The SEC has amended rules related to the risk management and resilience of covered clearing agencies, introducing new requirements around intraday margin collection and risk-based margin models.
Covered clearing agencies must now have policies and procedures in place to establish a risk-based margin system that monitors intraday exposures on an ongoing basis. This system must be able to make intraday margin calls when needed, and record when the agency does not make a call in line with its written policies and procedures.
The risk-based margin system must also use reliable sources of substantive inputs and have procedures in place to address circumstances in which substantive inputs are not available or reliable. These procedures must either use price data or substantive inputs from an alternate source or a risk-based margin system that does not rely on substantive inputs.
Under existing rules, covered clearing agencies are required to provide a recovery and wind-down plan. Now, nine elements must be specified within this plan to cover planning, timing and implementation, testing and board approval.
On the new requirements, Gary Gensler, SEC chair, said: “Recovery and wind-down planning enhances the resiliency and continuity of our market plumbing. I’m pleased that today’s amendments will benefit investors, issuers, and the markets alike.”
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