Federal Register #SR-FICC-2026-008

SEC Notice: FICC Proposes Guaranty Fund and Rule Changes for Government Securities Division

This notice details a proposed rule change by the Fixed Income Clearing Corporation (FICC) for its Government Securities Division (GSD), as published by the Securities and Exchange Commission (SEC): - Government Buyer: - Securities and Exchange Commission (SEC), with the Fixed Income Clearing Corporation (FICC) Government Securities Division (GSD) as the operating entity - OEMs and Vendors: - Fixed Income Clearing Corporation (FICC) is the only organization mentioned - Products/Services Requested: - Establishment and maintenance of a Guaranty Fund for the GSD, sized monthly to a Cover 2 standard using daily stress testing - Modification of Clearing Fund rules to ensure bankruptcy remote treatment, exclude from loss mutualization, and allow exchange of cash deposits for U.S. Treasury securities - Revision of loss allocation rules, including a 200% cap per event period and a five-day cooling-off period - Elimination of fixed minimum margin charges, with flexibility for FICC to impose minimums up to $1 million based on risk exposure - Unique or Notable Requirements: - The Guaranty Fund is designed to cover losses from the default of the two largest member affiliated families under extreme but plausible market conditions - The proposal introduces a new loss allocation waterfall and removes member tier distinctions - Clearing Fund deposits will be treated as initial margin and excluded from loss mutualization - Enhanced liquidity management provisions, including the ability to exchange Clearing Fund cash for U.S. Treasury securities - No specific commercial products, part numbers, or traditional procurement activities are involved; this is a regulatory and operational change, not a purchase of goods or services

Description

The Securities and Exchange Commission has filed a proposed rule change by the Fixed Income Clearing Corporation to establish a guaranty fund at the Government Securities Division. The proposed rule change involves modifications to the Fixed Income Clearing Corporation's Government Securities Division Rulebook to create a separate Guaranty Fund as a prefunded financial resource to serve as the default fund. This fund aims to enhance risk management by sizing the fund based on daily stress testing to cover potential losses from member defaults under extreme but plausible market conditions. The proposal also includes changes to treat Clearing Fund deposits as initial margin, exclude them from loss mutualization, and provide liquidity management enhancements.

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