SEC Greenlights Stronger Backup Plans for Clearing Firms
Published Date: 6/16/2025
Notice
Summary
The Depository Trust Company, Fixed Income Clearing Corporation, and National Securities Clearing Corporation updated their backup plans to handle tough times better, like if things go wrong financially. These changes, approved by the SEC, help keep the financial system safe and sound without costing extra money right now. Everyone who uses these big clearing agencies can feel more secure knowing they’re ready for any bumps ahead.
Analyzed Economic Effects
3 provisions identified: 3 benefits, 0 costs, 0 mixed.
Clearing Agencies' Plans Strengthened
The Depository Trust Company (DTC), Fixed Income Clearing Corporation (FICC), and National Securities Clearing Corporation (NSCC) updated their recovery and wind-down plans to incorporate the elements required by Exchange Act Rule 17ad-26. The changes require identification of core services, scenarios, triggers, tools, staffing, service providers, testing, board review, and Commission notification and must be effective by December 15, 2025. The SEC approved these proposed rule changes on June 10, 2025.
Membership Transfer in Wind-downs
The updated plans state that, if a Clearing Agency defaults or its Wind-down Plan is triggered, Members, Participants, and Pledgees may maintain access to clearing services through membership transfer to a Transferee (which could include a DTCC failover entity, an existing or new third party, or a bridge entity).
Annual Testing and Required Participation
The revised plans require procedures for testing the ability to implement recovery and wind-down plans at least every 12 months. The attachments state that certain Members or Participants will be required to participate in simulations based on criteria such as account structure, business model, operational details, or participant size.
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