On October 25, 2024, the Securities and Exchange Commission (“SEC”) adopted amendments to certain rules in the Covered Clearing Agency Standards (the “Amendments”) aimed at improving risk management and resilience of covered clearing agencies (“CCAs”).  Although not directly relevant to firms who are participants in one of the clearing agencies, the amendments could result in changes to margin requirements imposed by clearing agencies.  The Amendments:

(i) require that a CCA providing central counterparty services has policies and procedures to establish a risk-based margin system that monitors intraday credit exposures on an ongoing basis, and includes the authority and operational capacity to make intraday margin calls as frequently as circumstances warrant;

(ii) require that a CCA providing central counterparty services has policies and procedures reasonably designed to establish a risk-based margin system that uses reliable sources of timely price data and other substantive inputs and uses procedures to address circumstances in which substantive inputs are not readily available or reliable; and

(iii) add content requirements for a CCA’s recovery and orderly wind-down plan.

As a result of items (i) and (ii) in the Amendments, CCAs that provide central counterparty services such as the National Securities Clearing Corporation (“NSCC”), the Fixed Income Clearing Corporation (“FICC”), and the Options Clearing Corporation (“OCC”) may amend their rules in ways that result in margin being collected more frequently. The Amendments require CCAs to file any required proposed rule changes or advance notices with the SEC within 150 days after publication of the Amendments in the Federal Register. Clearing agency participants should be prepared to monitor rule filings from relevant CCAs over the next few months in order to ensure that their own operations can respond to intraday margin calls as the CCAs may require.