The Securities and Exchange Commission (SEC) has adopted amendments and a new rule aimed at enhancing the resilience, recovery, and wind-down planning of covered clearing agencies. The amendments establish requirements for intraday margin collection and the use of substantive inputs in risk-based margin models. Covered clearing agencies must now implement policies to monitor intraday exposures continuously, conduct margin calls as needed based on risk thresholds or market volatility, and document instances where margin calls are not made. Additionally, the amendments mandate the use of reliable inputs in risk-based margin systems and introduce procedures to address scenarios where inputs are unavailable or unreliable, ensuring agencies can meet credit obligations without disruptions.
The new rule formalizes nine essential elements for recovery and wind-down plans, encompassing planning, implementation, testing, and board approval. SEC Chair Gary Gensler highlighted the importance of these measures in maintaining market resilience and continuity. Compliance deadlines include a 150-day period for agencies to file rule changes with the SEC and a 390-day period for these changes to take effect. The new regulations aim to reinforce the stability of market infrastructure, benefiting investors, issuers, and the broader financial system.
