104582 Federal Register / Vol. 89, No. 246 / Monday, December 23, 2024 / Notices 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(2). 

5Capitalized terms not defined herein are defined 

in the Rules, available at www.dtcc.com/legal/rulesand-procedures. 

6See Securities Exchange Act Release No. 78525 

(Aug. 9, 2016), 81 FR 54146 (Aug. 15, 2016) (SR– 

NSCC–2016–002). 

7See Securities Exchange Act Release No. 95011 

(May 31, 2022), 87 FR 34339 (June 6, 2022) (SR– 

NSCC–2022–003) (Order Approving Proposed Rule 

Change to Introduce Central Clearing for Securities 

Financing Transaction Clearing Service). NSCC also 

filed the proposal as advance notice SR–NSCC– 

2022–801. See Securities Exchange Act Release No. 

94998 (May 27, 2022), 87 FR 33528 (June 2, 2022) 

(SR–NSCC–2022–801) (Notice of No Objection to 

Advance Notice to Introduce Central Clearing for 

Securities Financing Transaction Clearing Service). 

8See NSCC Rule 2C for Sponsoring Member and 

Sponsored Member requirements and NSCC Rule 

2D for Agent Clearing Member requirements, supra 

note 5. 

9Required Fund Deposit is generally defined to 

include the Sponsoring Member Required Fund 

Deposit, the Agent Clearing Member Required Fund 

Deposit and the Required SFT Deposit. See 

definition of Required Fund Deposit in Rule 1, 

supra note 5. 

10SFT Account is defined to include an SFT 

Member’s SFT Account for proprietary activity as 

well as any Agent Clearing Member Customer 

Omnibus Account and any Sponsored Member SubAccount. See definition of SFT Account in Rule 1, 

supra note 5. 

11See Section 12 of NSCC Rule 56 for Required 

SFT Deposit generally, Section 7 of NSCC Rule 2C 

for Sponsoring Member Required Fund Deposit, 

and Section 6 of NSCC Rule 2D for Agent Clearing 

Member Required Fund Deposit, supra note 5. 

12See Section II.A.2. of Addendum A of the 

NSCC Rules, supra note 5. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101949; File No. SR– 

NSCC–2024–011] 

Self-Regulatory Organizations; 

National Securities Clearing 

Corporation; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Modify Addendum A 

(Fee Structure) 

December 17, 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 December 

9, 2024, National Securities Clearing 

Corporation (‘‘NSCC’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II and III 

below, which Items have been prepared 

by the clearing agency. NSCC filed the 

proposed rule change pursuant to 

Section 19(b)(3)(A) of the Act 3 and Rule 

19b–4(f)(2) thereunder.4 The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change 

NSCC is filing the proposed rule 

change to modify Addendum A (Fee 

Structure) (‘‘Addendum A’’) of NSCC’s 

Rules & Procedures (‘‘Rules’’) to modify 

the Clearing Fund Maintenance Fee, as 

described below.5

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 

The purpose of this proposed rule 

change is to amend Addendum A (Fee 

Structure) of the Rules to modify 

NSCC’s Clearing Fund Maintenance Fee 

effective January 1, 2025. The proposed 

fee change is discussed in detail below. 

Background 

NSCC’s Clearing Fund Maintenance 

Fee was implemented in 2016 in order 

to (i) diversify NSCC’s revenue sources, 

mitigating NSCC’s dependence on 

revenues driven by trading volumes and 

(ii) add a stable revenue source that 

would contribute to NSCC’s operating 

margin by offsetting increasing costs 

and expenses.6 The fee is charged to all 

NSCC Members that are required to 

make deposits to the NSCC Clearing 

Fund in proportion to the Member’s 

average monthly cash deposit to the 

Clearing Fund. 

In June 2022, NSCC launched its 

Securities Financing Transaction 

(‘‘SFT’’) clearing service.7 The SFT 

clearing service provides central 

clearing for SFTs, which are, broadly 

speaking, transactions where members 

borrow or lend eligible securities versus 

cash and simultaneously agree to 

exchange the same securities and cash, 

plus or minus a rate payment, on a 

future date. NSCC novates the on leg of 

SFT trades as a central counterparty and 

risk manages the outstanding SFTs 

through maturity. The SFT clearing 

service allows Members to clear SFTs 

for their own proprietary accounts and 

established new membership categories 

and account types for Sponsoring 

Members, Sponsored Members and 

Agent Clearing Members.8

SFT Members are required to make 

contributions to the Clearing Fund 

(‘‘Required Fund Deposits’’) 9 for each 

applicable SFT Account 10 that they 

maintain for the SFT Clearing Service.11

The cash deposits made to satisfy 

Required Fund Deposits for SFT 

Accounts are currently subject to the 

Clearing Fund Maintenance Fee. SFT 

Members also pay Trade Clearance Fees 

that include: (i) a fee of $1.00 per side 

of each new SFT submitted (excluding 

any Linked SFT and Sponsored Member 

Transactions) and (ii) a fee of $0.14 per 

million of outstanding SFT notional 

balance.12

Proposed Fee Change 

Pursuant to Section V.F of Addendum 

A, NSCC charges a Clearing Fund 

Maintenance Fee, which is a monthly 

fee calculated, in arrears, as the product 

of (A) 0.35% and (B) the average of each 

Member’s cash deposit balance in the 

Clearing Fund, as of the end of each 

day, for the month, multiplied by the 

number of days for that month and 

divided by 360. 

NSCC has evaluated the application of 

the Clearing Fund Maintenance Fee to 

cash deposits in SFT Accounts and 

determined to exclude SFT Accounts 

from the Clearing Fund Maintenance 

Fee. In the current bilateral market for 

this activity, which is not cleared, SFTs 

are generally subject to standard 

haircuts regardless of the instrument or 

its volatility. In the NSCC SFT clearing 

service, NSCC utilizes a Value-at-Risk 

(‘‘VaR’’) model designed to specifically 

manage the market and volatility risk of 

the underlying assets. NSCC’s VaR 

charge for SFTs is typically greater than 

the standard haircut generally used in 

the bilateral market and therefore raises 

the costs of clearing such activity. 

Specifically, the margin requirements 

associated with SFTs in the SFT 

clearing service increase the amount of 

capital necessary to participate in the 

service. SFT Member profit margins are 

traditionally slim as lenders must pass 

a large portion of their profits back to 

the beneficial owners of the underlying 

securities. The additional 35 basis point 

fee charged via the NSCC Clearance 

Fund Maintenance Fee may therefore 

create a negative return for certain 


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Federal Register / Vol. 89, No. 246 / Monday, December 23, 2024 / Notices 104583 

13NSCC’s fees are cost-based plus a markup as 

approved by the Board of Directors or management 

(pursuant to authority delegated by the Board), as 

applicable. This markup is applied to recover 

development costs and operating expenses and to 

accumulate capital sufficient to meet regulatory and 

economic requirements. NSCC maintains 

procedures to control costs and regularly review 

pricing levels against costs of operation. See NSCC 

Disclosure Framework for Covered Clearing 

Agencies and Financial Market Infrastructures, 

available at www.dtcc.com/legal/policy-andcompliance. 

14 15 U.S.C. 78q–1(b)(3)(D). 

15 17 CFR 240.17ad–22(e)(23)(ii). 

16 15 U.S.C. 78q–1(b)(3)(D). 

17 17 CFR 240.17ad–22(e)(23)(ii). 

18See supra note 5. 

19 17 CFR 240.17ad–22(e)(23)(ii). 

20 15 U.S.C. 78q–1(b)(3)(I). 

Members attempting to use the SFT 

clearing service and may also serve to 

discourage broader participation, 

volumes, and liquidity in the SFT 

clearing service. NSCC also notes that 

SFTs are currently subject to Trade 

Clearance Fees that include: (i) a fee of 

$1.00 per side of each new SFT 

submitted (excluding any Linked SFT 

and Sponsored Member Transactions) 

and (ii) a fee of $0.14 per million of 

outstanding SFT notional balance, 

which are intended to cover the 

necessary costs of maintaining the 

service.13

To effectuate the proposed fee change, 

NSCC would amend Section V.F. of 

Addendum A concerning the Clearing 

Fund Maintenance Fee by inserting a 

parenthetical statement to clarify that 

the calculation of the average of each 

Member’s cash deposit balance in the 

Clearing Fund would exclude cash 

deposit balances in any SFT Accounts. 

Expected Impact 

The proposed fee change would have 

a minimal impact on Members and on 

NSCC’s overall revenues. Based on an 

analysis of NSCC’s SFT Account cash 

deposits and year-to-date revenues, the 

impact of the proposed fee change 

would be significantly less than one 

percent of NSCC’s overall revenues and 

would result in only slightly lower 

Clearing Fund Maintenance Fees for 

NSCC Members participating in the SFT 

clearing service. 

Member Outreach 

NSCC will perform outreach to those 

Members with SFT Accounts to notify 

them of the change. The Commission 

will be notified of any written 

comments received. 

Implementation Timeframe 

NSCC would implement this proposal 

on January 1, 2025. As proposed, a 

legend would be added to Addendum A 

stating there are changes that became 

effective upon filing with the 

Commission but have not yet been 

implemented. The proposed legend also 

would include the date on which such 

changes would be implemented and the 

file number of this proposal, and state 

that, once this proposal is implemented, 

the legend would automatically be 

removed. 

2. Statutory Basis 

NSCC believes the proposed rule 

change is consistent with the 

requirements of the Act and the rules 

and regulations thereunder applicable to 

a registered clearing agency. 

Specifically, NSCC believes the 

proposed rule change is consistent with 

Section 17A(b)(3)(D) of the Act 14 and 

Rule 17ad–22(e)(23)(ii) 15 thereunder for 

the reasons set forth below. 

Section 17A(b)(3)(D) of the Act 16

requires that the rules of a clearing 

agency provide for the equitable 

allocation of reasonable dues, fees, and 

other charges among its participants. 

NSCC believes the proposed fee change 

is reasonable and would be allocated 

equitably among its full-service 

Members. Members participating in the 

SFT clearing service are already subject 

to the Clearance Fund Maintenance Fee 

for all cash balances in their primary 

full-service accounts, which constitute 

the vast majority of NSCC’s Clearing 

Fund cash balances, similar to all other 

full-service Members. Moreover, the 

SFT Trade Clearance Fees, and not the 

Clearance Fund Maintenance Fee, are 

primarily intended to cover the costs of 

maintaining the SFT clearing service. 

Any Member that wishes to join the SFT 

clearing service in the future would 

receive the same treatment on their SFT 

Account cash balances. As a result, 

NSCC believes the proposed change to 

the Clearing Fund Maintenance Fee is 

equitable. 

NSCC also believes that the proposed 

change to the Clearing Fund 

Maintenance Fee is reasonable. As 

described above, the application of the 

Clearance Fund Maintenance Fee can 

create negative returns for certain 

Members attempting to use the SFT 

clearing service and may also serve to 

discourage broader participation, 

volumes, and liquidity in the SFT 

clearing service. Moreover, as noted 

above, the Trade Clearance Fees, and 

not the Clearance Fund Maintenance 

Fee, are primarily intended to cover the 

cost of the SFT clearing service. 

Additionally, Members participating in 

the SFT clearing service are already 

subject to the Clearance Fund 

Maintenance Fee for all cash balances in 

their primary full-service accounts, 

similar to all other full-service 

Members. The proposed change is 

designed to reduce economic burdens 

on SFT clearing and promote greater 

access to the service for NSCC’s 

Members. For this reason, NSCC 

believes the proposed change to the 

Clearing Fund Maintenance Fee is 

reasonable. 

Rule 17ad–22(e)(23)(ii) under the 

Act 17 requires NSCC to establish, 

implement, maintain and enforce 

written policies and procedures 

reasonably designed to provide 

sufficient information to enable 

participants to identify and evaluate the 

risks, fees, and other material costs they 

incur by participating in the covered 

clearing agency. The proposed fees 

would be clearly and transparently 

published in Addendum A of the Rules, 

which are available on a public 

website,18 thereby enabling Members to 

identify the fees and costs associated 

with participating in NSCC. As such, 

NSCC believes the proposed rule change 

is consistent with Rule 17ad– 

22(e)(23)(ii) under the Act.19

(B) Clearing Agency’s Statement on 

Burden on Competition 

Section 17A(b)(3)(I) of the Act 20

requires that the rules of the clearing 

agency do not impose any burden on 

competition not necessary or 

appropriate in furtherance of the Act. 

NSCC does not believe that the 

proposed change to the Clearing Fund 

Maintenance Fee would impose any 

burden on competition. The proposed 

rule change would result in a reduction 

of fees to Members using NSCC’s SFT 

clearing service and would apply to any 

Member using or desiring the use the 

SFT clearing service. NSCC believes the 

proposed fee change would not unfairly 

inhibit access to NSCC’s services by any 

Member, and in fact, is designed to 

reduce burdens on SFT clearing and 

promote greater access to the service for 

NSCC’s Members. NSCC therefore 

believes the proposed rule change 

would have a minimal impact on 

Members and would not impose any 

burden on competition. 

(C) Clearing Agency’s Statement on 

Comments on the Proposed Rule 

Change Received From Members, 

Participants, or Others 

NSCC has conducted outreach to 

Members to provide them with notice of 

the proposed fees. 

NSCC has not received or solicited 

any written comments relating to this 

proposal. If any written comments are 

received, NSCC will amend this filing to 


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104584 Federal Register / Vol. 89, No. 246 / Monday, December 23, 2024 / Notices 

21 15 U.S.C. 78s(b)(3)(A). 22 17 CFR 240.19b–4(f). 23 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 ‘‘Specialized Quote Feed’’ or ‘‘SQF’’ is an 

interface that allows Market Makers to connect, 

send, and receive messages related to quotes and 

Immediate-or-Cancel Orders into and from the 

Exchange. Features include the following: (1) 

options symbol directory messages (e.g., underlying 

instruments); (2) system event messages (e.g., start 

of trading hours messages and start of opening); (3) 

trading action messages (e.g., halts and resumes); (4) 

execution messages; (5) quote messages; (6) 

Immediate-or-Cancel Order messages; (7) risk 

protection triggers and purge notifications; and (8) 

opening imbalance messages. The SQF Purge 

Interface only receives and notifies of purge 

requests from the Market Maker. Market Makers 

may only enter interest into SQF in their assigned 

options series. Immediate-or-Cancel Orders entered 

into SQF are not subject to the Order Price 

Protection, Market Order Spread Protection, or Size 

Limitation in Options 3, Section 15(a)(1) and (a)(2), 

and (b)(2), respectively. See Options 3, Section 

7(e)(1)(B). 

4The Exchange initially filed this fee proposal as 

SR–NASDAQ–2024–063 on October 18, 2024. On 

December 3, 2024, the Exchange withdrew SR– 

NASDAQ–2024–063 and replaced it with this fee 

change. 

publicly file such comments 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 not to 

respond to any comments received. 

III. Date of Effectiveness of the 

Proposed Rule Change, and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A) 21 of the Act and paragraph 

(f) 22 of Rule 19b–4 thereunder. At any 

time within 60 days of the filing of the 

proposed rule change, the Commission 

summarily may temporarily suspend 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NSCC–2024–011 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–2024–011. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of NSCC and on DTCC’s website 

(www.dtcc.com/legal/sec-rule-filings). 

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–2024–011 

and should be submitted on or before 

January 13, 2025. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–30527 Filed 12–20–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101943; File No. SR– 

NASDAQ–2024–081] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend 

Options 7, Section 3 

December 17, 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 December 

3, 2024, The Nasdaq Stock Market LLC 

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

Securities and Exchange Commission 

(‘‘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 increase 

the Exchange’s port pricing in The 

Nasdaq Options Market LLC (‘‘NOM’’) 

Rules at Options 7, Section 3 for the 

Specialized Quote Feed (‘‘SQF’’) 3 Ports 

and SQF Purge Ports. 

While these amendments are effective 

upon filing, the Exchange has 

designated the proposed amendments to 

be operative on January 1, 2025.4

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 


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