Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing of Proposed Rule Change Concerning a New Customer Net Margin Account Option for Agent Clearing Members in the Securities Financing Transaction Clearing Service
AI-generated summary for informational purposes only. Not legal advice. See the original source for the authoritative text.
The National Securities Clearing Corporation (NSCC) has filed a proposed rule change to introduce a new 'Agent Clearing Member Customer Net Margin Account' option within its Securities Financing Transaction (SFT) Clearing Service. Currently, Agent Clearing Members must use separate gross margin omnibus accounts for borrowing and lending activities on behalf of institutional customers, preventing any netting of positions and resulting in higher margin requirements. The new net margin accounts will allow both long and short positions in a single account, enabling offset and netting for margin and Clearing Fund calculations. This is expected to significantly reduce margin and capital requirements for participants, aligning the treatment more closely with proprietary member accounts and with similar services offered by NSCC's affiliate, FICC. The change aims to improve capital efficiency and encourage broader institutional access to central clearing of SFTs while maintaining full liability of the Agent Clearing Member to NSCC.
AI-generated summary. May contain errors. Refer to official sources for legal decisions.
Key Changes
- Introduction of new 'Agent Clearing Member Customer Net Margin Account' allowing both Transferor and Transferee activity in one account
- Netting and offset of long and short positions for margin and Clearing Fund purposes (previously gross margined)
- Addition of definitions for 'Agent Clearing Member Customer Net Margin Account' and 'Agent Clearing Member Customer Gross Margin Account' in Rule 1
+ 3 more changes with Pro
Obligations
What this law requires
NSCC must amend NSCC Rules & Procedures to establish and offer the new Agent Clearing Member Customer Net Margin Account option for Agent Clearing Members in the SFT Clearing Service
Agent Clearing Members utilizing the new net margin account option must remain fully liable for the performance of all obligations to NSCC arising in connection with Agent Clearing Member Transactions
Agent Clearing Member Customer Net Margin Accounts must be margined in accordance with Procedure XV (Clearing Fund Formula and Methodology) of the NSCC Rules and Section 12(b) of NSCC Rule 56
Agent Clearing Member Customer Net Margin Accounts must allow for offset and netting of both long and short positions (where Agent Clearing Member acts as both Transferor and Transferee) for margin and Clearing Fund calculation purposes
NSCC must publish notice of the proposed rule change filing and solicit comments from interested persons