The Commission believes that any procedures adopted with respect to the review and approval conducted by the board of directors generally should provide for substantive consideration of the plan and whether it appropriately takes into account the specific characteristics of the covered clearing agency, including its ownership, organizational, and operational structures, as well as the size, systemic importance, global reach, and/or the risks inherent in the products it clears. Establish a Specific Monitoring Frequency for Intraday Margin Calls, 6. A cross-functional team has performed an internal audit to review the effectiveness of controls over the security and processing integrity of the Publishers Clearing House Contest Processing Systems. To be orderly, a wind-down generally should include a covered clearing agency providing notice to allow participants to transition to alternative arrangements in an orderly manner, as well as maintaining the operation of critical services. Testing must involve the covered clearing agency's participants and, where practicable, other stakeholders.

section III.B.2.a. A stated policy, practice, or interpretation of an SRO, such as its written policies and procedures, would generally be deemed to be a proposed rule change. available at https://www.theocc.com/getmedia/4664dece-7172-42a5-8f55-5982f358b696/pfmi-disclosures.pdf, To include your full publishers clearing house entry order processing center address as required below and the check to bounce affix. ICC 2017 Notice and Order, The proposed rule would require ongoing monitoring and compliance activities with respect to the written policies and procedures created in response to the proposed rule. supra Publishers Clearing House You may cancel any magazine subscription or return any merchandise item ordered through Publishers Clearing House up to 1 yearfrom receipt of shipment, if not completely satisfied, for any reason. [153], This alternative approach may reduce compliance costs by establishing the precise scope of the rule, which could allow covered clearing agencies to tailor their RWPs to the enumerated requirements for describing rules, policies, procedures, and other tools or resources. 13. As an alternative to implementing the proposed intraday margin amendments on a blanket basis, the Commission could adopt a more tailored approach that imposes the requirements only on a subset of covered clearing agencies that operate in certain markets such as those markets with the highest levels of activity[157] Based on the Commission's previous estimates for ongoing monitoring and compliance burdens with respect to existing 17 CFR 240.17Ad22(e)(2) (Rule 17Ad22(e)(2)),[141] The Commission believes that the costs to start plan tests every twelve months will not be large for the four covered clearing agencies that do not mention plan testing in their RWPs because they might be able to leverage existing requirements around default management testing. See15 U.S.C.

How does an increase of margin call frequency affect costs for participants in periods of market stress? Start Printed Page 34733 Be sure to take advantage of this special opportunity to enter to WIN and be sure to ACT FAST to go for one of our Fifty Cash Prizes . In this Issue, Documents [38] See generally17 CFR 240.17Ad22(e). Can I make a payment for my PCH orders online/how do I pay for my PCH order? l, Currently, covered clearing agencies identify triggers in their RWPs but differ with respect to how much they identify the specific monitoring or governance processes for such triggers. supra 153. Any mail that cannot be machine-scanned, either because it was damaged or was an unsolicited entry or order, is manually key-entered and sent to the PCH mainframe computers Contest System. The Form 19b4 specifies the contents that must be included in a proposed rule change filing, including, among other items, a statement of purpose for the proposed rule change, which describes the reasons for adopting the proposed rule change, any problems the proposed rule change is intended to address, the manner in which the proposed rule change will operate to resolve those problems, the manner in which the proposed rule change will affect various persons ( See

The Commission continues to believe that this is the case, and that the ongoing development of these strategies will be further promoted by specifically requiring that RWPs contain certain elements and ensuring that RWPs address these specified elements. How quickly are participants able to satisfy margin calls during periods of market calm?

identification of potential triggers can help ensure that a covered clearing agency not only implements its plan pursuant to the established RWP but that, before it implements such plans, it is aware of the triggering events that may necessitate use of the RWP.

Currently, Rule 17Ad22(e)(6)(ii) does not define what constitutes defined circumstances.. This is not a legitimate sweepstakes and its certainly not the real Publishers Clearing House. 27. [114] note 10. How do I contact Publishers Clearing House?

The Commission believes that certain covered clearing agencies would need to develop additional procedures, or refine existing procedures, that would apply when the specific substantive inputs used by a covered clearing agency are not readily available or reliable, in order to ensure that the covered clearing agency can continue to meet its requirements under Rule 17Ad22(e)(6). Will any of these costs substantively vary based on whether or not the current RWP includes testing? The Commission preliminarily believes that the estimated PRA burdens for the proposed amendment to Rule 17Ad22(e)(6) may require a respondent covered clearing agency to make fairly substantial changes to its policies and procedures. 177.

Start Printed Page 34715

2. See OCC Clears Over 1B Total Contracts in March 2023, Highest Month on Record and up 12.2% Year-Over-Year, supra [150] ([T]he decision to centralize risk in clearinghouses made them critical for the stability of the financial system, to the point that they are considered not only too-big-to-fail, but also too-important-to-fail institutions.).

Finally, the Commission believes that this proposed requirement regarding the identification and description of critical services should also assist a resolution authority, as discussed in section II.C et seq., This requirement encompasses: (i) determining the amount of liquid net assets funded by equity based upon the covered clearing agency's general business risk profile and the length of time required to achieve a recovery or orderly wind-down, as appropriate, of its critical operations and services if such action is taken; (ii) holding liquid net assets funded by equity equal to the greater of either (x) six months of the covered clearing agency's current operating expenses, or (y) the amount determined by the board of directors to be sufficient to ensure a recovery or orderly wind-down of critical operations and services of the covered clearing agency, as contemplated by the RWPs established under current Rule 17Ad22(e)(3)(ii),[22] In one model, the covered clearing agency is member-owned,[97] The original check then bounces, and the recipient has lost the money they wired and incurs returned check charges, the department said. The initial burden for one covered clearing agency is $47,190, and it is $377,520 for all eight covered clearing agencies.

Letter from Michael C. Bodson, President and Chief Executive Officer, DTCC (Feb. 15, 2017), infra, The Commission is therefore proposing to amend Rule 17Ad22(e)(6)(iv) to expand its scope beyond 8. LCH SA's plans categorizes potential stress scenarios in two ways as a result of either: (i) Clearing member defaults and (ii) non-clearing member events. A notification of the inclusion in the comment file of any such materials will be made available on our website. 2, 2021) (SRDTC2021004); 83972 (Aug. 28, 2018), 83 FR 44964 (Sept. 4, 2018) (SRDTC2017021); 83953 (Aug. 27, 2018), 83 FR 44381 (Aug. 30, 2018) (SRDTC2017803); 91430 (Mar. See15 U.S.C. What if I'm not home when the PCH Prize Patrol comes. Depending on their operations and the structure of their RWPs, covered clearing agencies currently identify between one and a dozen or more critical services in those RWPs. The Commission has also reviewed these confidential treatment requests and concluded that the redacted material could be withheld from the public under the Freedom of Information Act.

Moreover, the covered clearing agency generally should consider triggers that would be applicable in circumstances involving the default of its participant(s), as well as those that would be applicable in circumstances not related to the default of a participant or participants.

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Central clearing benefits the markets by significantly reducing participants' counterparty risk and through more efficient netting of margin requirements. Start Printed Page 34738 When analyzing the tools to be included in its RWP, a covered clearing agency generally should consider: (i) a description of the tools that the covered clearing agency would expect to use in each scenario; (ii) the order in which each tool would be expected to be used; (iii) the time frame within which the tool would be used; (iv) the governance and approval processes and arrangements within the covered clearing agency for the use of each of the tools available, including the exercise of any available discretion; (v) the processes to obtain any approvals external to the covered clearing agency (including any regulatory approvals) that would be necessary to use each of the tools available, and the steps that might be taken if such approval is not obtained; (vi) the steps necessary to implement the tools; (vii) the roles and responsibilities of all parties, including non-defaulting participants; (viii) whether the tool is mandatory or voluntary; and (ix) an assessment of the associated risks from the use of each tool to non-defaulting clearing members and their customers, linked financial market infrastructures, and the financial system more broadly. should verify the contents of the documents against a final, official For example, a covered clearing agency that clears products of longer duration may have a greater need for a tear-up tool that extinguishes a participant's positions in certain circumstances than a covered clearing agency that clears contracts with a relatively short settlement cycle. The Commission is therefore proposing to require that an RWP specifically identify and describe such service providers, to ensure that the RWP considers what providers are necessary for the covered clearing agency to continue providing its critical services. The RWPs differ in the number of identified triggering criterion and the detail in which they discuss each triggering criteria; there are also differences in the descriptions of the processes that covered clearing agencies use to monitor and determine whether the triggering criteria have been met, thus causing their RWPs to be activated. The proposed amendment to Rule 17Ad22(e)(6)(ii) requires covered clearing agencies to monitor exposure on an ongoing basis and 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, which would help reduce, but not eliminate, their credit exposure to their participants. 552(b)(4). See5 U.S.C. OCC is owned by certain options exchanges. This reporting would help ensure that the board of directors and senior management have an understanding of the testing.

The authority citation for part 240 continues to read, and the sectional authority for 240.17Ad22 is revised to read, as follows: Authority:

The Commission is requesting comment on all aspects of the proposed amendments to Rule 17Ad22(e)(6). NSCC 2017 Notice, First, the rule would bolster existing plans by requiring certain new elements be included.

available at Should the Commission require the covered clearing agency to estimate the potential size of the resources that the covered clearing agency would expect to receive from each tool?

7922; Mendenhall Glacier Recreation Area; Alaska, Safety Zone; Sausalito Fireworks Display; San Francisco Bay, Sausalito, CA, Energy Conservation Program: Test Procedure for Commercial Warm Air Furnaces, Agency Information Collection Activities; Migratory Bird Surveys, Migraine: Developing Drugs for Preventive Treatment, Moving Beyond COVID-19 Vaccination Requirements for Federal Workers, Imposing Sanctions on Certain Persons Destabilizing Sudan and Undermining the Goal of a Democratic Transition, /documents/2023/05/30/2023-10889/covered-clearing-agency-resilience-and-recovery-and-wind-down-plans, B. when it would initiate its RWP. GET STARTED BY FILLING OUT THE OFFICIAL REGISTRATION FORM BELOW! [165], Because of the existence of current Rule 17Ad22(e)(3)(ii), which means that covered clearing agencies are already required to maintain RWPs, Proposed Rule 17ad26 would impose on a covered clearing agency similar burdens as when, for example, Rule 17Ad22(e)(2) was proposed and covered clearing agencies generally had governance arrangements in place at that time. 128. 326 (2012), unless otherwise noted.

[98], Covered clearing agencies currently operate specialized clearing services and face limited competition in their markets. 78s(b)(1)(C)(ii). Further, the Commission is proposing to impose a new requirement that would further elaborate on the procedures necessary when price data is not available and that would also apply to substantive inputs to a covered clearing agency's risk-based margin system. The cost estimate associated with the initial burden is based on 20 hours for an assistant general counsel at $551 per hour; 50 hours for a compliance attorney at $432 per hour; 35 hours for a business risk analyst at $ 235 per hour; and 15 hours for a senior risk management specialist at $423 per hour. 24. 127. note 7, 81 FR at 70892 (discussing Rule 17Ad22(e)(2)). a central counterparty versus a central securities depository) and even across covered clearing agencies of the same type.

The Commission requests that commenters describe the nature of any impact on small entities, including clearing agencies, and provide empirical data to support the extent of the impact. Instead, the importance of identifying triggers lies in ensuring that a covered clearing agency considers and identifies

Identifying the scenarios enables a covered clearing agency to make the reasonable and appropriate preparations to achieve a recovery or, in the event that recovery fails, avoid a disorderly wind-down arising from those scenarios that could transmit risk through the U.S. securities markets and the broader financial system. These definitions, as relevant to this proposed rulemaking, are set forth in Rule 010, 17 CFR 240.010.

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