US Securities Clearing Agencies Ruling Updated by the SEC

Last Thursday 9th April, the Securities and Exchange Commission (SEC) issued amendments to its ruling which governs Securities Clearing Agencies in the United States (U.S.), effectively updating the definitions of a ‘Covered Clearing Agency’.

The purpose of such an amendment is to ensure that all registered clearing agencies providing the services of a Central Counterparty (CCP) or Central Securities Depository (CSD) are subject to Rule 17Ad-22(e) within the United States Exchange Act. The objective of such an amendment is to ensure the ongoing and enhanced standards for systemically important securities clearing agencies.

Rule 17Ad-22(e) comprises of the requirements for covered clearing agencies which span: activity, risks, size, operation, products and whether the organization poses a systemic importance to the U.S. securities markets.  This update will complement the Dodd-Frank Act and Exchange Act.

The SEC has developed these amendments in conjunction with consultations from the Financial Stability Oversight Council (FSCO), the Commodity Futures Trading Commission (CFTC) and the Board of Governors of the Federal Reserve System (FRB).

Systemically important Financial Market Infrastructures (FMIs) which include certain CCPs and CSDs will need to adopt these changes after 60 days from when the publication is made within the Federal Register.

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