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Federal Register / Vol. 86, No. 168 / Thursday, September 2, 2021 / Notices the pro-rata allocation of CCLF
obligations among members with daily peak liquidity in those supplemental liquidity tiers would increase.45 When fewer members generate peak liquidity needs in a supplemental liquidity tier, the remaining members that generate peak liquidity in that tier bear a larger pro-rata share of the CCLF allocations for that tier.
II. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the Advance Notice is consistent with the Clearing Supervision Act. Comments may be submitted by any of the following methods:
Electronic Comments Use the Commissions internet comment form http www.sec.gov/
rules/sro.shtml; or Send an email to rule-comments@
sec.gov. Please include File Number SR
FICC2020802 on the subject line.

lotter on DSK11XQN23PROD with NOTICES1

Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549.
All submissions should refer to File Number SRFICC2021801. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commissions internet website http www.sec.gov/
rules/sro.shtml. Copies of the submission, all subsequent amendments, all written statements with respect to the advance notice that are filed with the Commission, and all written communications relating to the advance notice between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commissions Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filings will also be available for inspection and copying at the principal office of FICC and FICCs website at https www.dtcc.com/legal.
45 The proposals in the Advance Notice would not change FICCs current methodology for calculating the total amount of the CCLF.

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All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions.
You should submit only information that you wish to make available publicly. All submissions should refer to File Number SRFICC2021801 and should be submitted on or before September 17, 2021.
III. Discussion and Commission Findings Although the Clearing Supervision Act does not specify a standard of review for an advance notice, the stated purpose of the Clearing Supervision Act is instructive: To mitigate systemic risk in the financial system and promote financial stability by, among other things, promoting uniform risk management standards for SIFMUs and strengthening the liquidity of SIFMUs.46
Section 805a2 of the Clearing Supervision Act authorizes the Commission to prescribe regulations containing risk management standards for the payment, clearing, and settlement activities of designated clearing entities engaged in designated activities for which the Commission is the supervisory agency.47 Section 805b of the Clearing Supervision Act provides the following objectives and principles for the Commissions risk management standards prescribed under Section 805a: 48
To promote robust risk management;
to promote safety and soundness;
to reduce systemic risks; and to support the stability of the broader financial system.
Section 805c provides, in addition, that the Commissions risk management standards may address such areas as risk management and default policies and procedures, among others areas.49
The Commission has adopted risk management standards under Section 805a2 of the Clearing Supervision Act and Section 17A of the Exchange Act the Clearing Agency Rules.50
The Clearing Agency Rules require, among other things, each covered clearing agency to establish, implement, maintain, and enforce written policies 46 See
12 U.S.C. 5461b.
U.S.C. 5464a2.
48 12 U.S.C. 5464b.
49 12 U.S.C. 5464c.
50 17 CFR 240.17Ad22. See Securities Exchange Act Release No. 68080 October 22, 2012, 77 FR
66220 November 2, 2012 S70811. See also Securities Exchange Act Release No. 78961
September 28, 2016, 81 FR 70786 October 13, 2016 S70314 Covered Clearing Agency Standards. FICC is a covered clearing agency as defined in Rule 17Ad22a5.
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and procedures that are reasonably designed to meet certain minimum requirements for its operations and risk management practices on an ongoing basis.51 As such, it is appropriate for the Commission to review advance notices against the Clearing Agency Rules and the objectives and principles of these risk management standards as described in Section 805b of the Clearing Supervision Act. As discussed below, the Commission believes the proposal in the Advance Notice is consistent with the objectives and principles described in Section 805b of the Clearing Supervision Act,52 and in the Clearing Agency Rules, in particular Rules 17Ad22e7 and 21.53
A. Consistency With Section 805b of the Clearing Supervision Act 1. Reducing Systemic Risks and Supporting the Stability of the Broader Financial System The Commission believes that the Advance Notice is consistent with the stated objectives and principles of Section 805b of the Clearing Supervision Act because the changes proposed in the Advance Notice are consistent with reducing systemic risks, supporting the stability of the broader financial system, promoting robust risk management, and promoting safety and soundness.54
The Commission believes that FICCs proposal to add the Sponsored GC
Service to the existing Sponsored Service is consistent with the principles of reducing systemic risk and supporting the stability of the broader financial system. As described above in Section I.B., FICC proposes to add the Sponsored GC Service to facilitate centrally cleared tri-party repo trading between a Sponsored Member and its Sponsoring Member within FICCs Sponsored Service. The Sponsored GC
Service is designed to enable a greater number of tri-party repo transactions to be eligible for FICCs netting services and subject to FICCs guaranteed settlement, novation, and risk management, which should help decrease the settlement and operational risk of such transactions relative to those made outside of central clearing.
This risk reduction should, in turn, enhance the stability of the tri-party repo market.55 Furthermore, by enabling 51 17

CFR 240.17Ad22.
U.S.C. 5464b.
53 17 CFR 240.17Ad22e7 and 21.
54 12 U.S.C. 5464b.
55 FICC notes that the centrally cleared repo market has functioned well during periods of extreme market volatility, as evidenced during the 52 12

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