SEC Adopts Clearing Agency Standards: SEC Adopts Rule Establishing Minimum Requirements for Registered Central Counterparties and Central Security Depositories
Sullivan & Cromwell LLP - November 28, 2012
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The Securities and Exchange Commission has adopted, substantially as proposed, Rule 17Ad-22 under the Securities Exchange Act. The new Rule, which only applies to registered clearing agencies, requires:
- Registered clearing agencies performing central clearing party services to:
- establish, implement, maintain and enforce written policies and procedures reasonably designed to meet certain risk management and operational standards, and prohibit the use of certain criteria for membership eligibility; and
- calculate and maintain a record of the financial resources necessary to withstand certain participant defaults on at least a quarterly basis.
- All registered clearing agencies to:
- post annual audited financial statements on their websites; and
- establish, implement, maintain and enforce written policies and procedures reasonably designed to meet certain objectives including imposing certain risk management requirements on participants, holding assets in a manner that minimizes risk of loss and delay of access to them in the event of default and publicly disclosing key aspects of default procedures.
Rule 17Ad-22 will become effective on January 2, 2013.