MFDF - Mutual Fund Directors Forum - SEC Adopts Clearing Agency Standards in Attempt to Address Risk Management; Proposes Amendments to Clearing Agency Definitions test

Member Login

Request an account

Sample Banner 1

SEC Adopts Clearing Agency Standards in Attempt to Address Risk Management; Proposes Amendments to Clearing Agency Definitions

On September 28, 2016, the Securities and Exchange Commission adopted rules for securities clearing agencies that have been designated as systemically important by the Financial Stability Oversight Council (FSOC) or that are involved in more complex transactions. The Commission also proposed amendments to expand the definition of “covered clearing agency” to include any registered clearing agency that provides the services of a central counterparty, central securities depository, or a securities settlement system.  The Commission serves as the supervisory agency for four of the designated clearing agencies, and the Commodity Futures Trading Commission serves as the supervisory agency for the remaining two.

Under the new rule, a covered clearing agency would be required to establish, implement, maintain, and enforce policies and procedures reasonably designed to address all major aspects of its operations, including its governance,  risk management (including financial, business, and operational risks), access requirements, and settlement and depository systems. The newly-adopted rule would apply to other categories of securities clearing agencies under the proposed expanded definition of “covered clearing agency.” According to the Commission, the rules are consistent with relevant global standards for clearing agencies and with the Commission’s obligations for clearing agency oversight under Dodd-Frank. 

The Commission’s actions were met with some criticism. Commissioner Michael S. Piwowar expressed concerns about existing counterparty clearing agency regulation, stating that “in an effort to reduce risk to the financial system, Dodd-Frank Act policy-makers have jammed more and more increasingly risky and complex financial products into these critical infrastructures” and suggested that the adopted rule may not be adequate to address past policy missteps. Commissioner Kara M. Stein stated that although the adopted rule could have been stronger “it marginally decreases the risk posed by systemically important clearing agencies.”

  • All
  • Accounting and Audit
  • Advisory Contracts
  • Board Governance
  • Board Governance: Board Leadership
  • Board Governance: Compensation
  • Board Governance: Oversight of CCO
  • Board Governance: D&O Insurance
  • Board Governance: Self-Evaluation
  • Closed-end Funds
  • ETFs
  • Other Oversight
  • Other Oversight: Alternative Investments and Derivatives
  • Other Oversight: Custody
  • Other Oversight: Fixed Income funds
  • Other Oversight: Distribution
  • Other Oversight: Portfolio Trading
  • Other Oversight: Proxy Voting
  • Other Oversight: Securities Lending
  • Legislative News
  • Money Market Funds
  • Reference
  • Regulatory News
  • Risk
  • Shareholder Disclosure
  • Valuation
  • Webinars
  • Aaron New Tag