[Federal Register Volume 90, Number 187 (Tuesday, September 30, 2025)]
[Notices]
[Pages 47086-47088]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-19064]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104088; File No. SR-NSCC-2025-014]
Self-Regulatory Organizations; National Securities Clearing
Corporation; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change To Amend NSCC Rule 22 (Suspension of Rules)
September 26, 2025.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on September 25, 2025, National Securities Clearing Corporation
(``NSCC'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II
and III below, which Items have been prepared by the clearing agency.
NSCC filed the proposed rule change pursuant to Section 19(b)(3)(A) of
the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
The proposed rule change would amend Rule 22 (Suspension of Rules)
of the NSCC Rules.\5\ NSCC's two affiliate clearing agencies, The
Depository Trust Company (``DTC'') and Fixed Income Clearing
Corporation (``FICC,'' and together with DTC and NSCC, the ``Clearing
Agencies'' or ``Clearing Agency'') \6\ will each file with the
Commission substantively similar proposals to amend their corresponding
rules: Rule 42 of the FICC Government Securities Division (``GSD'')
Rulebook (``GSD Rules'') and Rule 18 of the Rules, By-Laws,
Organization Certificate of DTC (``DTC Rules'') (collectively with NSCC
Rule 22, the ``Waiver Rules'').\7\ A
[[Page 47087]]
substantially similar proposal to amend Rule 33 of the FICC Mortgage-
Backed Securities Division (``MBSD'') Clearing Rules (``MBSD Rules'')
was already filed with the Commission and implemented by FICC.\8\
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\5\ Capitalized terms not otherwise defined herein are defined
in the NSCC Rules & Procedures (``NSCC Rules''), available at
www.dtcc.com/legal/rules-and-procedures.
\6\ The Clearing Agencies are each a subsidiary of The
Depository Trust & Clearing Corporation (``DTCC''). DTCC operates on
a shared service model with respect to the Clearing Agencies. Most
corporate functions are established and managed on an enterprise-
wide basis pursuant to intercompany agreements under which it is
generally DTCC that provides relevant services to the Clearing
Agencies.
\7\ Each Waiver Rule is publicly available in the respective
rules of the applicable Clearing Agency at https://www.dtcc.com/legal/rules-and-procedures.
\8\ See Securities Exchange Act Release No. 103584 (July 30,
2025), 90 FR 36492 (Aug. 4, 2025) (SR-FICC-2025-016).
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II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
In its filing with the Commission, the clearing agency included
statements concerning the purpose of and basis for the proposed rule
change and discussed any comments it received on the proposed rule
change. The text of these statements may be examined at the places
specified in Item IV below. The clearing agency has prepared summaries,
set forth in sections A, B, and C below, of the most significant
aspects of such statements.
(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
1. Purpose
The proposed rule change would amend Rule 22 (Suspension of Rules)
of the NSCC Rules. The Clearing Agencies will each file with the
Commission substantively similar proposals to amend their corresponding
Waiver Rules. A substantially similar proposal to amend MBSD Rule 33
was already filed with the Commission and implemented by FICC.
Specifically, the proposed amendments to NSCC Rule 22 would (i)
establish ``reasonable and appropriate'' as the new standard for when
an extension, waiver or suspension may occur; (ii) require action under
the rule to be in consideration of NSCC's obligations as a clearing
agency; (iii) be more clear and concise about who may authorize action
under the rule; and (iv) make technical, ministerial, and other
conforming and clarifying changes.
(i) Background
NSCC Rule 22 authorizes NSCC, in general, to extend, waive, or
suspend an NSCC Rule, Procedure or regulation issued by NSCC. Under the
current rule, any extension, waiver, or suspension must be (A)
necessary or expedient and (B) requires a written report of such
extension, waiver, or suspension (other than an extension of time of
less than eight hours), stating the pertinent facts, the identity of
the person or persons who authorized such extension, waiver or
suspension and the reason such extension, waiver or suspension was
deemed necessary or expedient. The report must then be promptly made
and filed with NSCC's corporate records and available for inspection
during regular business hours on Business Days.
(ii) Proposed Amendments to NSCC Rule 22
The proposed changes would harmonize the language, purpose, and
governance of NSCC Rule 22 with the equivalent Waiver Rule of MBSD Rule
33,\9\ and the similarly proposed changes to the Waiver Rules of DTC
Rule 18 \10\ and GSD Rule 42.\11\ Specifically, the proposed amendments
to NSCC Rule 22 would (i) establish ``reasonable and appropriate'' as
the new standard for when an extension, waiver or suspension may occur;
(ii) require action under the rule to be in consideration of NSCC's
obligations as a clearing agency; (iii) be more clear and concise about
who may authorize action under the rule; and (iv) make technical,
ministerial, and other conforming and clarifying changes.
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\9\ MBSD Rules, available at https://www.dtcc.com/~/media/Files/
Downloads/legal/rules/ficc_gov_rules.pdf.
\10\ DTC Rules, available at https://www.dtcc.com/~/media/Files/
Downloads/legal/rules/dtc_rules.pdf.
\11\ GSD Rules, available at https://www.dtcc.com/~/media/Files/
Downloads/legal/rules/ficc_gov_rules.pdf.
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NSCC proposes to eliminate the requirement that an extension,
waiver, or suspension authorized under NSCC Rule 22 must be ``necessary
or expedient.'' Instead, the proposed changes establish ``reasonable
and appropriate'' as the applicable standard, which NSCC believes is a
clearer and more relevant standard for the actions to be taken under
the rule. Moreover, NSCC proposes to provide some general guidance as
to when the rule may need to be invoked: to prevent, correct, mitigate
or otherwise address an event or situation that, if left unaddressed,
could result in a failure to satisfy a requirement of the NSCC Rules,
the Procedures or regulations issued by NSCC. Similarly, the proposed
rule change clarifies that such authority may not be used to circumvent
NSCC's regulatory obligations provided under NSCC Rule 60 (Market
Disruption and Force Majeure) in the event of a Market Disruption.
In determining whether to exercise the authority provided by the
proposed changes to NSCC Rule 22, the proposed rule text would require
NSCC to consider its obligation to facilitate the prompt and accurate
clearance and settlement of securities transactions; to safeguard
securities and funds which are in its custody or control; and, in
general, to protect investors and the public interest. Examples of the
types of actions that may be considered reasonable and appropriate
include, but are not limited to, reversing fees assessed in connection
with erroneous activity resulting from misunderstanding of established
procedures; suspension or extension of margin calculations due to
system disruptions; and temporary suspension of physical processing.
Note, though, any extension, waiver or suspension under the proposed
changes to NSCC Rule 22 could not be a permanent action, nor would the
rule permit extension, waiver or suspension of any regulatory
obligations of NSCC.
Currently, NSCC Rule 22 states that action under the rule can be
authorized by NSCC's Board of Directors, the Chairman of the NSCC
Board, the President, the General Counsel or any Managing Director. To
be clearer and more concise about who can authorize action,
particularly given changing Board and executive titles, NSCC proposes
to modify the language to simply state that action can be authorized by
the Board of Directors or by any Officer of the Corporation having a
rank of Managing Director or higher.
The proposed rule change would also make technical, ministerial,
and other conforming and clarifying changes, including updating the
title of NSCC Rule 22 to ``Extension, Waiver or Suspension of Rules''
and correct missing and defined terms.
This proposed harmonization is important to help ensure that NSCC,
DTC and both FICC divisions can reasonably, appropriately, and
consistently manage situations that may apply across multiple
divisions, Clearing Agencies, or common members.
2. Statutory Basis
Section 17A(b)(3)(F) of the Act requires that the rules of the
clearing agency be designed, inter alia, to assure the safeguarding of
securities and funds which are in the custody or control of the
clearing agency or for which it is responsible.\12\ NSCC believes that
the proposed rule change is consistent with the Section 17A(b)(3)(F) of
the Act, as cited above.
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\12\ 15 U.S.C. 78q-1(b)(3)(F).
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As described above, the proposed rule change would (i) establish
``reasonable and appropriate'' as the new standard for when an
extension, waiver or suspension may occur; (ii) require action under
the rule to be in
[[Page 47088]]
consideration of NSCC's obligations as a clearing agency; (iii) be more
clear and concise about who may authorize action under the rule; and
(iv) make technical, ministerial, and other conforming and clarifying
changes.
The proposed rule change would help ensure that NSCC is able to
respond reasonably, appropriately, and effectively to situations that
may require an extension, waiver, or suspension of an NSCC Rule,
Procedure or regulation issued by NSCC. The proposed changes also
enable NSCC to respond to such situations in the same way that DTC,
GSD, and MBSD can respond under their respective Waiver Rules and under
the same governance structure. Specifically, replacing the current
``necessary or expedient'' standard with a clearer and more intuitive
``reasonable and appropriate'' standard would enhance transparency and
consistency of actions taken under the rule. Clarifying who may
authorize action under the rule helps ensure that the individuals with
appropriate authority are clearly and efficiently identified, which
strengthens governance and accountability. Finally, the proposed
technical and confirming changes improve clarity and consistency within
the rule.
Therefore, by improving the function and clarity of NSCC Rule 22,
NSCC believes the proposed rule change would help to assure the
safeguarding of securities and funds which are in the custody or
control of NSCC or for which it is responsible, consistent with the
requirements of the Act, in particular Section 17A(b)(3)(F) of the Act,
cited above.
(B) Clearing Agency's Statement on Burden on Competition
NSCC does not believe that the proposed rule change will have any
impact or impose any burden on competition because, as described above,
the proposed changes would not affect the rights and obligations of the
NSCC membership. Rather, the proposed changes are limited to clarifying
the standard and conditions under which NSCC may extend, waive, or
suspend the NSCC Rules, Procedures or regulations issued by NSCC, while
also making technical and ministerial edits. These proposed changes
would not inhibit access to NSCC's services or disadvantage or favor
any particular Member in relationship to another Member. As such, NSCC
believes the proposed rule change would not have any impact on
competition.
(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants, or Others
NSCC has not received or solicited any written comments relating to
this proposal. If any written comments are received, NSCC will amend
this filing to publicly file such comments as an Exhibit 2 to this
filing, as required by Form 19b-4 and the General Instructions thereto.
Persons submitting written comments are cautioned that, according
to Section IV (Solicitation of Comments) of the Exhibit 1A in the
General Instructions to Form 19b-4, the Commission does not edit
personal identifying information from comment submissions. Commenters
should submit only information that they wish to make available
publicly, including their name, email address, and any other
identifying information.
All prospective commenters should follow the Commission's
instructions on How to Submit Comments, available at https://www.sec.gov/regulatory-actions/how-to-submit-comments. General
questions regarding the rule filing process or logistical questions
regarding this filing should be directed to the Main Office of the
Commission's Division of Trading and Markets at
[email protected] or 202-551-5777.
NSCC reserves the right to not respond to any comments received.
III. Date of Effectiveness of the Proposed Rule Change, and Timing for
Commission Action
Because the foregoing proposed rule change does not:
(i) significantly affect the protection of investors or the public
interest;
(ii) impose any significant burden on competition; and
(iii) become operative for 30 days from the date on which it was
filed, or such shorter time as the Commission may designate, it has
become effective pursuant to Section 19(b)(3)(A) of the Act \13\ and
Rule 19b-4(f)(6) thereunder.\14\
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(6).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules-regulations/self-regulatory-organization-rulemaking);
or
Send an email to [email protected]. Please include
File Number SR-NSCC-2025-014 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549.
All submissions should refer to File Number SR-NSCC-2025-014. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules-regulations/self-regulatory-organization-rulemaking). Copies of the
filing will be available for inspection and copying at the principal
office of NSCC and on DTCC's website (www.dtcc.com/legal/sec-rule-filings). Do not include personal identifiable information in
submissions; you should submit only information that you wish to make
available publicly. We may redact in part or withhold entirely from
publication submitted material that is obscene or subject to copyright
protection. All submissions should refer to File Number SR-NSCC-2025-
014 and should be submitted on or before October 21, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-19064 Filed 9-29-25; 8:45 am]
BILLING CODE 8011-01-P