On October 29, ISDA responded to the Securities Exchange Commission’s (SEC) notice of proposed rulemaking (NPR).

With the central role governance plays in a clearing agency’s risk management, we believe this NPR is very timely and will improve governance and risk management of these entities. We, however, believe that this NPR is only the beginning and would welcome further improvements in CCP governance.

We are generally very supportive of this NPR. Risk Management Committees (RMCs), Risk Working Groups and the obligation to formally consider stakeholders viewpoints will facilitate effective oversight by the Commission. RMCs are good practice in many central counterparties (CCPs) and are already required by regulation in many other jurisdictions. We, therefore, welcome codification of such governance bodies as proposed by this NPR.

We are also very supportive of the SEC’s thoughts about CCP’s board obligation to oversee service providers for critical services.

ISDA notes that the proposals in the NPR should be considered as a starting point in enhancing the regulatory framework for CCPs. There are several other important issues related to clearing agencies in which further regulatory action is warranted, including emergency powers, margin adequacy, transparency and CCP capital.