SEC Clears Path for Clearing Corp to Fix Tech Glitches Smoothly
Published Date: 3/27/2025
Notice
Summary
The National Securities Clearing Corporation (NSCC) wants to update its rules to better handle system disruptions that could affect its operations. These changes also apply to its sister agencies, FICC and DTC, and aim to keep things running smoothly when tech troubles hit. No big cost changes are expected, but participants should watch for new procedures starting soon after approval.
Analyzed Economic Effects
5 provisions identified: 0 benefits, 5 costs, 0 mixed.
More Firms Now Covered
The rule explicitly expands who is a "DTCC Systems Participant" to include Affiliates of members and entities similar to third‑party service providers or service bureaus that directly or indirectly connect with DTCC systems. That means Affiliates and third‑party providers that connect to DTCC may now be subject to disconnection and the Disruption Rules.
Fast Two‑Hour Reporting Requirement
A DTCC Systems Participant must give the Clearing Agencies immediate written notice, and in any event within two hours, after experiencing or learning (and having legal permission to disclose) that an unaffiliated DTCC Systems Participant is experiencing or may be affected by a Participant System Disruption. The notice must include legal entity names, contact information, event type, start and discovery dates, scope, and other known details.
New Reconnection Paperwork and Proof
Before a disconnected participant can be reconnected, the Clearing Agencies would require (i) a detailed, auditable report from a Third‑Party Cybersecurity Firm, (ii) an attestation from a Participant Officer, and (iii) an executed indemnity acceptable to the Clearing Agencies. The cybersecurity report must include timeline, root cause, confirmation that severe/critical issues are resolved, and confirmation of normal operation for at least 72 hours.
Reconnection Testing Before Approval
Prior to approval to reconnect, a participant must demonstrate in a test environment that it can send/receive messages and transactions, replay or resubmit prior messages, reverse or void transactions, confirm message integrity, and use alternative communication methods. Approval of reconnection would require two or more members of the Clearing Agencies' senior most management committee in their reasonable judgment.
Discipline and Liability for Noncompliance
If a DTCC Systems Participant fails to comply with the Disruption Rules, the Clearing Agencies may subject Respective Participants to any disciplinary action allowed under their rules. Non‑Respective Participants may face actions or obligations under their agreements with the Clearing Agencies, and a participant that authorized another party's access may be required to assume responsibility for that party's compliance.
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Key Dates
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