Bond Clearinghouse Sharpens Its Wind-Down Survival Guide
Published Date: 4/7/2025
Notice
Summary
The Fixed Income Clearing Corporation (FICC) updated its Recovery and Wind-Down Plan to keep up with new business changes and make the plan clearer and easier to follow. This affects financial firms that rely on FICC to manage risks in bond trading. The changes took effect right away, helping everyone stay prepared without any new costs or delays.
Analyzed Economic Effects
4 provisions identified: 3 benefits, 1 costs, 0 mixed.
Plan updates to preserve clearing access
FICC amended its Recovery & Wind-Down Plan on March 25, 2025 to reflect business and product developments and to improve clarity. The changes are intended to support the continuity of FICC's critical clearance and settlement services and to enable Members and Limited Members to maintain access to FICC services through a transfer of membership if FICC defaults or the Wind-down Plan is triggered.
CCLF clarified as qualifying liquidity tool
The Plan clarifies that the Capped Contingency Liquidity Facility (CCLF) is treated as a FICC "Qualifying Liquid Resource" and that FICC may declare a CCLF Event to address liquidity needs. The filing also notes that participation in the CCLF facility is a membership requirement for all full-service FICC Members.
Cross-margining description may reduce margin offsets
The Plan updates the cross-margining description between GSD and the Chicago Mercantile Exchange to state that each Clearing Organization will calculate margin savings percentages and, if the lesser percentage exceeds the maximum margin offset threshold agreed by the Clearing Organizations, each will reduce the Cross-Margining Participant's margin reduction. This describes conditions under which a participant's margin reduction could be reduced.
Amendments effective immediately with 60-day review window
FICC filed the proposed rule change on March 25, 2025 and the amendments became effective upon filing. The SEC may summarily suspend the change at any time within 60 days of the filing.
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