On 05 May 2025, the United States Securities and Exchange Commission (US SEC) published a notice confirming the immediate effectiveness of a rule change proposed by the Fixed Income Clearing Corporation (FICC), filed under Section 19(b)(3)(A) of the United States Securities Exchange Act of 1934 and Rule 19b-4(f)(3) thereunder. This rule change, submitted on 25 April 2025, concerns amendments to two internal governance documents, namely, the Capital Policy and the Capital Replenishment Plan i.e. used by the FICC and its affiliates, The Depository Trust Company (DTC) and the National Securities Clearing Corporation (NSCC), collectively referred to as the Clearing Agencies.
The revisions primarily aim to update, simplify, and clarify the wording of these documents, ensuring they continue to operate as intended under the applicable regulatory framework. Additionally, the Capital Replenishment Plan has been modified to include provisions for alternate authorisations, enabling continuity in capital replenishment decision-making when designated authorising officers are unavailable.
The Capital Policy governs how Clearing Agencies determine, hold, and manage Liquid Net Assets (LNA) funded by equity to satisfy their General Business Risk Capital Requirement. This requirement ensures that the entities can maintain critical operations as going concerns even in the face of general business losses. The capital requirement is defined as the greatest value among three separate metrics: a risk-based capital estimate, a recovery/wind-down requirement, and a six-month operating expense buffer. The Policy also incorporates the Corporate Contribution, a distinct capital buffer reserved for credit risk events in compliance with Rule 17ad-22(e)(4) and (e)(7) of the United States Securities Exchange Act.
The Capital Replenishment Plan, adopted in 2017 and maintained under US SEC Rule 17ad-22(e)(15), sets out procedures for restoring equity capital in case of depletion. The newly added language concerning alternate authorisations under Section 3.2 aims to ensure prompt and reliable implementation even during exigent staffing gaps.
The FICC has stated that the revisions will not impose any new burden on market participants, competition, or operational frameworks, as the changes are internally oriented and designed to ensure regulatory continuity and process integrity. No public comments were received at the time of filing in context of this.
The proposal became immediately effective upon filing. Nevertheless, under the United States Securities Exchange Act [https://www.govinfo.gov/content/pkg/COMPS-1885/pdf/COMPS-1885.pdf], the US SEC reserves the authority to summarily suspend the rule change within 60 days should it deem such action necessary in the public interest or for the protection of investors.
(Source: https://www.sec.gov/files/rules/sro/ficc/2025/34-102994.pdf)
