SEC proposals address risk management for clearinghouses

By Bryan Strickland

The SEC proposed rule amendments and a new rule Wednesday that would require clearinghouses to enhance their risk management and recovery planning.

"Today's proposal would help ensure the continuity of clearing services during times of significant stress," SEC Chair Gary Gensler said in a news release. "Well-regulated and well-managed clearinghouses help lower risk for the public. I am pleased to support the proposal because, if adopted, it would help enhance the resiliency of this part of our market plumbing, which is fundamental for the capital markets to operate. That benefits investors, issuers, and the markets alike."

A public comment period on the proposed changes will remain open for 60 days.

The amendments would require that a covered clearing agency have policies and procedures to establish a risk-based margin system that monitors intraday exposure on an ongoing basis and includes the authority and operational capacity to make intraday margin calls as frequently as circumstances warrant, including when risk thresholds specified by the covered clearing agency are breached or when the products cleared or markets served display elevated volatility. The agency's policies and procedures should address the use of substantive inputs to its risk-based margin system.

The proposed new rule builds upon the existing requirement that a covered clearing agency have a recovery and wind-down plan by specifying nine elements the plan must include.

— To comment on this article or to suggest an idea for another article, contact Bryan Strickland at

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