Tax & Finance

SEC Allows FICC to Raise Default Liquidity With Up to $10 Billion in Commercial Paper

🇺🇸United States··Notice·Medium Impact·View source ↗

AI-generated summary for informational purposes only. Not legal advice. See the original source for the authoritative text.

🇬🇧 English

This notice lets the Fixed Income Clearing Corporation raise emergency liquidity by issuing up to $10 billion in short-term commercial paper. The money is meant to help FICC complete settlement if a clearing member defaults, which matters to banks, broker-dealers, and other market participants that rely on FICC's clearing services. For business and compliance teams, the practical effect is that FICC gets a new funding source alongside member deposits and repo facilities. FICC says it will hold the cash in safe accounts and use it only for default-related settlement needs, not day-to-day operations.

AI-generated summary. May contain errors. Refer to official sources for legal decisions.

Key Changes

  • SEC does not object to FICC's plan to issue up to $10 billion in commercial paper.
  • The proceeds can be used only as default liquidity to complete settlement after a member default.
  • FICC says the new funding source will supplement member-based liquidity resources and diversify its liquidity providers.

Obligations

What this law requires

medium

FICC may implement the proposed commercial paper program and raise prefunded default liquidity through periodic issuance and private placement of short-term unsecured commercial paper, up to an aggregate amount of $10 billion.

The Fixed Income Clearing Corporation (FICC)
operational
high

FICC is authorized to implement the proposed commercial paper program to raise prefunded default liquidity, with aggregate issuance not to exceed $10 billion.

The Fixed Income Clearing Corporation (FICC)
As of the date of the notice
operational
high

FICC may issue commercial paper under the approved program only up to an aggregate principal amount of $10 billion.

The Fixed Income Clearing Corporation (FICC)
operational
critical

FICC must use the proceeds of the commercial paper program only to complete settlement in the event of a clearing member default, and not for any other purpose or day-to-day operations.

The Fixed Income Clearing Corporation (FICC)
prohibition
critical

FICC must use the commercial paper proceeds only as prefunded default liquidity to complete settlement in the event of a clearing member default, and not for any other purpose.

The Fixed Income Clearing Corporation (FICC)
prohibition

Affected Parties

Fixed Income Clearing CorporationFICC clearing members and market participants that depend on its settlement services

Tags

securities clearing,liquidity risk,commercial paper