The U.S. Securities and Exchange Commission (SEC) adopted a rule Monday that establishes standards for how registered clearing agencies should manage their risks and run their operations.
The rule is yet another part of the ongoing U.S. financial reform known as Dodd-Frank, which provides the SEC with additional authority to establish standards for clearing agencies, including agencies that clear security-based swaps. It will require registered clearing agencies that provide central counterparty services to maintain certain standards for risk management and operations.
Among other things, the rules would set standards with respect to the measurement and management of credit exposures, margin requirements, financial resources and margin model validation. The rule also establishes certain recordkeeping and financial disclosure requirements for all registered clearing agencies as well as several new operational standards for these entities. It is to become effective 60 days after publication.
“These new rules are designed to ensure that clearing agencies will be able to fulfill their responsibilities in the multi-trillion dollar derivatives market as well as more traditional securities markets,” said SEC chairman, Mary Schapiro. “They’re part of a broader effort to put in place an entirely new regulatory regime intended to mitigate systemic risks that emerged during the financial crisis.”