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Federal Register / Vol. 86, No. 153 / Thursday, August 12, 2021 / Notices
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Transactions in accordance with proposed Rule 56, as described below.
Proposed Rule 2D, Section 5 Agent Clearing Member Agent Obligations Section 5 of proposed Rule 2D would establish rules-based obligations for Agent Clearing Members and the establishment of Agent Clearing Member Customer Omnibus Accounts.
Section 5a of proposed Rule 2D
would provide that an Agent Clearing Member shall be permitted to submit to NSCC for novation Agent Clearing Member Transactions entered into by the Agent Clearing Member as agent on behalf of one or more Customers. Any such submission shall be in accordance with proposed Rule 2D. As proposed, subject to the provisions of the Rules, an Agent Clearing Members clearing of Agent Clearing Member Transactions for Customers Customer Clearing Service may be provided by an Agent Clearing Member to its Customers on any terms and conditions mutually agreed to by the Agent Clearing Member and its Customers; provided, that each Agent Clearing Member shall, before providing Customer Clearing Service to any Customer, enter into an agreement with that Customer that binds the Customer to the provisions of the Rules applicable to Agent Clearing Member Transactions and Customers.
Section 5b of proposed Rule 2D
would provide that, with respect to an Agent Clearing Member that submits Agent Clearing Member Transactions to NSCC for novation on behalf of its Customers, NSCC shall maintain one or more Agent Clearing Member Customer Omnibus Accounts in the name of the Agent Clearing Member for the benefit of its Customers. Each Agent Clearing Member Customer Omnibus Account would be permitted to contain only i SFTs entered into by the Agent Clearing Member, on behalf of a Customer, as Transferor or ii SFTs entered into by the Agent Clearing Member, on behalf of a Customer, as a Transferee. An Agent Clearing Member would not be permitted to combine SFTs entered into as Transferee and Transferor in the same Agent Clearing Member Customer Omnibus Account. This is designed to ensure that NSCCs volatility-based Clearing Fund deposit requirements represent the sum of each individual Customers activity i.e., that the positions are margined on a gross basis.71
71 If an Agent Clearing Member were permitted to maintain SFTs entered into as both Transferee and Transferor in the same Agent Clearing Member Customer Omnibus Account, the Required Fund Deposit obligations of the Agent Clearing Member could potentially be reduced by offsetting SFT

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Section 5c of proposed Rule 2D
would provide that an Agent Clearing Member shall act solely as agent of its Customers in connection with the clearing of Agent Clearing Member Transactions; provided that the Agent Clearing Member shall remain fully liable for the performance of all obligations to NSCC arising in connection with Agent Clearing Member Transactions; and provided further, that the liabilities and obligations of NSCC
with respect to Agent Clearing Member Transactions entered into by the Agent Clearing Member shall extend only to the Agent Clearing Member. Section 5c of proposed Rule 2D would further provide that, without limiting the generality of the foregoing, NSCC shall not have any liability or obligation arising out of or with respect to any Agent Clearing Member Transaction to any Customer on behalf of whom an Agent Clearing Member entered into the Agent Clearing Member Transaction.
Section 5d of proposed Rule 2D
would provide that nothing in the Rules shall prohibit an Agent Clearing Member from seeking reimbursement from a Customer for payments made by the Agent Clearing Member whether out of Clearing Fund deposits or otherwise under the Rules, or as otherwise may be agreed between the Agent Clearing Member and the Customer.
Proposed Rule 2D, Section 6 Clearing Fund Obligations Section 6 of proposed Rule 2D would set forth the Clearing Fund obligations.
Section 6a of proposed Rule 2D
would provide that NSCC shall maintain one or more Agent Clearing Member Customer Omnibus Accounts for an Agent Clearing Member. Each Agent Clearing Member shall make and maintain so long as such Member is an Agent Clearing Member a deposit to the Clearing Fund as a Required Fund Deposit to support the activity in its Agent Clearing Member Customer Omnibus Accounts the Agent Clearing Member Required Fund Deposit. Deposits to the Clearing Fund would be held by NSCC or its designated agents, to be applied as provided in the Rules.
Section 6b of proposed Rule 2D
would provide that, in the ordinary course, for purposes of satisfying the Agent Clearing Members Clearing Fund requirements under the Rules for its Member activity, its Agent Clearing Member activity, and, to the extent applicable, its Sponsoring Member Positions of different Customers in the same SFT
Security.

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activity, the Agent Clearing Members proprietary accounts, its Agent Clearing Member Customer Omnibus Accounts, and its Sponsored Member SubAccounts, if any, shall be treated separately, as if they were accounts of separate entities. Notwithstanding the previous sentence, however, NSCC may, in its sole discretion, at any time and without prior notice to the Agent Clearing Member but being obligated to give notice to the Agent Clearing Member as soon as possible thereafter and whether or not the Agent Clearing Member is in default of its obligations to NSCC, treat the Agent Clearing Members accounts as a single account for the purpose of applying Clearing Fund deposits; apply Clearing Fund deposits made by the Agent Clearing Member with respect to any account as necessary to ensure that the Agent Clearing Member meets all of its obligations to NSCC under any other accounts; and otherwise exercise all rights to offset and net against the Clearing Fund deposits any net obligations among any or all of the accounts, whether or not any other Person is deemed to have any interest in such account.72
Section 6c of proposed Rule 2D
would provide that the Agent Clearing Member Required Fund Deposit for each Agent Clearing Member Customer Omnibus Account shall be calculated separately based on the Agent Clearing Member Transactions in such Agent Clearing Member Customer Omnibus Account, and the Agent Clearing Member shall, as principal, be required to satisfy the Agent Clearing Member Required Fund Deposit for each of the Agent Clearing Members Agent Clearing Member Customer Omnibus Accounts.
Section 6d of proposed Rule 2D
would provide that Sections 1, 2, 4, 5, 6, 7, 8, 9, 10, 11 and 12 of Rule 4
Clearing Fund shall apply to the Agent Clearing Member Required Fund Deposit with respect to obligations of an Agent Clearing Member under the Rules, including its obligations arising under the Agent Clearing Member 72 NSCC believes this is appropriate because the Clearing Fund deposits of an Agent Clearing Member are the proprietary assets of the Agent Clearing Member and NSCC generally has the right to apply the Clearing Fund deposits of a Member to any of the Members obligations to NSCC, regardless of whether those were the obligations that generated the Clearing Fund deposit requirement. NSCC therefore believes that, consistent with the FICC Sponsoring Member/
Sponsored Member Program for the reasons described above in Item IIBiii Sponsoring Members and Sponsored Members, an Agent Clearing Members Clearing Fund deposits should be available to satisfy any of the Agent Clearing Members obligations to NSCC.

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