17 CFR 240.17ad–22(e)(18)(iv)(C). 

18See supra note 13. 19 15 U.S.C. 78q–1(b)(3)(F). 

would also be required by this new 

subsection. 

FICC’s goal in the annual review of 

FICC/GSD’s access models is to 

determine whether the GSD Clearing 

Rules and any other written policies and 

procedures are reasonably designed to 

ensure appropriate and flexible means 

to facilitate access to clearance and 

settlement of all eligible secondary 

market transactions in U.S. Treasury 

securities, including those of indirect 

participants.11 In furtherance of this 

goal, the new subsection would require 

that the annual review include the 

following: (1) document any instance in 

which FICC treats transactions 

differently based on either the identity 

of the submitting participant, the fact 

that an indirect participant is a party to 

the transaction, the method of 

execution, or any other way, and 

confirm that any variation in treatment 

is both necessary and appropriate to 

meet the minimum standards regarding, 

among other things, operations, 

governance, and risk management 

identified in the Standards for Covered 

Clearing Agencies; (2) consider whether 

to enable GSD’s Netting Members, as 

defined in the GSD Rules,12 to submit 

eligible transactions for clearance and 

settlement that have been executed by 

two indirect participants of FICC/GSD 

(‘‘done-away’’); (3) consider the volumes 

and proportion of the markets that are 

being centrally cleared through different 

access models in determining whether 

FICC/GSD’s access models are meeting 

the needs of the market; and (4) 

consider whether it is appropriate to 

develop and propose an additional 

category or categories of Netting 

Members to the GSD Rules to reflect the 

types of legal entities that applied to be 

a Netting Member over the prior 12 

months and did not fit into one of the 

existing Netting Member categories.13

C. Other Conforming and Clean Up 

Changes 

The proposal would make other 

conforming and clean up changes to the 

Framework. The Clearing Agencies 

would amend Section 1 of the 

Framework to: (1) include the annual 

review of GSD’s access models in the 

list of regulatory requirements that are 

addressed in the Framework, and (2) 

update the description of the contents of 

Section 3 of the Framework to include 

the solicitation of participant and 

stakeholder views and annual review of 

GSD’s access models as part of the 

Clearing Agencies’ management of risks. 

The Clearing Agencies would also 

remove the defined term ‘‘Management 

Committee’’ wherever referenced and 

replace it with ‘‘senior management 

committee’’ while maintaining the 

current makeup and responsibilities of 

the current Management Committee, as 

described in the Framework. The 

Clearing Agencies state that the 

proposed change would allow the 

Framework to continue to be accurate 

notwithstanding any future name 

changes to the committee.14

Other minor grammatical and clean 

up changes would also be made to the 

Framework. 

IV. Discussion and Commission 

Findings 

Section 19(b)(2)(C) of the Act 15

directs the Commission to approve a 

proposed rule change of a selfregulatory organization if it finds that 

such proposed rule change is consistent 

with the requirements of the Act and 

rules and regulations thereunder 

applicable to such organization. After 

carefully considering the Proposed Rule 

Changes, the Commission finds that the 

Proposed Rule Changes are consistent 

with the requirements of the Act and the 

rules and regulations thereunder 

applicable to the Clearing Agencies. In 

particular, the Commission finds that 

the Proposed Rule Changes are 

consistent with Section 17A(b)(3)(F) 16

of the Act and Rule 17Ad– 

22(e)(18)(iv)(C),17 each promulgated 

under the Act. 

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

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

requires, in part, that the rules of a 

registered clearing agency be designed 

to promote the prompt and accurate 

clearance and settlement of securities 

transactions and assure the safeguarding 

of securities and funds which are in 

their custody or control or for which 

they are responsible.18

As described above in Section III.A, 

the Clearing Agencies routinely solicit 

their participants’ and other industry 

stakeholders’ views. The Proposed Rule 

Changes would codify that the Clearing 

Agencies use this practice, which 

should help ensure that the Clearing 

Agencies have mechanisms in place to 

be informed of the views of their 

participants and other industry 

stakeholders. By allowing specifically 

for formal engagement and transparency 

on their risk management practices, the 

Proposed Rule Changes should continue 

to encourage communication and 

provide a formal mechanism to help the 

Clearing Agencies identify and evaluate 

any unintended consequences a 

proposal or practice may have on its 

direct and indirect participants and 

obtain recommendations on how to 

meet its goals through alternative 

approaches. In addition, as described in 

Section III.B, the Proposed Rule 

Changes would establish an annual 

advisory council for FICC’s GSD to 

assist the FICC Board of Directors, or a 

committee thereof, in its required 

annual review of GSD access models, 

and the Proposed Rule Changes would 

also identify several things that the 

advisory council would have to do as 

part of its review. Adopting this 

advisory council and a plan for its work, 

as well as requiring annual review by 

the FICC Board of Directors, should help 

FICC work to meet its regulatory 

obligations to establish, implement, 

maintain and enforce written policies 

and procedures reasonably designed to 

ensure that it has appropriate means to 

facilitate access, including for indirect 

participants, to its clearance and 

settlement services by providing a 

method by which FICC can be informed 

by its participants and other industry 

stakeholders as to access issues. This 

change should help ensure that FICC 

solicits and considers such views when 

making decisions about how to structure 

its access models, which should, in 

turn, help further continued prompt and 

accurate clearance and settlement in the 

U.S. Treasury market, consistent with 

Section 17A(b)(3)(F) of the Act.19

Finally, the proposed conforming and 

clean-up changes should help to ensure 

that the Framework is clear and 

accurate. The risk management 

functions described in the Framework 

allow the Clearing Agencies to continue 

their critical operations and services, 

and better understanding of the 

Framework should help promote the 

prompt and accurate clearance and 

settlement of securities transactions, 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 89, No. 229 / Wednesday, November 27, 2024 / Notices 93691 

20 15 U.S.C. 78q–1(b)(3)(F). 

21 17 CFR 240.17ad–22(e)(18)(iv)(C). 

22Letter from Jiri Krol, Deputy CEO, Global Head 

of Government Affairs, Alternative Investment 

Management Association, at 8 (Apr. 23, 2024), 

available at https://www.sec.gov/comments/sr-ficc2024-006/srficc2024006.htm (‘‘AIMA Letter’’). 

23 17 CFR 240.17ad–25(j). 

24Clearing Agency Governance and Conflicts of 

Interest, Securities Exchange Act Release No. 98959 

(Nov. 16, 2023), 88 FR 84454, 84483 (Dec. 5, 2023). 

25See id. 

26AIMA Letter, supra note 22, at 8. 

27 17 CFR 240.17ad–22(e)(18)(iv)(C). 

28 15 U.S.C. 78q–1. 

29 15 U.S.C. 78s(b)(2). 

30 In approving the Proposed Rule Changes, the 

Commission considered their impact on efficiency, 

competition, and capital formation. 15 U.S.C. 78c(f). 

31 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

the Act.20

Accordingly, and for the reasons 

stated above, the Commission finds that 

the Proposed Rule Changes are 

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

the Act. 

B. Section 17Ad–22(e)(18)(iv)(C) of the 

Act 

Section 17Ad–22(e)(18)(iv)(C) under 

the Act requires, among other things, 

that a covered clearing agency serving 

the U.S. Treasury market, like FICC, 

establish, implement, maintain, and 

enforce written policies and procedures 

reasonably designed to ensure that the 

covered clearing agency has appropriate 

means to facilitate access to clearance 

and settlement services of all eligible 

secondary market transactions in U.S. 

Treasury securities, including those of 

indirect participants, and that the board 

of directors for the covered clearing 

agency, like FICC, annually review such 

policies and procedures.21 The 

Proposed Rule Changes, as described in 

Section III.B above, would establish an 

advisory council and framework for that 

council’s work and would provide for 

annual review by the FICC Board of 

Directors as to FICC’s policies and 

procedures regarding access to its 

clearance and settlement services. 

One commenter addressed certain 

aspects of this proposal. Specifically, 

the commenter states that FICC’s rules 

‘‘should provide that indirect 

participants will be allotted at least 50% 

of the representation on the council.’’ 22

The Commission agrees that indirect 

participant representation on the 

proposed council is important. Under 

the Proposed Rule Changes, the 

advisory council would include 

representatives not only from FICC 

participants, but also their customers, 

that is, indirect participants who rely on 

FICC’s services to access FICC’s 

clearance and settlement services. 

Though not required, the use of an 

advisory council is consistent with Rule 

17ad–22(e)(18)(iv)(C), and that rule does 

not mandate the particular composition 

of the advisory council that FICC has 

chosen to establish. 

The Commission recently adopted 

Rule 17ad–25(j) 23 which requires each 

registered clearing agency to establish, 

implement, maintain, and enforce 

written policies and procedures 

reasonably designed to solicit, consider, 

and document its consideration of the 

views of participants and other relevant 

stakeholders. The Commission therefore 

has given clearing agencies discretion in 

the design and structure of stakeholder 

outreach.24 The Commission also stated 

in the Rule 17ad–25(j) final rule release 

that such ‘‘other relevant stakeholders’’ 

generally would include investors, 

customers of clearing agency 

participants, and securities issuers.25

Pursuant to the Proposed Rule 

Changes, FICC would include indirect 

participants on its advisory council. The 

Commission supports the inclusion of 

indirect participants and encourages 

FICC to solicit views from a variety of 

indirect participants who may have 

differing needs. 

The commenter further stated that 

FICC should, ‘‘explicitly describe how 

and to what extent the feedback and 

recommendations made by the indirect 

participant members on the council (or 

indirect participants at large) will be 

considered and/or incorporated into the 

review process and potential changes to 

the access models.’’ 26 Within the 

Proposed Rule Changes, FICC has 

outlined specific points of 

consideration, and specific data to 

document and analyze in furtherance of 

the annual review by the Board of 

Directors, or a committee thereof, of 

GSD access models as noted in Section 

III.B above. In addition, pursuant to the 

Proposed Rule Changes, the advisory 

council’s review would be escalated to 

the FICC Board of Directors, or a 

committee thereof, to assist in their 

annual review. Rule 17ad– 

22(e)(18)(iv)(C) does not require the use 

of an advisory council. 

Accordingly, the Commission finds 

that the Proposed Rule Changes are 

consistent with the requirements of Rule 

17ad–22(e)(18)(iv)(C).27

V. Conclusion 

On the basis of the foregoing, the 

Commission finds that the Proposed 

Rule Change is consistent with the 

requirements of the Act and in 

particular with the requirements of 

Section 17A of the Act 28 and the rules 

and regulations promulgated 

thereunder. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act 29 that 

proposed rule changes SR–DTC–2024– 

003, SR–FICC–2024–006, and SR– 

NSCC–2024–003 be, and hereby are, 

approved.30

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.31

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–27754 Filed 11–26–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101693; File No. SR– 

NASDAQ–2024–068] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend the 

Deadline for a Listed Company To 

Notify Nasdaq of a Reverse Stock Split 

November 21, 2024. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on November 

8, 2024, The Nasdaq Stock Market LLC 

(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) the proposed 

rule change as described in Items I, II, 

and III, below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to modify its 

listing standards related to notification 

and disclosure of reverse stock splits to 

the Exchange. The proposed rule change 

will become operative on January 30, 

2025. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/nasdaq/rules, at the principal 

office of the Exchange, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 


ddrumheller on DSK120RN23PROD with NOTICES1